Corporate Governance and Ethics

Corporate Governance and Ethics

An Aristotelian Perspective

New Horizons in Leadership Studies series

Alejo José G. Sison

Corporate Governance and Ethics is an illuminating and practical reading of Aristotle’s Politics for today’s corporate directors. With a deft synthesis of ethics, economics and politics, Alejo Sison elevates the discussion of corporate governance out of the realm of abstract rules and structures into a more effective form of Aristotelian politics. He argues that corporate governance is a human practice where subjective, ethical conditions outweigh the mastery of techniques, since the firm is not a mere production function but, above all, a community of workers. Corporate governance issues are discussed in a holistic fashion, using international case studies to embed the discussion in environments defined by their economic, legal and cultural systems. One of the author’s key messages is that reform starts with the ethical and political education of directors.

Chapter 5: Corporate Despots and Constitutional Rulers

Alejo José G. Sison

Subjects: business and management, business leadership, corporate governance, economics and finance, corporate governance, financial economics and regulation, politics and public policy, leadership


The third element of our analogy between states and firms refers to their organization. Both states and firms require a governing body with its rule or constitution. The major difference between them, however, is that, while states are sovereign (Pltcs, 1278b), corporations are not. Therefore, the governance of business organizations or firms is always subject to the governments of the states, which represent the supreme authority in the places where they reside and operate. In the Politics, Aristotle explores a plurality of state regimes, depending on the number of people who govern and for the good of whom. The main division he establishes is between ‘despotic’ and ‘constitutional’ rules. A despotic rule is one exercised over subjects who are ‘by nature slaves’, and a constitutional rule is one over those who are ‘by nature free’ (Pltcs, 1255b). Previously we have seen the preponderant role that nature plays over nurture – that is, education and culture – in a person’s fittingness for citizenship. The same is true for one’s propensity to govern or rule, exercising authority and lordship, or to be governed or ruled, exercising obedience. With regard to a despotic rule or regime, although both slave and master may have coincident interests, a slave is ruled primarily for the master and only accidentally for himself (Pltcs, 1278b). Compare this with a father’s government of his wife and children as an example of a constitutional rule, where the good of the governed or the common good of the household comes first (Pltcs,...

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