This paper presents an account of the moral boundaries of organizations. We define an organization’s moral boundary to encompass all of the actions for which it could be held morally responsible. Our theory requires us to view organizations as subjects that act in the world, rather than as objects that are used as tools; that is, it requires us to focus on corporate moral agency. We present a process model for determining whether a given action lies within an organization’s moral boundary, and we discuss how an organization’s moral boundary can be created, destroyed, or modified as a result of deliberate choices by human and organizational actors. Our article contributes to the literature by conceptualizing the distinction between organizations as subjects and organizations as objects, and so clarifying the distinction between legal and moral boundaries; by recentering the discussion of boundaries on organizational actions rather than on contingent institutional features; and by adding nuance to the assignment of moral responsibility in complex organizational networks and in situations where one corporate moral agent depends upon another for its existence.

We consider the problem of moral disjunction in professional and business activities from a virtue-ethical perspective. Moral disjunction arises when the behavioral demands of a role conflict with personal morality; it is an important problem because most people in modern societies occupy several complex roles that can cause this clash to occur. We argue that moral disjunction, and the psychological mechanisms that people use to cope with it, are problematic because they make it hard to pursue virtue and to live with integrity. We present role coadunation as a process with epistemic and behavioral aspects that people can use to resolve moral disjunction with integrity. When role coadunation is successful, it enables people to live virtuous lives of appropriate narrative disunity and to honor their identity-conferring commitments. We show how role coadunation can be facilitated by interpretive communities and discuss the emergence and ideal features of those communities.

We study the relationship between an organization's vocabularies, the cultural foundations of organizational categories, and the way that attention is directed within organizations. We present a process model within which organizations converge on specific vocabularies that enable them to perform tasks efficiently and, in turn, those vocabularies support commonly understood categories that enable organizational members to make sense of the world; those categories then focus attention on specific features of the world. We study these phenomena in an experimental setting within which participants communicate orally to perform an image recognition task. We perform Natural Language Processing (NLP) on transcripts of the subjects' speech in order to quantify the formation, evolution, and transmission of organizational vocabularies. When subjects leave the experiment, they perform a basic memory task that measures the way that their attention was directed during the experiment. Our set-up therefore facilitates an analysis of the relationship between strategic vocabularies and attention. Our work yields four results. First, vocabularies cause attention direction. Second, vocabularies outlast their progenitors and they exhibit strong founder effects. Third, organizational vocabularies change in response to conscious choices. And, finally, when personnel, processes, categories, and goals are held fixed, organizational identity affects the vocabularies used within organizations.

Using audio recordings, we study uptalk (rising intonation) by executives in earnings calls. Unexpected uptalk by female, but not male, executives predicts lower earnings. Analysts respond to female uptalk with lower recommendations and earnings forecasts, although these do not fully reflect the signal. During the earnings call bid-ask spreads widen when female executives speak and use uptalk. These results are consistent with sociolinguistic studies which find that uptalk is a female-typed characteristic signalling uncertainty. #MeToo did not alter the signaling value of, or market response to, female uptalk, but led to more male uptalk, which elicited a favorable market response.

This article presents a theory of organizational purpose that is normatively neutral and, hence, can be deployed to study firms without prejudging their role in society. The argument employs two ph...

Academy of Management ReviewIn-Press The Ontology of the Corporate MindAlan D. Morrison and Rita MotaAlan D. MorrisonOxford University, 6396, Said Business School, Park End Street, Oxford, United Kingdom of Great Britain and Northern Ireland, OX1 1HPUnited States; and Rita MotaRamon Llull University Esade Business School, 113022, Avinguda de la Torre Blanca, 59, Sant Cugat del Vallès, Barcelona, Spain, 08172Oxford University, 6396, Said Business School, Park End Street, Oxford, United Kingdom of Great Britain and Northern Ireland, OX1 1HP; Published Online:18 Apr 2022https://doi.org/10.5465/amr.2022.0161AboutSectionsPDF/EPUB ToolsDownload CitationsAdd to favoritesTrack Citations ShareShare onFacebookTwitterLinkedInRedditEmail FiguresReferencesRelatedDetails In-Press Permissions Metrics in the past 12 months History Received 18 March 2022 Published online 18 April 2022 InformationCopyright 2022Download PDF

Amicus brief of several scholars filed in the Supreme Court in SEC v. Jarkesy.

This paper attempts to explain why, in similar contexts, multinational enterprises (MNEs) respond differently to human rights questions, and why external audiences appear to tolerate these differences. Our explanation focuses on the perceived legitimacy of MNE human rights actions. This approach recognizes that organizations are actors that make legitimacy assessments, rather than mere legitimacy objects. We conceptualize organizational human rights attitudes and reasons for action, and we show how the two interact. We relate the norms that are used in legitimacy judgments, and the way that they are interpreted in different contexts, to different MNE human rights attitudes. Our analysis yields new predictions of the factors that might lead MNEs to adopt active, passive, or non-engagement human rights attitudes.

