This chapter presents a neo-Aristotelian account of stakeholder deliberation, arguing that a range of virtues is needed to ensure that consensus among stakeholders is based on a shared recognition of valid reasons, rather than on force or irrational persuasion. While proponents of political corporate social responsibility (PCSR) emphasize the need for corporations to engage in deliberation amid widespread market failures and regulatory gaps, fundamental normative questions regarding the legitimacy of agreements reached through such processes remain unanswered. Drawing on MacIntyre (1999), we argue that deliberation among stakeholders must be governed by deliberative virtues – including justice, honesty, humility, benevolence, courage, and mercy – to ensure that consensus emerges from an appreciation of salient reasons for action and the give-and-take of shared practical inquiry. Virtuous deliberation among stakeholders is a vital mode of moral agency in nonideal economic contexts, promoting eudaimonic efficiency by fostering market outcomes that are more just, as well as the self-constitution of market actors capable of responding wisely to moral complexity.

This chapter initiates a neo-Aristotelian theory of the firm by arguing that firms are not merely governance mechanisms to overcome market failures but sites of moral formation that foster the development of practical wisdom and the virtues. Building on critiques of the Market Failure Approach (MFA) and insights from the Knowledge-Based View (KBV) of the firm, we challenge the assumption, common in market morality literature, that internal firm norms can be evaluated independently of their effects on external stakeholders, arguing that virtuous relationships with external stakeholders play an important role in establishing and maintaining efficient internal norms. We also argue that, regardless of their efficacy in promoting organizational performance, hierarchical authority and cooperative norms are justified only insofar as they contribute to organization members’ flourishing. Drawing on McDowell’s notion of Bildung, we show how organizational life can “open employees’ eyes” to valid reasons for action, shaping their character in ways that contribute to their flourishing while also promoting organizational performance. This chapter thus reframes the firm as a moral community and provides the foundation for a virtue-based account of corporate purpose, to be extended in Chapters 5–9.

This chapter extends our neo-Aristotelian theory of the firm by examining the role of financial markets and corporate governance in promoting eudaimonic efficiency. Financial markets promote efficient capital allocation primarily by aggregating information about relevant risks and opportunity costs. Yet the “uniqueness paradox” and the “investment dilemma” reveal the limits of the standard agency-based theory of corporate governance. Members of the board of directors must go beyond minimizing opportunism in order to mediate competing stakeholder interests in ways that foster stakeholder collaboration and firm-specific investment. This demands that directors and financial market actors exercise a range of role-differentiated virtues, including justice, courage, honesty, and trustworthiness. Our virtue-based model offers a more complete account of the moral responsibilities of relevant market actors in the governance and allocation of capital for firms, challenging the MFA’s sole focus on agency problems.

This chapter extends our neo-Aristotelian theory of the firm by arguing that firms exist not merely to minimize transaction costs but also to foster entrepreneurial agency that contributes to human flourishing. Building on the theory-based view of the firm (Felin & Zenger, 2009; 2017), we contend that firms institutionalize eudaimonic efficiency by enabling members to specialize in value creation through collaborative experimentation and moral development. Whereas the Market Failure Approach (MFA) is bound to static efficiency and Pareto optimality, our neo-Aristotelian account emphasizes the dynamic, epistemic role of the firm in discovering new combinations of resources, which markets alone cannot coordinate. Drawing further on McDowell’s notion of Bildung, we argue that the moral formation of employees in the firm involves a range of virtues that support firm innovation, including benevolence, justice, entrepreneurial perceptiveness, and humility. This virtue-based framework offers a rich account of the way managerial authority can be morally justified, namely when it supports employees’ flourishing and the discovery of better ways to meet human needs. In short, firms are moral communities that inculcate and are sustained by virtues that support collaborative innovation.

