Mergers, Takeovers, and a Property Ethic
ABSTRACT. The recent takeover and merger trend cries
out for ethical evaluation. This essay proposes a model
for evaluating them in terms of their impact on a firm's
immediate stakeholders: investors, owners, management and
employees. Since mergers and takeovers are 'Transfers of
Ownership of Firms' (TOFs) they entail a property ethic of
ownership, control, securing stakeholder interests, and
defining which stakeholders should exercise these rights. I
use the model to evaluate two fictional cases, a friendly
merger and a hostile takeover. The results show that neither
TOF serves all interests equitably. Since the control structure
of the private firm is legitimized by its interest structure, I
reason that both should be reformed. Both rest on a broader
economic rationale; but it is controverted. Accordingly, the
economic and ethical evaluation of TOFs, I conclude, both
entail the democratic reform of the control structure of the
firm.
"A corporation represents far more than its
current stock price; it embodies obligations to
employees, customers, suppliers and commun-
ities."
Robert S. Saul, Peers Merchant Bank
Property rights and ethics
The firm, Saul suggests, is a complex social network,
but mergers and takeovers tend to treat it as a piece
of property to be exchanged for its share price.
Takeover proponents however speak of shareholder
rights. 21 will take that claim seriously, along with its
accompanying economic rationale.
Mergers and takeovers are both transfers of
Vincent di Norcia is Associate Professor of Philosophy at the
University of Sudbury. He is the author of 'Ethics in Manage-
ment' and 'Beyond the Red Tory'.
Journalof Business Ethics 7 (1988) 109--116.
© 1988 by D. Reidel Publishing Company.
Vincent di Norcia
ownership of firm ('TOFs'), the ultimate exercise of
the corporate property right. They directly affect
the firm's internal stakeholders: investors, owners,,
management and employees. This raises an ethical
question, are their stakes in a TOF recognized 0i:
fairly distributed? 3 In answer I will develop an
ethical model of TOFs based on property rights.
A property ethic, C. B. Macpherson holds, begins;
with the principle that each person has a basic right
of access to labour, through which persons both
appropriate things as one's property and produce the
means of life. This suggests a democratic ethic of
maximizing both labour skills and the control of
property in the means of labour. It transcends passive
utilities. Since in our economy labour means era-.
ployment in a firm, the firm is the major arena in
which the property ethic is worked ouc 4
A property right involves four practices: (a) the
power of persons to transfer the ownership of the
object possessed to others via a free contract and (b)
to control it, (c) in order to secure their interests. By"
'interest' I mean material or economic goods apart
from control itself. (d) indicates who does/does not:
exercise these powers. TOFs involve (a), (c), and (d)
direcdy, (b) indirectly. The arrangement of power
reflects the firm as a social institution. Now, private
property in the firm is other-excluding (d). It re-
stricts transfer and control (a, b) to an individual or
small group; and usually excludes employees. It can
elide into dictatorial ownership and management. It:
reinforces an egoist concept of interest (c).
The associated collectivist notion of "corporate
egoism", suggested by j. D. Richman, aggregates the
firm's different interests. Paradoxically it also evokes
altruism in the call for employee loyalty. But, Mark
Pastin argues, corporate egoism homogenizes the
competing interests in the firm and precludes recog-
nizing them) The firm is not an undifferentiated
110 Vincent di Norcia
whole, but a complex institution. Ownership and
control therefore call for a corporate social interest
ethic which can articulate the dynamic network of
different interests in the firm, their reciprocal ex-
changes, obligations, and mutuality. This does not
imply selfish egoism but reciprocal and distributive
justice. 6 It entails neither harmony nor conflict of
interests, only the pluralist principle that each should
be articulated and a stakeholder model of business
policy,v
The related social ethic suggests an inclusive
social property right (d) instead of unbridled private
property. Where the object owned is not inanimate,
like land or technology, but is a social institution like
a firm, then a major ethical question arises. One may
not own or control people like objects (a, b) or
neglect their interests (c), without approximating
slavery. Consequently a private property right to
own and transfer firms which totally excludes stake-
holders like investors and employees from control
is morally contentious. This is why the control
structure (a, b, d) of the modern capitalist firm is
legitimized by its highly efficient "productive or-
ganization" of labour, technology, and capital; for
that efficiency increases the rewards available (c) to
those excluded. It was enhanced by the managerial
revolution.8 An inclusive interest structure then
legitimizes the neo-classical firm's exclusive control
(private property) structure.
