MGMT 8415M Week 10 Obligation Argument Example

What Sawyer Creek Owes the Grower Whose Peas It Leaves in the Field: An Obligation Argument Grounding Full Payment in the Company's Control of Planting, Scoping It, Meeting the Shareholder Objection and Pricing It in the Company's Own Accounts

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Walden University

MGMT 8415M: Socially Conscious Leader

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Month Day, Year

What Sawyer Creek Owes the Grower Whose Peas It Leaves in the Field: An Obligation Argument Grounding Full Payment in the Company's Control of Planting, Scoping It, Meeting the Shareholder Objection and Pricing It in the Company's Own Accounts

Thesis

Sawyer Creek Foods owes each contract grower full payment of the contracted value for any acres the company declines to harvest for its own business reasons, because the company's control over planting and harvest makes it the author of that grower's loss.

The Ground: Harm Through Decisions the Company Controls

The duty rests on one ground, developed here: an organization that, through decisions it controls, causes a loss to another party who has ceded those decisions to it owes that party the loss. Processing vegetable contracts are unusual in how much they cede. The company sets the variety, supplies or specifies the seed, assigns planting dates so that harvest arrives at the plants in sequence and sends its own crews and equipment to harvest. A grower cannot harvest a field of processing peas early to sell elsewhere, and there is rarely another buyer for a processing crop at harvest time. When the company decides not to harvest a field because its frozen inventory is high, the grower's crop is lost by a decision the grower had no part in.

This ground is narrower than many accounts of corporate responsibility. It does not rest on the company's size, its profits or a general duty to help. It rests on a familiar moral principle, that those who cause harm through choices they control owe repair, applied to an arrangement in which control has been transferred by contract. Young (2006) argued for a broader view in which responsibility for structural injustice falls on all who participate in the processes that produce it, shared according to their power, privilege and ability to act. That view would reach further than this paper's argument, and the paper does not depend on it; but on Young's terms too, the company, as the most powerful participant with the clearest capacity to act, would bear the largest share.

Scope From the Same Reasoning

The scope follows from the ground. The duty covers losses caused by the company's decisions and only those. It does not cover crop failure from weather, disease or pests, which no one controls, or losses caused by a grower's own failure to follow contract terms. It covers contracted acres, not acres a grower planted beyond the contract. It applies to the contracted value, not to the higher prices a grower might have hoped to receive elsewhere, because the contract defines what the grower gave up. And it applies regardless of whether the payment is profitable for the company in a given year, because the loss and its cause do not change with the company's profits.

The Shareholder Objection, Met at Full Strength

The strongest objection holds that managers act as agents of shareholders and have no authority to spend shareholders' money on obligations the law does not impose. Friedman (2007) argued that executives who pursue social ends with corporate funds are in effect taxing owners, customers or employees without the legitimacy of a political process. Jensen (2002) added that managers asked to balance several objectives lose any clear standard of performance. If the grower contract already pays a reduced rate for abandoned acres, the objection says, growers accepted that term, and paying more is a gift from shareholders.

The reply has three parts. First, the duty does not authorize managers to pursue social ends at their discretion; it is a specific, formula-bound payment arising from the company's own conduct, which is the kind of obligation agents routinely honor. Second, the reduced-rate term was not freely bargained in any meaningful sense: processors in the region use similar contracts, growers have few alternatives, and the company itself publicly pledged to make growers whole, inviting reliance on that pledge. Friedman allowed that firms must play by the rules of the game without deception; publishing a pledge while keeping a contract that contradicts it comes close to the deception he excluded. Third, the duty serves shareholders who, like the founding family, have long described the grower relationship as part of the company's identity.

Priced in the Company's Own Accounts

Across the last five seasons the company left roughly one contracted acre in thirty-three unharvested, varying from below one acre in a hundred in the best season to one in fourteen in the worst. At the gap of about $300 an acre between the reduced rate and full value, the expected cost is about $340,000 a year, ranging from about $100,000 to about $800,000. In the company's accounts, this would appear as an increase in cost of goods sold. Against 2025 operating income of about $41 million, the expected cost is under 1 percent, and the worst year about 2 percent. The company can manage the variation by setting aside each year an amount matching the average expected payment and drawing on it in bad years.

When the Duty Counts as Met

The obligation is met when three conditions hold. The contract states the payment as a term, not as a policy statement. Payment is made within 30 days of the company's notice that a field will not be harvested. And the company reports annually the acres abandoned and amounts paid, so growers and owners can check that the duty is honored in bad years as well as good.

References

Friedman, M. (2007). The social responsibility of business is to increase its profits. In W. C. Zimmerli, M. Holzinger, & K. Richter (Eds.), Corporate ethics and corporate governance (pp. 173-178). Springer. https://doi.org/10.1007/978-3-540-70818-6_14

Jensen, M. C. (2002). Value maximization, stakeholder theory, and the corporate objective function. Business Ethics Quarterly, 12(2), 235-256. https://doi.org/10.2307/3857812

Young, I. M. (2006). Responsibility and global justice: A social connection model. Social Philosophy and Policy, 23(1), 102-130. https://doi.org/10.1017/S0265052506060043