The decline of the Quakers in the world of business: the role of corporate ethics and the law

The twenty-first century has witnessed a number of corporate scandals and private-sector takeovers that have called into question the shareholder-focused economy and corporate ethics. By way of contrast, this paper focuses on the Quakers as an example of a form of (largely) ‘responsible’ business practice. Quaker businesses had a significant impact on commerce and trade over a 200 year period, sowing the seeds of the industrial revolution. The Quakers were known for their honest and honourable business practices, their enlightened approach to employee welfare, their concern for wider society, and their willingness to innovate. Today, most of these ‘Quaker’ businesses are no longer either owned or controlled by Quakers, and have almost invariably adopted the conventional shareholder model of corporate governance. In the context of the UK, we trace their demise to the introduction of limited liability and innovations in corporate law in the mid-nineteenth century. These changes provided the legal basis for the Quaker family firms to incorporate, which many of them did in the late nineteenth century. We then describe how the unique Quaker ethos was inexorably decanted out of these companies during the twentieth century as the Quakers slowly lost both ownership and control of their businesses. In other words, we argue that in the context of business ethics, corporate law matters too.