Evaluating transfers of ownership of firms
Accordingly, an ethical approach to TOFs should
evaluate the internal interest and control structures
of the firm. This means assessing a TOF's impact on
investors, owners, managers and workers. One must
also examine the TOFs impact on the firm's pro-
fitability9 and on the market. The latter two are
independent checks on stakeholder bias and conflict.
Finally one should assess both hostile and friendly
TOFs.
I include these concerns in an 8 line model for
ethically evaluating TOFs. I apply it to two fictional,
hostile and friendly, TOFs. Each line lists the inter-
nal stakeholders: investors, owners, management,
employees. INVESTORS are shareowners, whether
outside (individuals and institutions like mutual
funds and pensions), or inside (managers and em-
ployees). Most have a relatively short term financial
interest. Investors do not normally practice the full
responsibilities of ownership (a, b). Their legal
ownership powers come into play sporadically if at
all: at shareholders meetings, and in TOF decisions;
but their concerns are often linked to ownership.
Investors are more shareowners than firm-owners, t°
OWNERS, e.g., directors on the board, in contrast
exercise the property rights of alienation and bear
responsibility for the firm's overall profitability'. The
other-excluding private property right leads to a
paternalist "ownership ethic", R. A. G. Monk holds,
which involves an altruist care for the other stake-
holders in the firm21
Here MANAGERS are senior management,
whose fulltime responsibility is the ongoing control
of the whole firm (b) and care for its internal
interests (c). They are ultimately accountable to
owners and investors under current rules. Modern
corporate management nonetheless often shares in
the transfer power (a).
Salaried EMPLOYEES today have a direct stake in
their job with the firm. It amounts, Macpherson
holds, to a property right in the means of labour and
income. The employees' stake in the firm varies with
time, work conditions, wages and mobility. In TOFs
their property right is often excluded by and/or
subordinated to investors and owners in exercising
the property rights powers, as the model will show.
Employee stock ownership plans and pension funds
however move employees closer to owners and in-
vestors.t2
The model evaluates a TOF by ranking the firm's
four stakeholder groups relative to each other in
respect of five objective stakes: financial investment
and time in the firm, mobility, general impact of the
TOF, total wealth (lines 1 to 5); and then subjective
support (6). To do this I use a 12 point scale, on
which: 1 - the lowest stake at risk for the average
member of that group, and 12 = the highest stake at
risk. (The scale does not reflect the probability of the
TOF occurring). In each case there only two choices:
accept or reject the TOF. In general one might
expect that the results would rank the stakeholders
in order of ascending risk, from investors, owners
and managers to employees.
Line (1): Financial Investment, ranks the four groups
according to the average member's financial stake in
the firm, whether embodied in stocks, income or a
 Mergers, Takeovers, and a Prope?tyEthic
job. Here I = least invested in the firm relative to
other groups and the lowest stake; 12 = most
invested in the firm and greatest stake.
Line (2): Time Committed to the firm. Here 1 = the
least time invested in the firm of all stakeholders and
therefore the lowest stake at risk; 12 = the most time
and greatest stake. Here time is not merely a passive
utility; rather it reflects Thurow's point that market
economics neglects time and Harold Innis' stress on
the control of time as a form of power. 13Time is also
an index of one's commitment to the firm.
Line (3) ranks the Mobility of each stakeholder's
capital in the firm, whether it be money, stocks,
knowledge, or labour skills. It does not reflect sub-
jective attitudes to change. 1 = the most mobile and
therefore least at risk; 12 = the least mobile and
most at risk. (3) reflects the control of economic
space; (2) of economic time.
