Three rival versions of human nature

By Simon Longstaff

A version of this article was first published: Business Ethics, vol 5, no 2 - April 1996

Introduction

Like most things in life, issues arising in the field of corporate governance boil down to a set of questions about relationships. For all the current debate about whether 'corporate governance' refers solely to matters affecting the structure and composition of boards of directors or a broader range of issues relating to the framework within which corporate policy is made and articulated, there is no escaping the fact that we are discussing a series of arrangements contrived by and for human beings.

When it comes to the nature, form and functions of a corporation; nothing is given. Everything is a matter of choice. All is open to criticism and justification. As such, there is a critical ethical dimension to the debate - which, inevitably, forces us to consider the nature, quality and extent of the underlying relationships on which the corporation is founded.

Indeed, this is in line with the definition of corporate governance offered by Monks and Minow (1995, p. 1). In answering the question, “what is corporate governance?” they reply, “It is the relationship among various participants in determining the direction and performance of corporations”.

Monks and Minow identify the key participants as being: shareholders, management and the board of directors. This identification obviously invites a response from those who hold that other key 'stakeholders' ought to be included in the discussion of corporate governance. Obvious contenders include employees, creditors and the community - especially as the latter manifests itself in the form of government. This is not a debate that I propose to address, except incidentally, in the context of this paper.

Rather, I want to focus on the reality of corporations as aggregates of people. True, the corporation enjoys the status of person as a legal fiction. But behind this fiction is a reality constituted entirely by the actions and interactions of people: people interacting with other people; people interacting with the products of technology; people interacting with systems and people interacting with the full variety of the natural world.

This may seem to be a fairly obvious point to labour. However, most of the discussion about corporate governance seems to ignore the implications of this simple observation. Specifically, advocates of various regimes for corporate governance are silent about an absolutely fundamental question; namely, “What (if anything) is the basic nature of humanity?”

In seeking to address this question, I want to put forward three alternative perspectives for consideration. I then intend to explore some of the implications, for corporate governance, flowing from their adoption.

For the sake of convenience, I have named these perspectives after three 'students' of human nature: Machiavelli, Robespierre and Rousseau. I do not propose to offer a detailed exegesis of each writer's ideas about psychology and the human condition. Instead, my approach will be 'emblematic' - identifying ideas at the heart of the positions to be examined.

Thus, the names; Machiavelli, Robespierre and Rousseau might best be thought of as representing general tendencies, rather than specific positions defined exclusively by their work.

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Machiavelli

If there is a central observation lying behind Machiavelli's prescriptions in The Prince, it is this:

One can make this generalisation about men (sic): they are ungrateful, fickle, liars, and deceivers, they shun danger and are greedy for profit; while you treat them well, they are yours. They would shed their blood for you, risk their property, their lives, their children, so long, as I said above, as danger is remote; but when you are in danger they turn against you ... Men worry less about doing an injury to one who makes himself loved than to one who makes himself feared. The bond of love is one which men, wretched creatures that they are, break when it is their advantage to do so; but fear is strengthened by a dread of punishment which is always effective.

(Machiavelli, 1981, pp. 96 & 97)

The position articulated by Machiavelli really speaks for itself. His poor opinion of humankind could not be more clearly expressed, and it is this which gives rise to his famous view that it is better to be feared than loved - as long as one is not, in turn, hated.

Machiavelli concludes that human nature is such that the Prince is compelled to act like a beast - learning from both the fox and the lion. In most cases, the ends justify the means and this allows for the effect of fear to be complemented by acts of treachery and deceit. Machiavelli observes that:

... contemporary experience shows that princes who have achieved great things have been those who have given their word lightly, who have known how to trick men with their cunning, and who, in the end, have overcome those abiding by honest principles.

(Machiavelli, ibid)

Now, it must be noted that Machiavelli has a lot more to say than that represented in these two quotations. Other parts of The Prince offer a kind of justification for ruthlessness. The astute reader is also invited to consider the extent to which Machiavelli is lacing his prose with irony. Even so, it's difficult to avoid the conclusion that it is a particularly dark view of human nature offered by Machiavelli in The Prince.

The implications for corporate governance are fairly obvious. If we accept Machiavelli's view of the world (and there is plenty of evidence that many do!), then the 'natural' response will be to establish corporate governance structures and procedures that are designed to constrain and punish the venal instincts of those affected. One will cause those lower in the hierarchy to be enthralled by the prospect of unpleasant consequences befalling those whose behaviour trespasses beyond the bounds of acceptable behaviour.

