This is the author's draft of an article published in Journal of Business Ethics. 'The original version is available at www.springerlink.com'.\ud http://www.springerlink.com/content/m131822256h21279/fulltext.pdfThe paper maps out an alternative to a behavioural (economic) approach to business ethics. Special attention is paid to the fundamental philosophical principle that any moral ‘ought’ implies a practical ‘can’, which the paper interprets with regard to the economic viability of moral agency of the firm under the conditions of the market economy, in particular competition. The paper details an economic understanding of business ethics with regard to classical and neo-classical views, on the one hand, and institutional, libertarian thought, on the other hand. Implications are derived regarding unintentional and passive intentional moral agency of the firm. The paper moves on to suggest that moral agency can be economically viable in competitive ‘market’ interactions, which is conventionally disputed by classical / neo-classical and institutional, libertarian economics. The paper here conceptualises active moral agency of the firm as the utilisation of ethical capital in firm–stakeholder interactions. This yields a reinterpretation of instrumental stakeholder theory
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