Sustainable development (SD) – that is, “Development that meets the needs of current generations without compromising the ability of future generations to meet their needs and aspirations” – can be pursued in many different ways. Stakeholder relations management (SRM) is one such way, through which corporations are confronted with economic, social, and environmental stakeholder claims. This paper lays the groundwork for an empirical analysis of the question of how far SD can be achieved through SRM. It describes the so-called SD–SRM (...) perspective as a distinctive research approach and shows how it relates to the wider body of stakeholder theory. Next, the concept of SD is operationalized for the microeconomic level with reference to important documents. Based on the ensuing SD framework, it is shown how SD and SRM relate to each other, and how the two concepts relate to other popular concepts such as Corporate Sustainability and Corporate Social Responsibility. The paper concludes that the significance of societal guiding models such as SD and of management approaches like CSR is strongly dependent on their footing in society. (shrink)

Stakeholder theory is one of the most influential theories in business ethics. It is perhaps not surprising that a theory as popular as stakeholder theory should be used in different ways, but when the disparity between different uses becomes too great, it is questionable whether all the ‘stakeholder research’ refers to the same underlying theory. This paper starts to clarify this definitional confusion by distinguishing between three different ways in which different lines of stakeholder research are connected with descriptive and (...) instrumental stakeholder theory. First, a distinction is made between research connected with descriptive and with instrumental stakeholder theory as defined by Donaldson & Preston in the narrow or broad sense. Second, a distinction is made between research that interprets descriptive and instrumental stakeholder theories as either hypotheses or research areas. Third, a distinction is made between research that interprets Donaldson & Preston’s central concept of ‘stakeholder management’ as either behaviour or rationale. Finally, the paper discusses the implications of these differences for empirical research into stakeholder theory. (shrink)

The Corporate Social Responsibility (CSR) field presents not only a landscape of theories but also a proliferation of approaches, which are controversial, complex and unclear. This article tries to clarify the situation, mapping the territory by classifying the main CSR theories and related approaches in four groups: (1) instrumental theories, in which the corporation is seen as only an instrument for wealth creation, and its social activities are only a means to achieve economic results; (2) political theories, which concern themselves (...) with the power of corporations in society and a responsible use of this power in the political arena; (3) integrative theories, in which the corporation is focused on the satisfaction of social demands; and (4) ethical theories, based on ethical responsibilities of corporations to society. In practice, each CSR theory presents four dimensions related to profits, political performance, social demands and ethical values. The findings suggest the necessity to develop a new theory on the business and society relationship, which should integrate these four dimensions. (shrink)

In response to conventional rationalistic approaches to management and corporate governance, the Aristotelian tradition is emerging as a basis for alternative theories in which practical wisdom is central. This paper, following Aristotle and Thomas Aquinas, considers the specificity of “political wisdom” -directed to the common good- as being different from individual practical wisdom. We suggest that the business firm is a “political community”, understood as a whole formed by free and intelligent individuals called to cooperate for common goals and to (...) pursue a common good. This orientation toward the common good requires political wisdom. After discussing the concepts of “political wisdom” and the business firm as “political community” we propose a number of implications of political wisdom in management and corporate governance. (shrink)

Social capital can serve as informal governance in weak investor-protection regimes. Using hand-collected data on entrepreneurs’ political connections and firm ownership, we construct several original measures of social capital and examine their effect on the performance of entrepreneurial firms in China after their initial public offerings. Political connections or a high percentage of external investors tend to enhance firm performance, but intragroup related-party transactions commonly lead to performance decline. These forms of social capital have a strong influence on the performance (...) of Chinese firms, whereas formal governance variables such as board size or board independence have little effect. Although social capital may serve as an informal governance mechanism and effectively substitute for formal governance mechanisms in an emerging market, this role of social capital raises several ethical concerns, notably the development of rent-seeking and crony capitalism. (shrink)

The concept of the ‘stakeholder’ has become central to business, yet there is no common consensus as to what the concept of a stakeholder means, with hundreds of different published definitions suggested. Whilst every concept is liable to be contested, for stakeholder research, this is problematic for both theoretical and empirical analysis. This article explores whether this lack of consensus is conceptual confusion, which would benefit from further debate to try to reach a higher degree of elucidation, or whether the (...) stakeholder concept is essentially contested, rendering the quest to seek a singular definition unfeasible. The theory of essentially contested concepts was proposed by Gallie (Proc Aristot Soc 56:167–198, 1956 ). The seven criteria Gallie prescribes for evaluating essentially contested concepts are applied to the stakeholder concept. The analysis suggests that this concept is an essentially contested concept and this explains the degree of definitional variation. (shrink)

