This paper argues that the notion of value has been overly simplified and narrowed to focus on economic returns. Stakeholder theory provides an appropriate lens for considering a more complex perspective of the value that stakeholders seek as well as new ways to measure it. We develop a four-factor perspective for defining value that includes, but extends beyond, the economic value stakeholders seek. To highlight its distinctiveness, we compare this perspective to three other popular performance perspectives. Recommendations are made regarding (...) performance measurement for both academic researchers and practitioners. The stakeholder perspective on value offered in this paper draws attention to those factors that are most closely associated with building more value for stakeholders, and in so doing, allows academics to better measure it and enhances managerial ability to create it. (shrink)

This article contributes to the body of stakeholder literature by providing an in-depth analysis of the dynamics of stakeholder relationships as a part of change in value creation. The article presents an argument that the stakeholder salience model as a tool for analyzing stakeholder relationships is not sufficient for understanding business value creation. In the recent stakeholder literature, understanding business value creation has become an important theme. Through an analysis of an empirical case, the article shows how the three stakeholder (...) relationship attributes, legitimacy, power and urgency help to reveal the definitive stakeholders and to capture dynamics of stakeholder relations. However, in the case of strategic change, where the value creation of a firm is in transition, a more profound understanding of stakeholder relationships is needed. As a result of our empirical analysis, six characteristics of stakeholder relationships were identified. To conclude, the question of who and what really counts should be replaced by the question of how value is created in stakeholder relationships. (shrink)

The purpose of this paper is to enter the conversation about stakeholder theory with the goal of clarifying certain foundational issues. I want to show, along with Boatright, that there is no stakeholder paradox, and that the principle on which such a paradox is built, the Separation Thesis, is nicely self-serving to business and ethics academics. If we give up such a thesis we find there is no stakeholder theory but that stakeholder theory becomes a genre that is quite rich. (...) It becomes one of many ways to blend together the central concepts of business with those of ethics. Rather than take each concept of business singly or the whole of “business” together and hold it to the light of ethical standards, we can use the stakeholder concept to create more fine-grained analyses that combine business and ethics; or more simply, we can tell many more, and more interesting, stories about business. (shrink)

In this paper, we examine critically the notion of “Triple Bottom Line” accounting. We begin by asking just what it is that supporters of the Triple Bottom Line idea advocate, and attempt to distil specific, assessable claims from the vague, diverse, and sometimescontradictory uses of the Triple Bottom Line rhetoric. We then use these claims as a basis upon which to argue (a) that what issound about the idea of a Triple Bottom Line is not novel, and (b) that what (...) is novel about the idea is not sound. We argue on bothconceptual and practical grounds that the Triple Bottom Line is an unhelpful addition to current discussions of corporate social responsibility. Finally, we argue that the Triple Bottom Line paradigm cannot be rescued simply by attenuating its claims: the rhetoric isbadly misleading, and may in fact provide a smokescreen behind which firms can avoid truly effective social and environmental reporting and performance. (shrink)

Abstract:The term stakeholder is a powerful one. This is due, to a significant degree, to its conceptual breadth. The term means different things to different people and hence evokes praise or scorn from a wide variety of scholars and practitioners. Such breadth of interpretation, though one of stakeholder theory’s greatest strengths, is also one of its most prominent theoretical liabilities. The goal of the current paper is like that of a controlled burn that clears away some of the underbrush of (...) misinterpretation in the hope of denying easy fuel to the critical conflagration that would raze the theory. We aim to narrow its technical meaning for greater facility of use in management and organizational studies. By elaborating a number of common misinterpretations – critical and friendly – of the theory, we hope to render a stronger and more convincing theory as a starting place for future research. (shrink)

While discovery of error provides personal gain for the entrepreneur, does this process automatically allocate value equitably among all stakeholders? We argue that the entrepreneurial process can be used to generate or maintain an entrepreneur’s personal wealth through the exploitation of a stakeholder group. Thus entrepreneurship can be both an equilibrating and a disequilibrating process and that both the visible hand of government and the decisions of an entrepreneur can speed or slow our movement toward value equilibrium. Speed toward value (...) equilibrium is likely to be important to a victimized stakeholder group and deserves further scholarly attention. (shrink)

Stakeholder theory is often unable to distinguish those individuals and groups that are stakeholders from those that are not. This problem of stakeholder identity has recently been addressed by linking stakeholder theory to a Rawlsian principle of fairness. To illustrate, the question of stakeholder status for the non-human environment is discussed. This essay criticizes a past attempt to ascribe stakeholder status to the non-human environment, which utilized a broad definition of the term "stakeholder." This paper then demonstrates how, despite the (...) denial of stakeholder status, the environment is nonetheless accounted for on a fairness-based approach through legitimate organizational stakeholders. In addition, since stakeholder theory has never claimed to be a comprehensive ethical scheme, it is argued that sound reasons might exist for managers to consider their organization's impact on the environment that are not stakeholder-related. (shrink)

In this critique, Martha Nussbaum argues that our dominant theories of development have given us policies that ignore our most basic human needs for dignity and self-respect.