Line (4) ranks the General Impact of the TOF on
each stakeholder group. It denotes foreseable and/or
controllable consequences of the TOF, other than
those specified here. 1 = greatest positive likely
impact on stakeholders and therefore least risk,
while 12 - most negative impact.
Line (5) Total Wealth. (5) ranks each stakeholder in
terms of their wealth, within and outside the firm.
The more wealth, the higher the score. This corrects
the scale's mild bias in favour of workers, lower
management, and small investors.
Line (6) Support~Opposition reflects the extent of
subjective support for the TOF in each group as a
whole. Here 1 = near 100% support in the group, 6
= about 50%, and 12 = 8% or less. This reflects the
democratic principle that people directly affected by
a decision should have the power to consent to it.
In order to control for stakeholder bias, self-
interest and error I include two independent mea-
sures of the TOF: its impact on the firm and the
economy. Line (7) reports whether a takeover will
help the firm's long term Profitability, i.e., its per-
formance on all relevant objectives. Here 1 - greater
profitability if the takeover occurs; 12 = lower. Line
(8) reports the TOF's Market Impact. Here 1 = a
significant increase in competitiveness in that sector,
and 12 = a marked decrease in same. (8) indirectly
represents the consumers' objective interest in main-
taining a competitive, less concentrated, market.
I apply these 8 factors to two contrasting fictional
cases: (A) Macho Munchies hostile takeover of
111
Biddle's Brass; and (B), the friendly merger of Smart-
Arswell Infomatics and Turing Technics. In each
line I note the ranking of the groups, and the
maximum/minimum gaps between groups; and then
compare the results of lines (1) to (6). The two cases
constitute a thought experiment to see whether the
model shows how the risk is fairly distributed among
stakeholders, and whether the TOF is justified.
Case A: Biddle's Brass versusMacho Munchies
Biddle's Brass is a old well-managed mid-size firm
in New England and New Brunswick. It is stable,
profitable, has a good product (brass and other
marine hardware), and loyal consumers. Its 500
employees, more than half of whom have worked
there 15 years, are satisfied and well-paid. Ownership
resides with the three Biddle siblings, Henrietta
(25%), Calvin (15%), and Jonathan (12%); 48% was
widely held by investors. The stock is undervalued.
Biddle's has become a target for takeover by Macho
Munchies, one of the top snack firms (with 20% of
the national market). Its MBA studded management
is interested in diversifying. Macho now has 10% of
Biddle's stock and hopes to get Calvin's shares,
through his enW of Henrietta (who with top man-
agement opposes Macho). This will firm up support
from small investors. Macho, already in debt, is
considering a leveraged buyout worked out by Wall
St. arbitrageurs. It hopes to increase Biddle's stock
price, clean out management 'dead wood', and close
one of the two plants. In order to pay off its resultant
debt, Macho will use Biddle's cash, upscale the
products and prices. This takeover would seem
dubious, as the table suggests.
Each line ranks the stakeholders in ascending
order of risk for each factor being measured.
The actual owners are the three Biddle's siblings,
while investors include Macho and other small
(1) Relativeinvestment
Ranking: 1st 2d 3d 4th
Stakeholder: INV. MAN. OWN, EMP.
Stake: 2 6 9 12
(Maximum Gap: INV/MAN = 4; Minimum Gap: MAN/
OWN/EMP ~ 3)
112 Vincent di Norcia

holdings. Line (1) shows that Biddle's employees (5) Total wealth
have the greatest financial stake in the firm and
investors the least. Ranking: 1st 2d 3d 4th
Stakeholder: EMP. INV. MAN. OWN.
(2) Time committed Stake: 3 6 9 12
(Constant Gap: EMP/INV/MAN/OWN = 3)
Ranking: 1st 2nd 3d 4th
Stakeholder: INV. MAN. EMP. OWN.