This kind of approach can be manifested at various levels. For example, governments have not infrequently concluded (in practice, if not in theory) that the application (or threat) of the stick is to be preferred to the carrot. Heavy regulation, by way of black letter law, is evidence of a point of view resistant to the argument that individuals and institutions can be trusted to do what is right.

Likewise, some corporations adopt an internal stance that relies on the application of fear, force and subterfuge. Lest this seem improbable, let me mention just one example that I have observed. It relates specifically to the evolving relationship between the board and management of a company that I have watched over some time.

At the time of my first contact, it would be fair to say that there was considerable tension in the relationship between the board and management. This was manifested by management's habit of disguising 'unpleasant' facts and through the practice of delivering matters to the board for decision when they were already a fait accompli. In one case, a policy was publicly announced before the board had even considered it.

I understand that the board responded by tightening the screws on management. This was done by enforcing its right to insist on very specific levels of reporting and by adopting an adversarial style of relationship. The Board knew that it ultimately exercised power and authority. It made sure that management knew this too. Fear, force and subterfuge were employed in conditions where levels of trust and mutual respect had eroded to very low levels. I believe that things have improved considerably over the last year or so.

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Robespierre

Robespierre saw revolutionary France gripped by The Terror. Tumbrels, carrying the hapless victims of the revolution, rolled throughout France - each arriving at its own 'Place de la Revolution'. In Paris, 'Madame Guillotine' lopped off the heads of hundreds - an ideal display combining efficiency and spectacle. In time, even the Paris crowds of sans-culottes became disgusted by the excesses.

While the revolutionary guillotine had been originally deployed as a means of removing the heads of those thought to be a danger to the nascent republic, under Robespierre's control the blade was applied for an even loftier purpose. Robespierre's objective was to fashion a Republic of Virtue. In order to do this he would need to cut the cloth of France according to a very exacting pattern and, in the process, excise all blemishes.

I ascribe to Robespierre what might be called the 'rotten apple' view of human nature. According to this perspective, most people are good (or at least harmless). However, there are some who are unwilling or unable to be reformed. Society will only be perfected if such people are eliminated. For the rest, a sufficiently rigorous scheme of checks and balances, complemented by a comprehensive system of surveillance, will ensure the habits of compliance.

When compared to Machiavelli, the 'Robespierre' perspective is relatively enlightened in its view of the basic human constitution. At least it allows the possibility of virtue in some cases. On the other hand, it is uncompromising in its response to irremediable ‘vice’. The finality of the guillotine allows neither appeal or the possibility of reform.

Those who see the world in these terms develop systems of corporate governance that are similar to that produced under a 'Machiavellian' regime. In the broader arena, government will rely on the force of penalties to maintain and buttress standards of acceptable behaviour. Transgressions will be punished. John Braithwaite (1984) has even contemplated a form of 'capital punishment' that might be meted out to recalcitrant corporations whose shareholders refuse to 'discipline' their boards. One way or another, government will try to force people to be good!

We must, however, be wary of thinking that governments can force us to be good - any more than that they can force us to be free! Robespierre was not some wild-eyed fanatic. He really believed that a system of controls could lead people to be good. And in the France of those days, everything was controlled - prices, wages, movement, even places of worship (with Notre Dame turned over to the new civic deity, the Goddess of Reason).

Those looking for an analogy in the 'internal' world of corporate governance might turn to examples of boards dominated by a strong executive chairman whose primary response to dissent is to lop of the heads of dissident directors and/or managers. One of the characteristics of a 'Robespierrist' framework is that the person in charge retains a nominal right to define what might be considered 'virtuous' behaviour. In these circumstances, the definition of what constitutes a 'rotten apple' amounts to nothing more than he or she who displeases the chairman.

One further consequence of this approach is a weakening of the conditions under which best practice and innovation might flourish. The 'Robespierrist' will only accept advice from the virtuous (who, in the end, are the only survivors). Given that the only ones to survive are those made in the image of Robespierre, there is little room for the kind of fresh approach that might be liberated by a dissident.

In his turn, Robespierre was sent to the guillotine. As he mounted the scaffold, I wonder if he realised the utter futility of his project? Too much regulation and surveillance destroys the one thing that people need if they are to be truly virtuous; that is, a sense of personal responsibility. It is because of this that we should be wary of any group or individual claiming to have all the answers and a system to make us good.

