Corporate Responsibility

Paper Summary:

This paper examines the various parties to whom corporations are responsible. This issue is multi-faceted, encompassing not only to whom corporations owe their allegiance, but also the extent of their obligations. Corporate responsibility is considered in terms of an evolutionary process. Some of the liabilities conflict with one another, whereas others may depend on an individual corporate culture. Also discussed is the role of the CEO and their potential liability in the corporation and its actions.

From the Paper:

"In the face of all the scandals plaguing modern corporations, it is ironic to consider the origins of the corporation. Corporations were formed for two primary reasons; limiting responsibility and growing profits. The first purpose of a corporation is independent of corporate size; even small business owners can incorporate their businesses into limited liability corporations (LLCs), which function as individual entities and protect the personal assets of the corporation's owners from financial attack in the face of corporate liability. For example, a person running an in-home pet-sitting business may choose to incorporate the business. By incorporating, the business itself is treated as an entity. Therefore, even if the owner of the business himself brings about a circumstance that makes the corporation liable, such as leaving open a gate and allowing a client's prize-winning pet to escape, the corporation can only be held liable to the limits of its corporate assets, rather than the assets of the individual owner. Ideally, this situation would allow someone to do business in an arena where it might otherwise be too financially risky to do so. However, the liability limiting functions of a corporation can also work to protect the unethical businessperson. By shifting corporate assets to the individual, in the guise of an over-inflated personal salary, an unscrupulous businessperson can do business in a way that leaves its clients vulnerable to wrongdoing. "

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