Stake: 1 8 10 11 (6) Support/opposition
(Maximum GAP: INV/MAN = 7; Minimum Gap: EMP/
OWN - 1) Ranking: 1st 2d 3d 4th
Stakeholder: INV. OWN. MAN. EMP.
Stake: 8 9 10 12
In (2) the widest gap is between investors and the (Maximum Gap: MAN/EMP = 2; Minimum Gap: INV/
rest, who are bunched together in a high risk ex- OWN/MAN = 1)
posure.

(3) Mobility results in the four objective factors (2 to 6) show a

vastly greater risk gap between investors and each of
Ranking: 1st 2d 3d 4th the other three groups (5.6) than one finds among
Stakeholder: INV. OWN. MAN. EMP. owners management and employees (0.5). The hos-
Stake: 1 4 9 12 tile Macho takeover places the stakes of employees,
(Maximum Gap: OWN/MAN = 5; Minimum GAP: INV/ managers, owners, and investors at risk in that order,
OWN, MAN/EMP = 3) largely as expected. Opposition to the Macho bid (6)
has ethical weight; for it is supported by economic
factors in lines (7) and (8):
In (3) however the maximum gap is between
(7) Impact of Takeover on PROFITABILITY = 10
owners and management. Here liquid capital has
(8) Impact of Takeover on MARKET = 9
greater mobility than management or employees.
The high score in (7) reflects the fact that if Biddle's
(4) General impact didn't have to repel the Macho shark its longterm
potential is solid. But repelling Macho will cost in
Ranking: 1st 2d 3d 4th money and management time. In a takeover both
Stakeholder: INV. OWN. MAN. EMP. firms' share prices might blip upwards in the short
Stake: 1 7 9 10 term, but not stay there. Finally Macho executives
(Maximum Gap: INV/OWN = 6; Minimum Gap: MAN/ uncritically project synergies from moving into an
EMP = 1) unrelated field. They downplay Macho's debt; and
they assume that rising stock and product prices, etc.,
will help them recoup their costs. But a takeover
In (4) the large investor/management gap indi- battle will cost them much in debt, internal illwill
cates that the impact of the takeover will be less and talent loss. Line (8) suggests that a less competi-
risky for investors than anyone else. In these 4 tive market will result from creating a larger Macho
objective measures the largest gap on th6 average is Munchies. Consumers are not likely to gain.
between investors and another group. Investors are In fine, the hostile MachoABiddle's takeover is
always at the least risk and employees at the greatest. ethically objectionable because it threatens stake-
The ranking of the four stakeholders in (5) shows holders in disproportion to their stake in the firm,
how wealth is weighted in favour of owners and while not promising significant economic benefits to
managers. the firm or the market. Even investors might lose in
In (6) all are opposed; but investors the least. The the short term.
 Mergers, Takeovers, and a Property Ethic 113

Case B: Smart-Arswell meets Turing (3) Mobility

Smart-Arswell Infomatics, located in eastern B.C., Ranking: 1st 2d 3d 4th

makes circuit boards. They are well-designed but Stakeholder: INV. OWN. MAN. EMP.
poorly marketed. Workmanship is shoddy and ser- Stake: 1 2 9 9
vice non-existent. S-A suffers high losses and debt. (Maximum Gap: O W N / M A N = 7; Minimum Gap: MAN,/
Its stock has slipped from $30 in 1982 to $3.00 today. EMP = O)
No investor has more than 8% of the shares, the
original owners having jumped ship long ago. Turn-
over is high among management and the low-skilled (4) General impact
workforce. They're upset with the union, which calls
for 10% wage hikes while it's pension fund invests Ranking: 1st 2d 3d 4th
in other firms. No one wants an ESOP. Only the Stakeholder: INV. OWN. EMP. MAN.
secretaries hold the place together. Salvation has Stake: 1 2 8 9
come in a merger bid from Turing Technics, a (Maximum Gap: OWN/EMP = 6; Minimum Gap: INV/
thriving California firm with a complementary OWN, EMP/MAN = 1)
product and marketing network. It has 25% of S-A
stock, and has support from most other investors. It
is not rushing S-A (they can't wait). It intends to Again, a Turing housecleaning yields the same
clean house, keep half of the staff (but most secre- split between the groups.
taries), and establish itself in the Northwest region.