This introductory chapter situates the book within the fragmented landscape of business ethics scholarship, where MacIntyreans, Habermasians, Rawlsians, and others conduct debates within distinct clusters that seldom engage with one another, or with mainstream management research. We argue that a neo-Aristotelian approach can provide a more integrated view of business ethics by taking seriously the gap between ethical theory and concrete moral agency in the context of the firm. Our methodology employs a form of immanent critique, taking the Market Failure Approach as its starting point but arguing that its commitment to Pareto efficiency must be replaced by an account of eudaimonic efficiency grounded in human flourishing and the virtues. Part I provides the foundations for this critique, grounding the concept of eudaimonic efficiency in an account of human flourishing and introducing market virtues that both mitigate market failures and foster higher levels of efficiency. Part II extends this framework to the firm, drawing on organization theory, strategic management, and corporate governance to show how firms, as moral communities, promote eudaimonic efficiency by fostering collaboration and moral development. Part III examines the role of the virtues in stakeholder deliberations, arguing that such deliberation is a crucial means by which market actors can mitigate harms and rectify injustices that obstruct flourishing.

Our aim for this book is, in one sense, modest. We do not attempt to address pressing contemporary problems involving, for example, climate change, new technology, or growing inequality. Nor do we seek to adjudicate challenges to market society stemming from resurgent forms of authoritarianism and a growing disillusionment with capitalism. Instead, we have merely sought to articulate the implicit morality of market society in a more extensive manner.

This chapter critically evaluates the Market Failure Approach (MFA) to business ethics, focusing on two fundamental challenges it faces in real-world economic contexts: the theory of the second best and the ubiquity of negative externalities. While the MFA offers a simple, rule-based framework based on the concept of Pareto efficiency, we argue that its efficiency imperatives are often inapplicable or indeterminate in real-word market settings. Drawing on a neo-Aristotelian perspective, we contend that ethical formation and practical wisdom are essential for navigating these complexities. The chapter introduces eudaimonic efficiency as a more realistic and morally adequate ideal of market activity, one that emphasizes human flourishing and justice, rather than Pareto efficiency. The ideal of eudaimonic efficiency reframes the moral purpose of markets as enabling voluntary exchanges that enhance well-being without unjust harm. We show how the application of market norms inevitably requires virtues like honesty, justice, and practical wisdom, challenging the MFA’s aspiration to rule-based moral guidance. By embedding market ethics in a framework of virtue and formation, we lay the groundwork for a richer theory of market morality, developed throughout the book.

In this chapter argues that the ethics of Environmental, Social, and Governance (ESG) must be understood as inseparable from the modes of responsibilization that have preceded it, which refers to developments in business ethics, Corporate Social Responsibility (CSR) and corporate sustainability. Focusing primarily on ESG as a heading for corporate responsibility policies and practices within the context of EU regulation, the chapter considers ESG as a supplement to prior conceptions rather than a stand–alone concept. After outlining the foundational, societal and environmental accomplishments of the three preceding constructs, the chapter argues that the defining, supplementary feature of ESG is that it is informational and that it has emerged as a concept that binds together the information needs of investors and other stakeholders, corporate disclosures, and government regulation. Thus, the ethics of ESG must be understood in terms of its ability to put greater and more obligatory demands on corporate responsibility through standardized reporting, standardized methods, and standardized data and performance measures.

This chapter examines how international relations (IR) scholarship has approached two central questions concerning international law and legalisation: why do states create international law, and what makes a particular norm ‘legal’ in nature? It then outlines the concept of legalisation as described in Abbott et al.’s well-known article of the same name. Under the classic legalisation framework, legalisation has three components: obligation, precision and delegation. The chapter argues that the classic OPD framework cannot fully capture the expanding role of non-state actors or conceptualise law as a process. It therefore proposes an adapted model for the transnational legal system that incorporates a crucial omitted dimension – implementation. Implementation refers to the concrete actions taken by agents to translate legal or law-like principles into practical, workable instructions for courts, governments, companies, and other non-state actors.