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Rousseau

Rousseau presents us with a complex picture. While accepting that people may not be all that good he rejects, utterly, the Machiavellian depiction. Although somewhat unfair to Hobbes, the following quotation makes the point:

Above all, let us not conclude with Hobbes that man (sic) is naturally evil just because he has no idea of goodness, that he is vicious for want of any knowledge of virtue, that he always refuses to do his fellow-men services which he does not believe he owes them, or that on the strength of the right he reasonably claims to things he needs, he foolishly imagines himself to be the sole proprietor of the whole universe.

(Rousseau, 1984, p. 98)

What makes the picture complex is that Rousseau says, in his notes to the Origins of Inequality:

Men are wicked; melancholy and constant proof removes any need for proof. Yet man is naturally good; I believe I have demonstrated it.

(Rousseau, ibid, p.147)

It is a curious confection that we are offered. Yet, for all that we can see a striking difference to the position adopted by Machiavelli.

Rousseau believes in the inherent goodness of people. His problem is that human society has evolved in a manner that has buried this goodness under a cover of selfish behaviour. Like Machiavelli, Rousseau has a set of solutions for resolving the problem. Many will find his economic prescriptions unpalatable as he traces the origins of inequality to the institution of private property. However, his more general prescriptions are of more immediate interest.

Machiavelli sought to meet the human condition by the intervention of a prince able to use fear, force and deceit and Robespierre sought to excise or control the vicious. Rousseau offers this alternative; those unable to return to a sublimely innocent natural state will endeavour:

... by the exercise of virtues which they commit themselves to practise while learning to understand them, to deserve the eternal prize that they ought to expect for them; they will respect the sacred bonds of the societies of which they are members; they will love their fellow-men and serve them with all their strength; they will scrupulously obey the laws and the men who are the authors and the ministers of the laws; they will honour above all the good and wise princes who know how to prevent, cure and relieve that mass of abuses and evils which are always ready to overwhelm us; they will animate the zeal of those worthy rulers, in showing them without fear or flattery the greatness of their task and the rigour of their duty ...

(Rousseau, ibid, p.153, my emphasis)

Rousseau recognises that, for the vast majority of humanity, it will be near impossible to recover the condition of innocence that existed prior to the 'fall' from a state of nature. However, he does offer an alternative response that echoes the traditions of Aristotle and Aquinas. That is, he advocates that people “exercise ...virtues which they commit themselves to practise while learning to understand them”.

Rousseau's recommendation is based on his belief that people can take positive steps to orient their practice in line with their underlying goodness. The inculcation of virtue requires people to accept personal responsibility for their lives and places a premium on self-discipline and exemplary behaviour. Most importantly, people are enjoined to move beyond mere imitation of virtuous behaviour and through practise, come to understand dispositions that they eventually make their own.

This paper is not the place to offer a comprehensive account of the means by which virtuous behaviour can be encouraged and developed. Suffice it to say that the development of virtuous individuals and organisations is only possible in an environment in which people are consciously reflective about the status of shared practices that define their daily activity. In this context, the two great enemies of progress are firstly, a lack of integrity through which people (or organisations) say one thing and do another and secondly, a lack of thought in which people do things “just because that's the way we do things around here”.

Rousseau offers a radical alternative in the area of corporate governance. Rather than using the primarily negative responses that flow from Machiavelli and Robespierre, Rousseau offers a multi-faceted approach that combines education about 'best practice' with an opportunity to take responsibility for one's deeds.

To talk of education (as opposed to indoctrination) is to allow room for consideration of the interests of those being educated. Thus, in this environment, there will be a legitimate expectation that adherence to best practice in corporate governance will be of benefit to each of the parties bound into the relevant relationships.

These benefits may be of two types. Some will be 'intrinsic' benefits - such as when things are done for their own sake. These might include reforms in relations between stakeholders based on respect for the inherent dignity of persons. For example, board functions designed to ensure that accounts are 'true and fair' (compelling concepts despite their official demise), would just as likely be based on a belief that lying and deceit are an affront to the dignity of persons, as a desire to ensure technical accuracy as a way of securing market approval or avoiding punishment.

Then there are 'extrinsic' benefits - goods that flow from an action and which are external to the deed. For example, returning a lost wallet in order to secure a financial reward is to act in order to receive an extrinsic benefit. As indicated above, a decision to determine the quality of annual accounts according to the likelihood of earning praise from the market or regulator would be to act in the expectation of extrinsic benefits.