As a philosopher, whose theory about economics and business is systematically connected to a moral and political philosophy, Aristotle provides a rich conceptual framework to reflect upon personal wellbeing, the wealth of households, and the welfare of the state. Even though Aristotle has mainly been portrayed as an enemy of business, interest in his teachings has been on the rise among management scholars. Several articles have examined Aristotle's position with regard to current managerial approaches such as total quality management, knowledge (...) management, crisis management, and networking. Even though Aristotle is a constant reference point for business ethics scholars, only rarely have there been attempts to see what consequences his thinking would have for reorienting business philosophy and organizational strategy. In this study, we wiD outline how Aristotle's theory of household management can be applied to the management of modern corporations. We argue that conceptions of chrematistike and oikonomia provide a basis to discuss the relationship between business and society and to draw important conclusions for business management. (shrink)

In recent years, the stakeholder approach has been widely applied in the debate on corporate social responsibility (CSR). Although many authors of this approach have reviewed many elements of the model, they have unconditionally accepted several criteria assumed by Freeman ( 1984 ) to identify stakeholders. In general, stakeholder authors have assumed that (a) the company establishes dyadic relationships with other agents, and (b) decisions made by a company only have foreseen and direct effects on other agents. These criteria have (...) enabled researchers to understand simple processes. However, they have also prevented researchers from explaining how action comes about, and how responsibility is shared, in many complex processes taking place in contemporary societies. Such complex processes involve many agents, and each decision can generate unexpected effects which accumulate or disseminate. Furthermore, the normative structure governing these processes can affect and/or be affected by the actions of agents. In this study, we propose new criteria to expand the stakeholder model and facilitate the study of CSR in such processes. (shrink)

The question of how an individual firm's social and environmental performance impacts its firm risk has not been examined in any empirical UK research. Does a company that strives to attain good environmental performance decrease its market risk or is environmental performance just a disadvantageous cost that increases such risk levels for these firms? Answers to this question have important implications for the management of companies and the investment decisions of individuals and institutions. The purpose of this paper is to (...) examine the relationship between corporate environmental performance and firm risk in the British context. Using the largest dataset assembled so far, with community and environmental responsibility (CER) rankings for all rated UK companies between 1994 and 2006, we show that a company's environmental performance is inversely related to its systematic financial risk. However, an increase of 1.0 in the CER score is associated with only a 0.028 reduction in its β. (shrink)

Previous research on sustainable entrepreneurship has mainly aimed to understand the antecedents of entrepreneurs’ sustainability-oriented behavior. Yet the literature lacks a more nuanced understanding of how entrepreneurs implement sustainability strategies when creating a new venture. Drawing on sustainability concepts, we first examine how entrepreneurs balance the economic, environmental, and social dimensions as part of their ventures’ strategic ambitions. We show that sustainable entrepreneurs prioritize the three sustainability dimensions and possibly reprioritize them in response to stakeholder interests. Applying a stakeholder theory (...) perspective, we theorize that how entrepreneurs balance their sustainability dimensions and goals depends on the degree of stakeholder involvement and of external expectations. Our contributions refine the growing sustainable entrepreneurship literature and call attention to the importance of including weightings and time when examining the dimensions of sustainability. (shrink)

The corporate responsibility (CR) discussion has so far been rather fragmented as academics tackle it from their own areas of expertise, which guarantees in-depth analyses, but leaves room for broader syntheses. This research is a synthetic, interdisciplinary exercise: it integrates philosophical, psychological and managerial perspectives of corporate responsibility into a more holistic CR-model for the benefit of academics, companies and their interest groups. CR usually comprises three areas: environmental, social and economic responsibilities. In all these areas there should be a (...) match between corporate values, discourses and actions. The aim of this multidisciplinary research is to build a CR-model by integrating (1) utilitarian/egoistic, duty/rights/justice and virtue ethical corporate values with (2) increased consciousness of psychological defences in corporate discourses, in order to achieve (3) responsible environmental, social and economic corporate actions. The resulting CR-model can be tested in companies and executed through corporate strategic and operational management. (shrink)

Every academic endeavour rests ultimately on a particular assumption of human nature. Two views of human nature are compared and contrasted: (1) a utilitarian naturalistic humanism which holds essentially the view that human nature is materialistic, and (2) an Aristotelian-Thomistic natural law/virtue ethics humanism which holds the view that human nature is both materialistic and spiritualistic. This paper argues that the latter view better captures and explains the metaphysical realities of human nature. In addition, the role of virtues and its (...) applications in management practice are presented. Organisational policy mechanisms and managerial implications will depend on which view of human nature one adopts. The failure to integrate the virtues and natural law ethical principles into management practice threatens the stability and survival of the firm since they are required to correct the dysfunctional aspects and ethical deficits of the current business philosophy. (shrink)

