IDEAS home Printed from https://ideas.repec.org/a/bpj/maneco/v7y2020i1p8n1.html
   My bibliography  Save this article

Corporations as the Outgroup?

Author

Listed:
  • Murphy Ryan H.

    (Southern Methodist University, Dallas, TX75205, USA)

Abstract

Because the evolutionary competitive process found in the market selects firms whose practices most closely maximize profits, as in Alchian (1950), members of society correctly perceive that firms will defect when it aligns with their long-run profitability. This holds regardless of the intentions of those running the firm. But in terms of moral psychology, members of society subsequently consider firms to be members of the outgroup, deserving of ostracism. However, because conventional economic analysis already assumes that firms maximize profits, the observation that firms only act “ethically” when it is in their rational self-interest to do so does not have policy implications that are not already contained in neoclassical economics.

Suggested Citation

  • Murphy Ryan H., 2020. "Corporations as the Outgroup?," Man and the Economy, De Gruyter, vol. 7(1), pages 1-8, June.
    • Handle: RePEc:bpj:maneco:v:7:y:2020:i:1:p:8:n:1
    DOI: 10.1515/me-2019-0008
    as

    Download full text from publisher

    File URL: https://doi.org/10.1515/me-2019-0008
    Download Restriction: For access to full text, subscription to the journal or payment for the individual article is required.
    File URL: https://libkey.io/10.1515/me-2019-0008?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Stringham, Edward Peter, 2011. "Embracing morals in economics: The role of internal moral constraints in a market economy," Journal of Economic Behavior & Organization, Elsevier, vol. 78(1), pages 98-109.
    2. Hart, Oliver & Zingales, Luigi, 2017. "Companies Should Maximize Shareholder Welfare Not Market Value," Journal of Law, Finance, and Accounting, now publishers, vol. 2(2), pages 247-275, November.
    3. McCloskey, Deirdre Nansen, 2006. "The Bourgeois Virtues," University of Chicago Press Economics Books, University of Chicago Press, number 9780226556635.
    4. Gary S. Becker, 1974. "Crime and Punishment: An Economic Approach," NBER Chapters, in: Essays in the Economics of Crime and Punishment, pages 1-54, National Bureau of Economic Research, Inc.
    5. Wilson, James Q., 1993. "The Moral Sense," American Political Science Review, Cambridge University Press, vol. 87(1), pages 1-11, March.
    6. Hong, Harrison & Kacperczyk, Marcin, 2009. "The price of sin: The effects of social norms on markets," Journal of Financial Economics, Elsevier, vol. 93(1), pages 15-36, July.
    7. Amir Barnea & Robert Heinkel & Alan Kraus, 2013. "Corporate social responsibility, stock prices, and tax policy," Canadian Journal of Economics, Canadian Economics Association, vol. 46(3), pages 1066-1084, August.
    8. Andrei Shleifer, 2004. "Does Competition Destroy Ethical Behavior?," American Economic Review, American Economic Association, vol. 94(2), pages 414-418, May.
    9. Amir Barnea & Robert Heinkel & Alan Kraus, 2013. "Corporate social responsibility, stock prices, and tax policy," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 46(3), pages 1066-1084, August.
    10. Paul Seabright, 2010. "The Company of Strangers: A Natural History of Economic Life Revised Edition," Economics Books, Princeton University Press, edition 1, number 9169.
    11. Deirdre Mccloskey, 2008. "Not by P Alone: A Virtuous Economy," Review of Political Economy, Taylor & Francis Journals, vol. 20(2), pages 181-197.
    12. Salter, Alexander W. & Veetil, Vipin & White, Lawrence H., 2017. "Extended shareholder liability as a means to constrain moral hazard in insured banks," The Quarterly Review of Economics and Finance, Elsevier, vol. 63(C), pages 153-160.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Christian Gollier & Sébastien Pouget, 2022. "Investment Strategies and Corporate Behaviour with Socially Responsible Investors: A Theory of Active Ownership," Economica, London School of Economics and Political Science, vol. 89(356), pages 997-1023, October.
    2. Hart, Oliver & Zingales, Luigi, 2017. "Companies Should Maximize Shareholder Welfare Not Market Value," Journal of Law, Finance, and Accounting, now publishers, vol. 2(2), pages 247-275, November.