Now to a line by line analysis: (5) Total wealth

(1) Relative investment

Ranking: 1st 2d 3d 4th
Stakeholder: EMP. MAN. INV. OWN.
Ranking: 1st 2d 3d 4th Stake: 2 6 8 10
Stakeholder: INV. OWN. EMP, MAN.
(Maximum Gap: EMP/MAN = 4; Minimum Gap: MAN/'
Stake: 2 4 6 8
INV/OWN = 2)
(Constant Gap: INV/OWN/EMP/MAN = 2)

Everyone, (1) says, has a relatively small invest- (5) indicates that S-A's investors, management,
ment in Smart-Arswell. Employees are even less and owners, all bunched above 6, are worth much
exposed than management. more than employees.

(2) Time committed (6) Support/opposition

Ranking 1st 2d 3d 4th Ranking: l st 2d 3d 4th

Stakeholder: INV. OWN. EMP. MAN. Stakeholder: INV. OWN. EMP. MAN,
Stake: 1 4 5 7 Stake: 1 2 7 7

(Maximum Gap: 1NV/OWN - 3; Minimum Gap: O W N / (Maximum Gap: OWN/EMP = 5; Minimum Gap: EMP/
EMP = 1) MAN = 0)

(2) shows that no group has committed much of
their time to S-A: investors the least and managers
the most.
The main gap in line (3) opposes the more liquid
capital of S-A's owners and investors (whose gap -
1), to the lower mobility of managers and employees.
In support the same split appears for the third
time; but employees and management are not utterly
opposed. Subjective choice reinforces the objective
measures. Staff are at risk, since Turing's bid means
a leaner firm; but staying with S-A is not a real
alternative.
114 Vincent di Norcia
Here the average risk gap between investors and
the others (4.1) is less than in Case A; but it is
still much greater than that between the owners,
managers and employees (1.2), by more than a factor
of three. And owners are sometimes less at risk than
investors. The S-A/Turing merger places the stakes
of investors, owners, employees and managers at risk,
in that order, but they are much more closely
bunched and less threatened by or opposed to the
TOF than in Case & Each group has less to lose and
more to gain from the Turing merger. Ethically, it is
a promising, if imperfect, move. This is confirmed in
the two economic measures.
(7) Impact of Takeover on PROFITABILITY = 1
(8) Impact of Takeover on MARKET = 2
Lines (7) and (8) show the economic wisdom of the
S-A/Turing TOF for the profitability of the firm
and its market. Indeed if S-A refused Turing's
blandishments its profitability would likely decline
sharply; nor would the market be better served.
Reforming corporate governance
Since this thought experiment evaluates the extremes,
a friendly and a hostile TOF, the results should apply
to most firm ownership transfers. They suggest the
need for greater democracy in corporate governance,
using the four corporate property powers as a guide.
The reforms should avoid the extremes of unbridled
private property and excessive state ownership. TM
(A) Ownership Transfers: Since businesses are so-
cial institutions, they may not be treated as physical
property. Furthermore, the ownership power (a)
differs from investing (c), although the two are
commonly associated. In the traditional ownership
ethic of corporate governance owners have wide
responsibilities for the firm as a whole; but this
implies an outmoded paternal altruism in which
owners care for the interests of unrepresented parties,
like employees. In contrast a modern property ethic,
as Henry Mintzberg suggests, should be pluralistic
and recognize the firm's internal stakeholders. It
should also, I feel, solicit their support to any TOF.
Directors should be elected by all constituencies: by
management and employees as well as investors. All
candidates should declare their interests and propose
policies prior to election. Directors and constituen-
cies should each hold shares in the firm/s
Hostile takeovers can transmute the free contract
on which property rests (a) into a coercive battle.