Business ethicists draw extensively on Aristotle’s work in defining the purpose of the business corporation. Insights from ancient authors can be valuable in illuminating contemporary issues, but we should be wary of enlisting their authority for our views without paying careful attention to what they might have intended by what they said in their own social and economic context. Business ethicists have argued that the business corporation should be a community within which its members can live a good life; that (...) its purpose should not be to maximise profits; and that it should integrate itself into a range of wider communities beyond its own boundaries and serve their interests. Aristotle would have agreed that the business corporation should not seek to make as much profit as possible, although he might have accepted that – in the light of modern developments in economic management - it should make enough profit to fund projects that would be beneficial to society. Aristotle’s view that the polis provided the setting in which people could best live a good life does not justify the claim that the business corporation can or should serve a similar purpose. Aristotle believed that people should strive for enough and not too much in several contexts, not only in acquiring wealth, but also in defining the size and scope of the community of which they should be members. Some expansive, contemporary views on the communities into which the business corporation should integrate itself are alien to Aristotle’s thinking. (shrink)

Current organizations are underpinned by utilitarian ethics of Modernity. Pure economic motive driven organizations detach themselves from larger societal interest. Rising number of corporate scandals and intraorganizational income inequalities are breeding similar trends in society at large. Current organizations base their competitive advantage on resources and capabilities which boils down to economic supremacy at all cost whether it is named I/o or RBV of the firm. This theoretical article posits Ethics-based Trust as the main competency and capability for attaining sustained (...) competitive advantage. It in no way condemns utility view of the firms but treats it as a natural yet secondary outcome of genuine ethicality of the firm. Cultivating an ethical culture in the firm through identifying antecedents, organizational practices, and the outcomes where profitability is an automatic but secondary outcome under the supremacy of ethics is detailed in the multilevel model presented in this article. The main call of this article is to posit ethics and morality over and above short-term profits so that organizations fulfill their trustee role for society through enacting socio-humanistic theories within organizations. A brief analysis of the proposed ethical theory of firm is undertaken in light of the “schooling” notion in the contemporary organization theory literature. (shrink)

Organisational leaders mismanaging business affairs are guided by performance pressures and/or greed while pressurising employees to follow. Unethical activities have led to stakeholder losses, with no accountability by individuals perpetuating the fraud. Corporate governance frameworks and subsequent reforms have been used merely as tick box measures, proving them inefficient in numerous corporate collapses. This study intends to explore and analyse the roles of personal and collective virtues in corporate citizenship. Developing from the virtues theory and using a mixed method of (...) three focus group discussions and a self-administered questionnaire of 119 participants from various organisations, the authors establish that personal virtues are important to portray ethical individualism. However, in a corporate setting, collective virtues are more important to enhance corporate citizenship, through ethical culture and collective accountability. (shrink)

Previous research on corporate community involvement (CCI) initiatives indicates that such behaviour is critical for building neighbourhood relationships and extending corporate influence in the community, but there is little theoretical work that provides a clear picture of managing the nature of the initiatives from different stakeholder management approaches. Drawing from theoretical insights of stakeholder theory and the concept of social capital, this article proposes nine strategic directions for CCI initiatives, and concludes by discussing the management implications of the proposed strategic (...) directions. Our proposed approaches have the potential to improve current understanding and practice of corporations and their CCI initiatives. (shrink)

The question of how an individual firm's social and environmental performance impacts its firm risk has not been examined in any empirical UK research. Does a company that strives to attain good environmental performance decrease its market risk or is environmental performance just a disadvantageous cost that increases such risk levels for these firms? Answers to this question have important implications for the management of companies and the investment decisions of individuals and institutions. The purpose of this paper is to (...) examine the relationship between corporate environmental performance and firm risk in the British context. Using the largest dataset assembled so far, with community and environmental responsibility (CER) rankings for all rated UK companies between 1994 and 2006, we show that a company's environmental performance is inversely related to its systematic financial risk. However, an increase of 1.0 in the CER score is associated with only a 0.028 reduction in its β. (shrink)

There has been much theoretical debate on issues of business ethics during the last decades, but there has been little research which could concretise the content of these issues in terms of practical business. Although business life must frequently deal with concepts such as corporate social performance, business ethics and the acceptability of operations, the content and meaning of these concepts has remained flexible. In addition, rapid internationalisation and globalisation have introduced a number of new phenomena related to corporate social (...) performance. An attempt at defining the concepts more precisely and searching for a potential indicator was considered necessary in order to concretise the business environment facing corporations engaged in internationalisation and globalisation. The connection between corporate social performance and stakeholder theory provides a basis for the proposal put forward here that acceptability of operation could be employed as an indicator of corporate social performance. This approach was then applied to developing a model which could be used to assess corporate social performance. (shrink)