It should be noted, in passing, that unlike 'intrinsic' benefits (which are entirely positive) 'extrinsic' benefits can be in both a 'positive' and 'negative' form. By 'positive' extrinsic benefits I mean those that produce some good that would otherwise have been absent. By 'negative' extrinsic benefits I mean those which involve escaping some adverse outcome that might otherwise have occurred.

As in the case of the views attributed to Machiavelli and Robespierre, those of Rousseau have their practical application in the field of corporate governance. Fear of punishment or an over-reliance on control mechanisms are replaced with a fair degree of self-regulation as the preferred basis for ensuring sound practice in the field of corporate governance.

The reason for this is simple. Virtuous dispositions can only be developed through practice. Similarly, a sense of personal responsibility only develops in an environment where choice is a genuine option. In circumstances where all or most matters are decided in advance by the legislature, or regulators, individual directors and boards are (somewhat paradoxically) relieved of their sense of responsibility. One hears comments like: “Why bother worrying about X. It's up to the government to decide. If they haven't said that it is wrong; if it is legal - then it must be okay”.

In such circumstances, all manner of wrongs can be committed by otherwise decent people who have suspended their judgement in deference to the authorities.

At the 'micro' level, Rousseau suggests that good corporate governance will be fostered by the adoption of 'inclusive' procedures designed to bring all the relevant parties into the process. For example, if compliance is an issue, say, for a Board's Due Diligence Committee, then it might achieve best practice by encouraging management to focus on developing a culture (or ethos) that is supportive of compliant behaviour. That is, the Board will adopt policies that reward compliant behaviour and not just punish the errant.

This approach takes on even greater significance when attention is directed away from issues of compliance and towards the challenge of performance. In a significant passage from Strictly Boardroom, Hilmer writes:

The board's key role is to ensure that corporate management is continuously and effectively striving for above-average performance, taking account of risk. This is not to deny the board's additional role with respect to shareholder protection.

(Hilmer, 1993, p. 33)

If Hilmer is right in his recommendation, then it is clear that boards must do everything in their power to establish a framework of policies within which performance can be maximised, taking account of risk. Given recent developments in the theory of organisational behaviour (see McGregor, 1983; Karpin, 1995), there are good reasons for holding that people perform best when managed according to a paradigm which, like Rousseau's, assumes the predominance of positive aspects in human nature.

A responsible board should take full account of this sort of information and ensure that it informs its deliberations when approving policy. Not to do so, would be to court the charge of insincerity in the pursuit of improved performance.

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A practical proposal

What are we to make of this discussion? As a first point, it should be noted that it is extremely unlikely that any explicit view of human nature is informing the process of developing policies that provide the framework within which corporate governance occurs. Secondly, it is my hunch that few people would openly endorse either the 'Machiavellian' or 'Robespierrist' perspectives as representing a true view of the human condition.

Yet, a brief survey of the existing legislative, regulatory and common law framework for corporate governance would suggest that the underlying perspective is, indeed, roughly 'Machiavellian' or 'Robespierrist' in character! For example, hardly a year passes without significant increases in the risk and level of punishment that might be meted out to company directors.

One need only look to the proposed consumer protection laws outlined in the Justice Statement announced by the Australian Prime Minister in May, 1995. Fines are to be increased substantially and adverse publicity orders will be added to the list of possible sanctions. In addition to this the powers of the Trades Practices Commission to launch representative law suits will be enhanced by the provision of the required funding. Such a response, largely welcomed by consumer groups, is a classic example of a response which is designed to jolt directors into fulfilling their obligations to stakeholders - in this case, consumers.

Such measures are extraordinarily effective in concentrating the minds of directors. For example, similar measures previously announced in relation to life insurance products. In this case, the prospect of personal liability (both civil and criminal) has encouraged a vigorous response in the board-rooms of life offices.

I do not wish to suggest that these measures are unwarranted. Consumers are certainly entitled to receive full disclosure of all information relevant to their making an informed decision. And no-one would wish to endorse misleading or deceptive conduct. Both as a matter of ethics and 'economic hygiene' - a term borrowed from Alan Fels - consumer protection is to be applauded.

However, what signals do such measures send - especially when they are the primary method for ensuring that commercial practice accords with community standards as expressed through the legislature? Is it too far-fetched to suggest that much of the compliance related activity, now taking place, is driven by nothing more than a fear of the consequences should due diligence not prevail?