This may inhibit full deliberation. Owners have the
right to sufficient time to properly consider offers to
purchase the firm. This may require delaying a final
TOF decision, say, for 120 days, as j. D. Richman
suggests. This gives all constituencies some time to
communicate and study relevant information, and
better debate their options. 16 This approach is
weighted against TOFs and corporate concentration;
right.
(]3) Controlling the Firm: Ongoing control of the
modern firm (b) is management's primary respon-
sibility. The growth and market dominance of the
large modern corporation rest largely on managerial
control, iv TOFs can redistribute business skills and
corporate resources, improve management, competi-
tiveness, and stock market performance. Successful
TOFs however appear to rest on careful planning,
scrutiny of acquisition offers, minimizing debt, stay-
ing in related industries, and linking complementary
management and cultures/8
To use share prices as criteria of the worth of
firms in a TOF, as Jensen does, assumes what is at
issue: namely, whether share prices do reflect a firm's
performance in its product market. However Saul
claims that one should not "confuse transient stock
market prices with long-term values", like profita-
bility and productive enterpreneurialism. Share price
rises in takeovers moreover are commonly tainted by
insider information, as the recent Boesky/Levine
scandals show. 19
In addifon hostile takeovers may set owners/
investors and managers unnecessarily at odds, make
managers risk-averse, reinforce political battles in
the firm, drain managerial talent and divert energy
from more important matters. Union Carbide, for
example, had to abandon needed diversification into
consumer products to fend off a hostile takeover.
TOFs should not be ill-thought out, hasty and
costly, as are many of those which fail. And one half
to two thirds do fail. Sometimes takeovers break up
large firms; but to sell assets to pay offTOF-incurred
debts begs the question. Where TOFs are manage-
ment-driven they can however reinforce managerial
control. Friendly mergers may increase already ex-
cessive corporate concentration and market power.
Recently however there has been a move away from
conglomerates and back to the basics. 2°
 Mergers, Takeovers, and a PropertyEthic
Where TOFs are likely to succeed, they should be
encouraged but only as a last resort. Where failure is
likely they should be discouraged. To rely on TOFs,
and especially hostile takeovers, to make firms more
competitive is to use a missile where a revolver (or
carrot) might do. To oppose mergers and takeovers
does not entail support for complacent, self-serving,
or bureaucratic management. Japanese firms have
fewer management layers, I note, yet they are neither
governed by investors nor threatened by raiders. 21
TOFs too must be well-managed; but modern man-
agement is a social affair. TOF decisions then should
recognize the firm's responsibility to all its consti-
tuencies, not just to investors. The present approach
moreover is pluralist. It favours neither owner,
investor, managerial, nor employee primacy.
(C) Securing Interests: TOFs, hostile and friendly
can restrict one's focus to the short term financial
interest (c). Takeovers usually improve share prices
for both firms and serve investors' short term inter-
ests. But in cases A and B the interests of the four
constituencies do not coincide. The investors' stake
was usually lower than that of owners, management
and much less than employees. Even if takeovers do
not increase the likelihood of plant closures and
layoffs, as Jensen claims, the employees' stake in
TOFs still remains higher than investors. And where
TOFs increase corporate size and market power they
do not appear to serve the consumer interest. 22 In
fine, the intereststructure of tkefirm appears to be ethically
unjustified and in need of reform.
(D) An Inclusive Property Right: Not only is share-
holder democracy more rhetoric than reality, it
would not extend the control and transfer powers (a,
b) to constituencies now excluded from exercising
them. Indeed Jensen expressly denies that other
stakeholders' interests are equal to investors in claims
to control the firm; for they most efficiently bear the
"residual risk" in the firm, which is thereby shifted
from the other stakeholders. 23
However in both cases all four constituencies bore
the TOF risk, but the average investor invested less
of his life and wealth in the firm than did the others.
The cases suggest that other stakeholders cannot
avoid that risk, and are even more exposed. Yet
investors and owners can exclude employees, and
management to some degree, from TOF decisions.
