The Practical Soul of Business Ethics: The Corporate Manager's Dilemma and the Social Teaching of the Catholic Church

The relative responsibility and authority of shareholders, directors and managers in governing a corporation has been a central issue in the law and economics literature. Part of that debate has focused on the fiduciary duty of boards and managers to maximize profits, especially when questions of social responsibility are presented. However, relatively little attention has been paid to the practical aspects of managerial decisions when ethical issues are present. In this article, we demonstrate that the shareholder primacy/profit maximization claim is more myth than substance and that corporate managers have both the power and the ethical responsibility to consider questions of right and wrong that arise in the course of the firm's operations. More importantly, we offer specific analyses of how Catholic social teaching can assist the manager in resolving those ethical issues consistent with her fiduciary duties. Our use of specific hypothetical problems allows us to avoid the usual ethereal ethical discussion and instead demonstrate how managers can use defined principles to make specific prudential judgments.