¹ Locke, J., “Instance in Keeping Compacts,” from An Essay Concerning Human Understanding, annotated by Alexander C. Fraser (New York: Dover, 1959), p. 69.

² Plato, “Ring of Gyges,” from Book II of The Republic, translated by Benjamin Jowett, reproduced in Robert Solomon, Morality and the Good Life (New York: McGraw Hill, 1985), p. 45f.

³ The coincidence of the interests of owners and managers is the topic of recent work in “agency theory;” for an excellent summary and critique of this work see Kathleen Eisenhardt, “Agency Theory: An Assessment and Review” in Academy of Management Review, vol. 14 (1989), pp. 57–74.

⁴ The social benefits of optimal profits is based upon the concept of Pareto Optimality; see the famous piece by Milton Friedman, “The Social Responsibility of Business is to Increase its Profits,” from The New York Times Magazine, Sept 13, 1970 or, for a less intemperate approach, see Alan Blinder, “The Principle of Efficiency: More is Better than Less,” from Hard Heads, Soft Hearts: Tough Minded Economics for a Just Society (Reading, MA: Addison Wesley, 1987).

⁵ Freeman, R., Strategic Management: A Stakeholder Approach (Marshfield, MA: Pitman, 1984), p. 46.

⁶ The best discussion of extended organizations is to be found in Jeffrey Pfeffer and Gary Salancik, The Extended Organization: A Reource Dependent Perspective (New York: Harper & Row, 1978). This is an exchange theory, not a moral theory. The essential argument is that the resources necessary to continue the existence of organizations are exchanged for organizational control.

⁷ Hamel, G. and C. K. Prahalad, “Strategic Intent,” Harvard Business Review (May-June 1989), pp. 63–76.

⁸ Ibid., p. 66

⁹ Ibid., p. 67

¹⁰ Motivation is a complex topic with multiple variables and constraints; for a clear introduction to the present status of the field see R. M. Steers and Lyman Porter, Motivation and Work Behavior, 4th Edition (New York: McGraw-Hill, 1987).

¹¹ For a good discussion of “moral hazards” and their relationship to microeconomic theory see once again Kathleen Eisenhardt (op. cit.).

¹² Peters, T. J. and R. H. Waterman, In Search of Excellence: Lsessons from Americas’s Best-Run Companies (New York, Harper & Row, 1982).

¹³ Websters’ New World Dictionary (Cleveland, OH: World Publishing Company, 1953), p. 1565.

¹⁴ Approximately the same definition is to be found in R. Edward Freeman and Norman Bowie, Ethics and Agency Theory: An Introduction (New York: Oxford University Press, 1992).

¹⁵ Andrews, K.R., The Concept of Corporate Strategy, 3rd Edition (Homewood, IL: R. D. Irwin, 1987).

¹⁶ Barnard, C.I., The Functions of the Executive, 30th Aniversary Edition (Cambridge, MA: Harvard University Press, 1968), p.???

¹⁷ Ibid., p.???

¹⁸ Simon, H., Administrative Behavior (New York: Free Press, 1947), p. 47.

¹⁹ Andrews, op. cit., p. 174.

²⁰ Schendel, D. and C. Hofer, Strategic Management: A New View of Business Policy and Planning (Boston: Little Brown, 1979).