If fear is the driver, then this general orientation will frequently be communicated throughout a company. In my experience, it is not uncommon to hear personnel labelling new initiatives in the field of ethics as a cynical exercise “to protect the backs of directors”.

Such a view persists - even in circumstances where the initiative has been launched with the best and most positive of intentions. Cynicism of this kind can be found in both the private and the public sectors. For example in the New South Wales public sector, compliance related programmes are frequently perceived to be all about avoiding trouble with the ICAC. The point is this; even enlightened management decisions are currently being tainted by suspicion that they are motivated by nothing more than an attempt to escape punishment by the regulators or courts.

Turning around such perceptions is a major challenge, not just for companies but also for the whole community. We cannot afford to have developments, designed to foster best practice, being labelled in predominantly negative terms.

This is no more so than in the field of ethics. The grounds for serious concern already lie in the frequency with which the topic of ‘ethics’ is linked to programmes of fraud prevention and control. While it is true that a healthy, ethical culture will reduce the incidence of fraud and also lower the costs of compliance, it is a grave error to think that this necessitates the type of specific link that is currently in vogue in all too many organisations.

A proper concern about ethics is of importance for far more pressing reasons. Not least of these is the fact that a decision to include the ethical dimension, as an explicit element in the daily management environment, is a commitment to ensure that the organisation is equipped to handle new issues arising in a rapidly changing world.

Challenges arise with the advent of new technology, just as they do as a direct by-product of Australia's increasing engagement with people and organisations in the Asian region. Organisations wishing to embrace change in a positive manner need to be made capable of spotting and dealing with new issues and conflicts of value and perspective.

Having said this, it is important to realise that many companies still view programmes designed to reinforce the processes of corporate governance as an expensive imposition. Bearing this in mind, I would like to propose that Government consider ways in which it can introduce incentives designed to foster and, in some cases, reward real and sensible efforts to implement best practice. That is, I wish to propose that Government offer a carrot in addition to the stick.

How might this be done? One suggestion is to amend the Corporations Law so that courts can take into account the extent to which corporations have instituted best practice in corporate governance (in its broad construction) when sentencing those that have been found guilty of an offence.

That is, I am proposing a modified version of the Federal Sentencing Guidelines which apply in the United States of America. Under that scheme, corporations are encouraged to implement compliance schemes, and have them independently audited, with the understanding that courts are required to discount penalties by up to 90%. Under this regime, a company that does nothing about compliance is liable, say, to a minimum fine of $1,000,000. A company that has done all that it can reasonably be required to do would be liable for a maximum fine of $100,000.

Companies are still held accountable for their actions. However, the State recognises that even, with the best intentions, things can go wrong. In these cases due weight is given to the effort made by the corporation. As such, the community sees the responsibility is properly apportioned, while shareholders and other stakeholders with a financial interest in the company, are 'rewarded' for their efforts aimed at preventing wrong-doing.

Under such a scheme, bodies like the ASC, ISC and TPC would still be responsible for monitoring and investigating breaches of the regulations and would continue to recommend prosecutions. Self-regulatory organisations would then be responsible for providing support services to companies inclined to engage in best practice in this area. The final leg of the tripod would be the auditing firms which would be required to conduct independent audits of each company's framework for compliance. Unlike normal financial or risk audit, the necessary audit would have to take into account measures designed to strengthen the ethical culture of the organisation.

It should be stressed that participation in these arrangements would be entirely voluntary. Companies feeling sufficiently confident about the efficacy of their own programmes could choose not to be audited. This would generate a svaing in expenditure but at the price of taking on extra risk if something should go wrong.

While not wishing to propose a wholesale adoption of the American arrangement, I do want to suggest that we start to explore ways in which the general principle, underlying this proposal, might be imported into the Australian context.

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Resolving a potential inconsistency

Those blessed with a sharp eye for an apparent contradiction may be ready to pounce on this latest turn in my argument.

It could be objected that a legislative response, such as that proposed above, would reinforce a tendency for organisations to shape their behaviour in response to external stimuli. After all, is there much difference between engaging in compliant behaviour through fear of punishment and the alternative, of engaging in positive behaviour in hope of a reduced punishment - if something should go wrong?

At first glance, this objection would seem to be quite devastating for anyone trying to adopt Rousseau's perspective. However, the force of the objection can be nullified by being clear about that which is to be specified as best practice in corporate governance.