There has been much theoretical debate on issues of business ethics during the last decades, but there has been little research which could concretise the content of these issues in terms of practical business. Although business life must frequently deal with concepts such as corporate social performance, business ethics and the acceptability of operations, the content and meaning of these concepts has remained flexible. In addition, rapid internationalisation and globalisation have introduced a number of new phenomena related to corporate social (...) performance. An attempt at defining the concepts more precisely and searching for a potential indicator was considered necessary in order to concretise the business environment facing corporations engaged in internationalisation and globalisation. The connection between corporate social performance and stakeholder theory provides a basis for the proposal put forward here that acceptability of operation could be employed as an indicator of corporate social performance. This approach was then applied to developing a model which could be used to assess corporate social performance. (shrink)

Business ethics’ theories have come under a lot of criticism lately. The problem has been the lack of a philosophical base or the inadequate implementation of it. We are trying to solve this problem by examining the roots of ethics and then applying it to the business environment. The root that has been undeservedly overlooked has been the concept of free will, the oldest philosophical problem on which every ethics theory lies. We have chosen two theories that we think would (...) be the best base for business ethics. We will shortly present the others. Since free will presents the core of business ethics, business ethicists must first agree on which theory to implement. Aristotle’s and Aquinas’ theory of free will best amplify the core of economic theory, because it gives reason a central and most important role in the theory. The concept of free will is mainly philosophical as is business ethics so the article follows this tradition, but we tried to give business examples where possible. We do not give a final conclusion because it should be reached by debate and mutual agreement between business ethicists. (shrink)

One field in ethics that has been developed during recent decades is virtue ethics, represented most importantly by Alasdair MacIntyre's work After Virtue. Virtue ethics is not opposed to principle-based ethics, but rather complements its task and develops it more fully. In the field of US bioethics, this option has proved to be even more fruitful, especially in the work of Edmund Pellegrino and David Thomasma. Virtue ethics is also being reappraised in relation to the ethics of organisations and business. (...) It is considered that the best way of running a company does not depend solely on a group of ethical principles or agreed criteria, but on the effective exercise of certain qualities of character. Indeed, minimal ethics do not guarantee the excellence of organisations, or even their correct development. They guarantee certain standards of coexistence, but this is not sufficient to carry forward a collective enterprise in a creative way. It is impossible to achieve the aims of an organisation without ambition, magnanimity, humility, prudence, responsibility and courage. This group of intangible elements are virtues. This article explores the process of decision-making in the light of Aristotelian ethics, in particular his work _Nicomachean Ethics_. Making decisions is a common task on the managerial agenda. The decisions of a manager affect individuals, the future of the organisation and, of course, they have consequences for the organisation and its surroundings. Aristotle dedicates Book III of the work in question to studying the art of deliberation and examining which virtues must be taken into account when reaching the best decision. Aristotle tells us that we deliberate about things that are within our power and can be done. There can be no deliberation upon exact and sufficient knowledge; however, we deliberate upon the things that are brought about by our own efforts, although not always in the same way. Leading an organisation is not a mechanical matter, but rather a process that requires creativity and responsibility. There are many different ways of doing it. Following the Aristotelian doctrine, this article aims to examine the elements that must be taken into consideration for correct decisions to be made. The following virtues play a fundamental role in this process: prudence, fortitude, justice and temperance, referred to below as called cardinal virtues. (shrink)

Management scholars, practitioners, and policy makers alike have sought to develop a deeper understanding of recent business crises—including corporate scandals, the collapse of financial institutions, and deep recession—in order to prevent their recurrence. Among the “culprits” that have been identified is Conventional management theory based upon a moral-point-of-view founded on assumptions of materialism and individualism. There have been calls to move beyond the dominant profit maximization paradigm and think about other, potentially more compelling, corporate objectives (Hamel, 2009 ). In this (...) article, we respond to those calls, and seek to develop what we call Radical resource-based theory (RBT), which draws from and contrasts with the highly-influential Conventional RBT. Radical RBT defines the value of resources more broadly than profit maximization, rarity as an occasion for stewardship, inimitability as an opportunity for teaching, and non-substitutability as an opportunity to meet a panoply of human needs. This augmentation of RBT promises to help managers and scholars address a myriad of problems that are insoluble under Conventional assumptions. More generally, it shows the value of broadening management theory to a radical perspective by relaxing assumptions of self-interest and materialism. (shrink)