We present a second-personal account of corporate moral agency. This approach is in contrast to the first-personal approach adopted in much of the existing literature, which concentrates on the corporation’s ability to identify moral reasons for itself. Our account treats relationships and communications as the fundamental building blocks of moral agency. The second-personal account rests on a framework developed by Darwall. Its central requirement is that corporations be capable of recognizing the authority relations that they have with other moral agents. We discuss the relevance of corporate affect, corporate communications, and corporate culture to the second-personal account. The second-personal account yields a new way to specify first-personal criteria for moral agency, and it generates fresh insights into the reasons those criteria matter. In addition, a second-personal analysis implies that moral agency is partly a matter of policy, and it provides a fresh perspective on corporate punishment.

We present a model in which a long-lived bank endogenously learns about the environment for financial innovation through experimentation on its clients. When the bank has superior knowledge of the state of the world facing its clients, it may engage in inefficient or "reckless" experimentation because it cannot commit to do otherwise. We show that strong client relationships can mitigate the incentive to pitch innovative products to clients for whom they are not appropriate. We also explore the limits of internal monitoring systems intended to prevent such behavior. Finally, we show that greater banker mobility can complement monitoring systems because bankers will have incentive to visibly seek out weak monitoring environments only when the expected collective benefits from financial innovation are especially large.

Organizational language links individual and group-level cognition and therefore affects organizational efficiency and adaptability. We present a model of organizational language that makes sense of these relationships. In the model, some members of an organization achieve detailed understandings of the external environment and must then convey their knowledge to other members who synthesize environmental and organizational knowledge to select actions. The languages that they develop are negotiated, path-dependent, and resistant to change. They enable long-term retention of critical information about the organization’s relationship to its environment and, hence, our work provides a linguistic approach to organizational learning and organizational memory. Our formal analysis of language negotiation explains what a linguistic code is, how it is formed, and the way that organizational messages are decoded for processing and action selection. The model explains how individual cognition is formed and also the relationship between linguistic codes and actions. We relate organizational efficiency to an organization’s cognitive breadth and we show how language and corporate adaptability are related. By our account, competitive markets, hierarchical organizational structures and remote working reduce adaptability; staff turnover and team recombination increase it. Our work has implications for the design of research studies that deploy natural language processing and other techniques to analyze the use and the evolution of corporate language.

We show that a firm can use its organizational structure to commit to an investment strategy. The firmdelegates sequential search and project management tasks to a manager. Ex post, the firm turns away projects that generate high project management rent. However, because the expectation of such rent serves to defray the manager's search cost, investment might be optimal ex ante. A leveraged subsidiary mitigates this time-inconsistency problem by creating ex post risk-shifting incentives that counteract underinvestment. Subsidiaries are more valuable for projects with costly search, intermediate management costs, and returns that are uncorrelated with the existing business.

The Federal Circuit in these cases concluded that APJs are principal rather than inferior officers under the Appointments Clause. The parties agree that the answer to this question is determined in part by the duties that APJs perform and the degree of supervision over them. It is agreed that APJs serve only as judicial officers, meaning that they have no authority to issue rules or otherwise make policy. The Director of the PTO has administrative supervisory authority over them but has no power to review specific decisions. Although the Director has certain other duties and powers that affect APJs, none of them is significant enough to constitute meaningful supervision of the kind that those officers found to be principal officers in other contexts have possessed. The same is true of other officials in the Department, including the Secretary. And, as noted above, none of them has express authority to review the substance of a decision of an APJ panel in an inter partes proceeding.The Federal Circuit recognized that this Court has not set forth a definitive test by which to determine whether Congress’ designation of inferior officer status is constitutional. It examined various factors that it found relevant, and it found, on balance, that APJs were not inferior officers. That conclusion is incorrect. As demonstrated below, the “totality of all the circumstances” method is not an administrable way to resolve these questions, nor is it compelled by the Constitution. Instead, amici urge the Court to decide this case by relying on two objective factors that support the conclusion that APJs and other similarly situated officers in other Departments are inferior officers.First, Congress determined by its careful selection of the method by which APJs are appointed that APJs are inferior officers. Under the express provisions of the Appointments Clause, an officer may not be an inferior officer unless Congress has, by law, so provided. When Congress authorized the Secretary to appoint APJs, the Senate gave up the power to oversee their appointment that it has for principal officers. In addition, when the President signed the AIA into law, he surrendered his power to appoint APJs, although he may still make “suggestions” to the Secretary. There is no reason to suppose that Congress would have agreed to an alternative means of appointment here or in other similar situations unless it concluded that the duties of the office at issue were such that it could confidently leave their appointment to one of the three alterative appointing authorities provided in the Appointments Clause, here the Head of the Commerce Department. As several Justices have recognized, at least where Congress has created an inferior office, there should be a rebuttable presumption that Congress has acted constitutionally. Because there is no basis to second-guess that determination in this instance, such a presumption should apply here.The second fact supporting the inferior officer designation for APJs is that their position is strictly limited to that of an adjudicator who must follow the law as set forth by Congress and, to the extent applicable, by principal officers in the Commerce Department for which they work. They do not have authority to issue rules or otherwise make policy, except to the extent that any adjudication involves policy choices. They also have no authority to commence enforcement proceedings of any kind, civil or criminal. Their duties to decide cases under the patent laws arise when a party seeks review before the PTO, the Director decides (or delegates the decision to decide) whether review is appropriate, and the case is assigned to specific APJs. Although the patent owner may not seek inter partes review, it knows that, when it commences an infringement action, there is a real possibility that such review will be Federal Circuit will review an inter partes ruling on the validity of a patent, just like one coming from a federal district court. Those facts all support the reasonableness of Congress’ determination that APJs are inferior officers because they have no significant duties inconsistent with that status.If the Court nonetheless affirms the Federal Circuit’s conclusion that APJs are principal officers, it should reject the Federal Circuit’s remedy of striking the “for cause” limitation on the removal of APJs. That rejection would not affect the result in these cases because the APJ decision in this case was not made by properly appointed officers and thus cannot stand. However, the outcome in other inter partes review cases will be determined depending on whether the Federal Circuit’s remedial ruling is upheld. The United States has taken the position that the elimination of for-cause removal solves the Appointments Clause problem, but that view is mistaken.

