Business Firms and Relational Failures: Situating Relational Goods Beyond Market and Justice Failures

Business ethics increasingly explains corporate duties through failure-based theories. The Market Failures Approach (MFA) limits profit-seeking by reference to competitive efficiency, while the Justice Failures Approach (JFA) bars firms from benefiting from unjust background conditions. This article argues that both leave a distinct class of corporate wrongs under-theorized, namely the degradation of relational goods through which corporate authority becomes legitimate and social cooperation remains stable. The article develops a Relational Failures Approach (RFA), according to which firms are relationship-constituting institutions whose permission to exercise discretionary power depends on sustaining relational goods. Drawing on sociology and organizational research, the article defends an empirically grounded and non-perfectionist account of these goods and shows how firms can commit efficiency-compatible, justice-compatible, and institutionally corrosive wrongs. The argument clarifies why familiar corporate pathologies, including disposability regimes and fear-based cultures, are not adequately captured by efficiency or justice alone in contemporary corporate ethics debates.