Decision power is not distributed in proportion to
stakeholder risk. Rather, the risk falls mostly on
115
employees, somewhat on managers, less on owners,
and least on investors. Why should investors be able
to keep the buck and pass the residual risk? Why
should employees pay for investor, owner or man-
agement errors? Perhaps we should treat investors
mostly as bankers, as the Japanese do. On Jensen's
own logic therefore the powers of corporate govern-.
ance must be redistributed along fairer, more demo-
cratic and modern lines.
The era of an unbridled private property rights is
well and gone. No modern social ethic can tolerate
major internal stakeholders being excluded from
some share in corporate decisions which significantly
affect them. Certainly the constituencies who bear
the risk in the firm should share in controlling it. 24
(E) The Economic Rationale: The ultimate ethical
rationale for the traditionally exclusive private prop-
erty right in the firm is economic growth, which is
said to 'trickle down' to those excluded from owner-
ship and control, eg, through wages. 2s In the case
of TOFs however that rationale is controversial.
For instance takeovers and mergers are said to
excessively increase corporate debt. They may have
contributed, as Reich suggests, to "paper entrepre-
neurialism" in contrast to more productive uses of
capital. Business Week is justifiably concerned about
America's "Casino Society" economy, where debt
and risk do not rest on a solid capital and enterprise
base. j. D. Paulus however argues that American
corporate debt in relation to market values is lower
than German and Japanese debt26
However the Canadian, U.S., and British eco-
nomies, where investor rights are strong and the
traditional private property right less diluted by
employee power, are less productive than other
OECD nations. 27 The classic economic rationale for
investor primacy and private property is in question.
Modernization in the new global economy, I suggest;
goes beyond technology and finance to the heart of
corporate governance. The not unsuccessful Japanese
have a more internally open firm, less beholden to
investors and less layered with management levels.
More inclusive corporate interest and control
structures would not only be fairer, they also pro-
raise better feedback and control, especially in im-
plementing hard decisions. They may also bring
greater productivity.28 Both ethics and economics
demand their development.
116 Vincent di Norcia
Notes
1 'Hostile Takeovers', Harvard Business Review [HBR] (63:5;
Sepc-Occ 1985), 20; cf. J. C. Fogg III, 'Takeovers: Last
Chance for Restraint', HBR (63:6; Nov.-Dec. 1985), 30--40.
Also see the Boone Pickens and Warren Law essays in HBR
(64:3; May-,1une, 1986), 75--83.
2 'The Raiders', Business Week, [BW] (4 Mar., 1985); 'Do
Mergers Really Work', BW (3 June, 1985); Jensen, M. C.,
'Takeovers: Folklore and Science', I-IBR (Vol. 62, no. 6; Nov.-
Dec. 1984), 111.
3 See P. Werhane's essay in this issue; Donaldson, T.,
Corporations and Morality (Prentice Hall, Englewood Cliffs:
1982), 32f, ch. 3.
Macpherson, C. B., Democratic Theory. Essays in Retrieval
(Oxford, New York: 1973), ch. I, III, V, VI; and The Life and
Times of Liberal Democracy (Oxford, New York: 1977).
J. D. Richman, 'Merger Decision-Making: An Ethical
Analysis and Recommendation', California Management Re-
view (XXVII:I; Fall, 1984), 177--84; M. Pastin, The Hard
Problems of Management (Jossey-Bass, San Francisco: 1986), ch.
3; also see,1.Danly's essay in this issue.
6 Donaldson, 52f; O'Toole, ch. 13; Pastin, 61f~, A. Gutman,
Liberal Equality (Cambridge UP, Cambridge: 1980), chs. 3-7.
7 Ansoff, I., Corporate Strategy (Penguin, Harmon&worth:
1973), 39, 59-65; and Implementing Strategic Change (Prentice
Hall, Englewood Cliffs: 1984) 2.5, 5.3;1. O'Toole, Vanguard
Management (Doubleday, New York: 1985), part 2.