    3. De Meyst, Karen J. & Cardinaels, Eddy & Van den Abbeele, Alexandra, 2024. "CSR disclosures in buyer-seller markets: The impact of assurance of CSR disclosures and incentives for CSR investments," Accounting, Organizations and Society, Elsevier, vol. 113(C).
    4. Dorfleitner, Gregor & Kreuzer, Christian & Sparrer, Christian, 2022. "To sin in secret is no sin at all: On the linkage of policy, society, culture, and firm characteristics with corporate scandals," Journal of Economic Behavior & Organization, Elsevier, vol. 202(C), pages 762-784.
    5. Ahlin, Christian & Kim, In Kyung & Kim, Kyoo il, 2021. "Who commits fraud? evidence from korean gas stations," International Journal of Industrial Organization, Elsevier, vol. 76(C).
    6. Hart, Oliver D. & Zingales, Luigi, 2017. "Companies Should Maximize Shareholder Welfare Not Market Value," Working Papers 267, The University of Chicago Booth School of Business, George J. Stigler Center for the Study of the Economy and the State.
    7. Maarten Pieter Schinkel & Leonard Treuren, 2021. "Corporate Social Responsibility by Joint Agreement," Tinbergen Institute Discussion Papers 21-063/VII, Tinbergen Institute.
    8. Susanne Fengler & Stephan Russ‐Mohl, 2008. "The Crumbling Hidden Wall: towards an Economic Theory of Journalism," Kyklos, Wiley Blackwell, vol. 61(4), pages 520-542, November.
    9. Schwieren, Christiane & Weichselbaumer, Doris, 2010. "Does competition enhance performance or cheating? A laboratory experiment," Journal of Economic Psychology, Elsevier, vol. 31(3), pages 241-253, June.
    10. Fafaliou, Irene & Giaka, Maria & Konstantios, Dimitrios & Polemis, Michael, 2022. "Firms’ ESG reputational risk and market longevity: A firm-level analysis for the United States," Journal of Business Research, Elsevier, vol. 149(C), pages 161-177.
    11. Martin Oehmke & Marcus M Opp, 2025. "A Theory of Socially Responsible Investment," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 92(2), pages 1193-1225.
    12. Shackleton, Mark & Yan, Jiali & Yao, Yaqiong, 2022. "What drives a firm's ES performance? Evidence from stock returns," Journal of Banking & Finance, Elsevier, vol. 136(C).
    13. Eleonora Broccardo & Oliver D. Hart & Luigi Zingales, 2020. "Exit vs. Voice," Working Papers 2020-114, Becker Friedman Institute for Research In Economics.
    14. Baumann Florian & Friehe Tim, 2016. "Competitive Pressure and Corporate Crime," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 16(2), pages 647-687, April.
    15. Barber, Brad M. & Morse, Adair & Yasuda, Ayako, 2021. "Impact investing," Journal of Financial Economics, Elsevier, vol. 139(1), pages 162-185.
    16. Zwetelina Iliewa & Elisabeth Kempf & Oliver Spalt, 2025. "Corporate Actions as Moral Issues," CRC TR 224 Discussion Paper Series crctr224_2025_649, University of Bonn and University of Mannheim, Germany.
    17. Paul Cousins & Marie Dutordoir & Benn Lawson & João Quariguasi Frota Neto, 2020. "Shareholder Wealth Effects of Modern Slavery Regulation," Management Science, INFORMS, vol. 66(11), pages 5265-5289, November.
    18. Michael Kirchler & Jürgen Huber & Matthias Stefan & Matthias Sutter, 2016. "Market Design and Moral Behavior," Management Science, INFORMS, vol. 62(9), pages 2615-2625, September.
    19. Kuo-Jung Lee, 2018. "Valuations and Decisions of Investing in Corporate Social Responsibility: A Real Options Viewpoint," Sustainability, MDPI, vol. 10(10), pages 1-14, October.
    20. Pástor, Ľuboš & Stambaugh, Robert F. & Taylor, Lucian A., 2021. "Sustainable investing in equilibrium," Journal of Financial Economics, Elsevier, vol. 142(2), pages 550-571.

    More about this item

    Keywords

    ingroups; outgroups; corporate social responsibility; business ethics; psychopathy; ethics & economics; Armen Alchian;
    All these keywords.

    JEL classification:

    • Z10 - Other Special Topics - - Cultural Economics - - - General
    • M14 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Corporate Culture; Diversity; Social Responsibility
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bpj:maneco:v:7:y:2020:i:1:p:8:n:1. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Peter Golla (email available below). General contact details of provider: https://www.degruyter.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.