If the legislature were minded to do so, it could require companies to engage in practices that were specifically designed to foster the kind of virtuous behaviour that Rousseau contemplates as an antidote for the fallen condition of humankind.

That is, sentencing guidelines might be designed so as to reward companies that engage in “the exercise of virtues which they commit themselves to practise while learning to understand them” (Rousseau, opcit). Although the programme of activities emanating from the board might, in the first instance, be motivated by fear of punishment (or in hope of reward), their effect would be to transform the organisation into one that performed to the highest levels because its personnel had genuinely come to understand the virtues necessary to such success.

Let me be clear, I am proposing a legislative solution that is specifically designed to encourage a form of education such that companies will naturally come to avoid some or all of the excessive behaviour that occurs in lightly regulated markets when largely populated by selfish egoists. Should the government consider adopting such a recommendation, it would be combining a concern for the ethics of the market place with that of promoting economic hygiene. As in public health campaigns, prevention would be better than cure.

Needless to say, a great number of practical souls will be wondering about the detail of a programme designed to deliver the kind of results that I envisage. Those of a more sceptical bent may even doubt that such a programme can be devised.

The Ethicscan process, developed by St James Ethics Centre is one such approach. It not only generates a base-line study but also assists organisations in the development and implementation of strategies designed to foster an inherently ethical culture - a culture which builds successful performance on a foundation of consistently applied values. As such, the Centre's approach is based on a belief that Rousseau and his ilk are closer to the mark than Machiavelli and his followers.

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Conclusion

I want to conclude by stressing the need for a practical response to the issues outlined above. In the context of this paper, this means drawing attention to some specific aspects of the corporate governance equation. For example, the preceding discussion begins to throw a somewhat different light on issues such as; the need for non-executive directors, the role of audit committees and so on. Some see initiatives in corporate governance as nothing more than a fashionable response to the problems of the past.

However, if the general welfare of stakeholders is dependent on the company adopting best practice in corporate governance (as more broadly construed), then it is essential that boards set an adequate example and establish institutional structures that support the desired outcome.

Non-executive directors make sense in such an environment. Above all else, they bring a disinterested perspective to the board table. Furthermore, the extent of their own personal liability ensures a diligent gaze. In the same way, audit and due diligence committees should act as a kind of internal 'circuit-breaker". In short, a properly constituted board will have a majority of non-executive directors who view the actions of the company with what might be called a 'diligent and disinterested gaze".

This is not to suggest that boards should be divided into opposing camps with executives on one side and the non-executives occupying the other. Non-executives are not there to check up on management. Rather, their role is to assist management by helping to clear a space that allows the wood to be seen for the trees.

A diligent and disinterested gaze is also important when trying to balance the interests of stakeholders. Some argue that the problem should be dismissed in favour of concentrating solely on the claims of shareholders. However, to do so is remarkably short-sighted. As Sir John Dunlop once observed:

I put it to you that the directors are responsible to the shareholders for profit in perpetuity; and that this general expression of a principle permits, indeed requires, directors to pay full regard to their employees, to labour relations generally, to the community, to the country, in all their decisions for and on behalf of shareholders.

(Dunlop, 1987, p 7, my italic)

If Dunlop is correct, then there is no likelihood that directors will avoid, indefinitely, the difficult task of seeking a balanced position. A well-informed board of directors can better achieve a balance that can be justified in public.

Most of the points outlined above relate to prudential reasons for encouraging best practice in corporate governance. There are also ethical reasons which bring us back to the central theme of this paper. Corporate governance is about setting a framework within which extraordinarily complex relationships unfold on a daily basis. As previously noted, business is a human institution. Whether human nature is set in stone or not is open to debate. My own view is that the good within people can be liberated within supportive social environments. If we want a better world, then it is incumbent on directors to exercise positive influence over those parts of society which they control.

There is a profoundly moral aspect to corporate governance. Not only does a board have to decide the broad parameters within which a company will operate, it also has to decide how the company will be. That is, the board has a vital role to play when helping the organisation to answer the questions, “Who are we? What do we stand for?”

It should be noted that many philosophers deny that there is anything such as innate 'human nature". Rather, the person is considered to be 'constructed' within a social environment dominated by relationships of power. Indeed, the infinitely plastic 'person' does not exist in any independent sense. This, of course, raises problems to do with the identity of the self. For example, what is the 'matrix' onto which the construction is applied. I hope that I will be forgiven for not trying to address such issues in this paper.