8 Donaldson, 2f, 43ff; L. Thurow, The Zero-Sum Society
(Penguin, Harmondswoth: 1983), 181t; O'Toole, ch. 6; cf.
Dyke, C., The Philosophy of Economics (Prentice Hall, Engle-
wood Cliffs: 1981), ch. 6.
9 In the widest sense, see Ansoff, 1973, chs. 3, 4; O'Toole,
ch. 5; Pastin, ch. 11.
10 See W. Irvine's essay in this issue; and Bhimberg, P. The
Megacorporation in American Society (Prentice Hall, Englewood
Cliffs: 1975), chs. 1, 6.
II Monk, R. A. G., 'The New Shareholder', Barron's, 4 Nov.,
1985; Fogg, op. cir.; Henry Knowles, former Chairman,
Ontario Securities Commission, 'Corporate Governance and
Canadian Capital Markets', a talk given on Nov. 22, 1985.
~2 Macpherson, 1973, 125f, 13If;Monk, 0p. cit.; O'Toole;ch.
4.
~3 Thurow, L., Dangerous Currents (Vintage, New York:
1984), llff, Innis, H. A., Empire and Communication (U. of
Toronto Press, Toronto: 1972), ch. 1; and Pastin, ch. 5.
~4 Mintzberg, H., 'Who Should Control the Corporation?',
California ManagementReview (XXVII: 1; Fall, 1984), 90-115.
is See Knowles, H., 'Table Manners, Social Graces, Morality
and Corporate Governance', talk given on 19 March, 1986;
Mintzberg, 94f.
16 Richman, 182f.
17 See A. Chandler, The Visible Hand (Harvard UP, Cam-
bridge, Mass: 1977); Reich, R. The Next American Frontier
(Times, New York: 1983), part II; Bhimberg, chs. 5, 7.
~8 BW, 4 March and 3June, 1985.
19 Saul, 20, 18~ 'Insider Trading', BW 29 April, 1985;
O'Toole, 20, 148f, 156f.
20 BW 16 Sept, 1985, (on Union Carbide); also see BW 4
March, 3 June, and 'Splitting Up, the Other Side of Merger
Mania', 1 July, 1985; Fogg, 30t~Jensen, 114~ for critiques see
'Letters', HBR (Vol 63, no. 1; Jan-Feb. 1985), 172-78 and
(64:8; Sep.-Occ, 198@ 144-50.
a See Athos, A. and Pascale R., The Art ofJapanese Manage-
ment (Warner, New York: 1981); Ouchi W., TheoryZ (Avon,
New York: 1982), part I.
22 Jensen, 114; Blumberg, ch. 3, 4; Bannock, G., The
Juggernauts: The Age of the Big Corporation (Penguin, Har-
mondsworth: 1973).
23 See Irvine's paper in this issue; andJensen, 110.
24 K. Ohmae, The Mind of the Strategist (Penguin, Harmond-
sworth: 1982), 219£ Fogg, 38~, Mintzberg, 106f.
2s Bowles, S., Gordon, D., and Weisskopf, T., Beyond the
Wasteland: A Democratic Alternative to Economic Decline
(Doubleday, New York: 1983), 2f, 14f, 216f.
26 Reich, ch. VIII; BW 16 Sept., 1985; J. D. Paulus, 'Cor-
porate Restructuring, '[Junk" and Leverage: Too Much or
Too Little?', presented 27 Feb., 1986 at the American
Bankers Assoc. Conference on Corporate Restructuring
Financing. (My thanks to Gordon Sharwood of Sharwood
Bank, Toronto, for material on this conference and his
critical comments.)
27 See Reich, chs. 1, 2; Thurow, ch. 8; BW, 17 Feb., 1986.
28 See Bowles et al., ch. 6, 7, part III; O'Toole, ch. 7; Reich,
part IV; D. V. Nightingale, Workplace Democracy (Univ. of
Toronto Press, Toronto: 1982); Mintzberg, 94f.
Department of Philosophy,
University of Sudbury,
Sudbury, Ontario,
Canada P3E 2C6