Any analysis of non-legal business human rights obligations requires an appropriate theoretical framework. We present a theory that employs a Deliberative View of the Firm, which explicitly acknowledges that firms are capable of deliberating over non-economic propositions. Because firms are able to martial sufficient resources significantly to affect human rights, we claim that firms should be held to account as agents of justice. In some situations, “do no harm” is insufficient: a firm that has deep roots in a community and the ability to advance human rights in that community has a Kantian obligation seriously to consider doing so. Our argument therefore identifies a path dependency in corporate human rights: positive corporate obligations arise as a result of past corporate engagement. When a corporation has deep roots in a local community, “doing no harm” in that circumstance is tantamount to disavowing those obligations. A firm that identifies human rights violations in its supply chain may acquire moral obligations that go beyond those identified in current business and human rights initiatives. In particular, we suggest that it may in some circumstances have a positive obligation to be a human rights activist.

Amicus curiae brief of civil procedure professors in support of jurisdiction

We analyze a general equilibrium model in which financial institutions generate endogenous systemic risk. Banks optimally select correlated investments and thereby expose themselves to fire-sale risk so as to sharpen their incentives. Systemic risk is therefore a natural consequence of banks’ fundamental role as delegated monitors. Our model sheds light on recent and historical trends in measured systemic risk. Technological innovations and government-directed lending can cause surges in systemic risk. Strict capital requirements and well-designed government-asset purchase programs can combat systemic risk. This paper was accepted by Gustavo Manso, finance.

Efficient capital allocation in a market economy depends on the exchange of reliable information between providers of capital and companies that seek to put capital to work. One challenge, however, is that information exchange is at most only partly subject to verification and contractual arrangements. Take the case of securities issuance, including IPOs; whereas issuers of the new securities have incentives to overstate their prospects to attract higher bids, prospective investors have incentives to understate their interest. In principle, the counterparties could enter into an agreement that would prevent or discourage misrepresentations by both sides, but failure to perform would be very costly, if not impossible, for a court to verify.Investment banks have traditionally addressed this problem by creating extralegal markets for information whose functioning depends on the reputations of the banks for upholding the interests of both their corporate clients and the providers of capital. But committing to strike the right balance among all of the parties’ interests means that relational investment bankers inevitably face conflicts of interest. The authors of this article argue that such bankers exist to absorb and to manage conflicts of interest in financial markets—and that they do so by exercising judgment in ways that support their reputation for fair dealing.Modern full‐service investment banks, when addressing such conflicts, combine, or braid, such relational functions with technocratic banking activities involving the use of technical skills with advanced information technology. In so doing, however, technocratic bankers substitute formal contracts for the informal judgment exercised by relational bankers; and as a result, they are less dependent on their banks’ reputations for fair dealing. Moreover, technocratic bankers often have powerful incentives to pursue a personal reputation by executing complex transactions that demonstrate their skill, even at the expense of their clients and the bank's reputation for fair dealing.Well‐governed braided banks can benefit from complementarities between relational and technocratic skills. Nevertheless, full‐service banks continue to struggle with governance problems. The authors discuss several market responses to these struggles, such as the growing use of boutique banks offering “unconflicted” sell‐side advice in mergers and acquisitions and securities offerings. But the authors view such responses as at most a first step toward achieving a new understanding of the extent of the challenge facing today's investment banks in carrying out their economic function of bringing together and balancing the interests of companies and their investors.

We study the effect that internal information systems have on a firm's leverage and corporate governance choices. Information systems lower governance costs by facilitating more targeted interventions. But they also generate asymmetric information between firms and their investors. As a result, firms may attempt to signal their superior quality by assuming more leverage. In some circumstances, this can reduce governance incentives and result in inferior outcomes. Investors anticipate this effect, and it renders information systems inefficient.The online appendix is available at https://doi.org/10.1287/mnsc.2016.2599. This paper was accepted by Amit Seru, finance.