Presents a theory of bullshit, how it differs from lying, how those who engage in it change the rules of conversation, and how indulgence in bullshit can alter a person's ability to tell the truth.

ABSTRACT:We develop the concept of stakeholder salience to account for stakeholders who should matter to the firm, even when managers do not perceive them as important. While managers are responsible for attributing salience to stakeholders, they can overlook or ignore stakeholder importance because of market frictions that affect managerial perceptions or induce opportunism. When this happens, corporate financial and social performance can suffer. Thus, we propose that the perceptions of organizational and societal stakeholders should also codetermine the salience of the (...) focal stakeholder to the firm. We also propose that stakeholder dialogue can reduce the impacts that market frictions can have on managerial perceptions of stakeholder interests that should matter to the firm. Finally, we discuss how the refined conceptualization of stakeholder salience might have better predictive validity, be more normative, and make instrumental and normative stakeholder theory more convergent. (shrink)

This book develops some of the most important themes of Sen's works over the last decade. He argues in a rich and subtle approach that we should be concerned with people's capabilities rather than their resources or welfare.

In this major book Martha Nussbaum, one of the most innovative and influential philosophical voices of our time, proposes a kind of feminism that is genuinely international, argues for an ethical underpinning to all thought about development planning and public policy, and dramatically moves beyond the abstractions of economists and philosophers to embed thought about justice in the concrete reality of the struggles of poor women. Nussbaum argues that international political and economic thought must be sensitive to gender difference as (...) a problem of justice, and that feminist thought must begin to focus on the problems of women in the third world. Taking as her point of departure the predicament of poor women in India, she shows how philosophy should undergird basic constitutional principles that should be respected and implemented by all governments, and used as a comparative measure of quality of life across nations. (shrink)

In this conceptual paper, we draw on social identity theory as a means to bridge individuals’ memberships in social groups with value creation in stakeholder networks defined by a socio-economic issue. To address recent calls for microfoundations of stakeholder theory, we introduce a reconceptualization of stakeholders as social groups to examine how value is defined and interpreted in intergroup processes embedded in an issue-based stakeholder network. We establish a theoretical model of value creation that links individuals’ identification with stakeholder groups (...) to intergroup trust, co-operation, and value creation. Specifically, we argue that the salience of preexisting social identities causes harmful tensions in stakeholder relationships that negatively impact value creation. We then propose that the development of a more inclusive stakeholder identity overcomes these negative intergroup consequences in multistakeholder settings. We discuss the impact on value creation of four stakeholder identity representations based on the salience of specific and superordinate stakeholder groups. The paper concludes with implications of our theoretical model for both research and practice related to value creation in issue-based stakeholder networks. (shrink)

Commodities and Capabilities presents a set of inter-related theses concerning the foundations of welfare economics, and in particular about the assessment of personal well-being and advantage. The argument presented focuses on the capability to function, i.e. what a person can do or can be, questioning in the process the more standard emphasis on opulence or on utility. In fact, a person's motivation behind choice is treated here as a parametric variable which may or may not coincide with the pursuit of (...) self-interest. Given the large number of practical problems arising from the roles and limitations of different concepts of interest and the judgement of advantage and well-being, this scholarly investigation is both of theoretical interest and practical import. (shrink)

Introduction to one of the most important, controversial, and suggestive works of moral philosophy ever written.

Recent years have seen a significant increase in stakeholder pressure on firms to be not only economically sustainable but also from an environmental and social perspective. Besides operational changes in practices and products companies have reacted toward this increased pressure from a strategic perspective through structural changes of their top management team. A recent addition to the TMT has been the appointment of the chief officer of corporate social responsibility. In this paper, we take a behavioral perspective and investigate how (...) the employment of a chief officer of CSR to the TMT impact on firm performance. Specifically, we explore how certain characteristics of the newly appointed chief executive of CSR impact on a firm’s financial performance. We collected secondary, longitudinal data of listed companies in the United States. Results indicate that appointing a chief executive of CSR does under certain conditions and characteristics result in financial performance benefits. Furthermore, the greatest financial performance benefits can be achieved if the appointee is female and has a CSR functional background. (shrink)

Amartya Sen has made a major contribution to the theory of social justice, and of gender justice, by arguing that capabilities are the relevant space of comparison when justice-related issues are considered. This article supports Sen's idea, arguing that capabilities supply guidance superior to that of utility and resources (the view's familiar opponents), but also to that of the social contract tradition, and at least some accounts of human rights. But I argue that capabilities can help us to construct a (...) normative conception of social justice, with critical potential for gender issues, only if we specify a definite set of capabilities as the most important ones to protect. Sen's "perspective of freedom" is too vague. Some freedoms limit others; some freedoms are important, some trivial, some good, and some positively bad. Before the approach can offer a valuable normative gender perspective, we must make commitments about substance. (shrink)

Distinguishing “business” concerns from “ethical” values is not only an unfruitful and meaningless task, it is also an impossible endeavor. Nevertheless, fruitless attempts to separate facts from values produce detrimental second-order effects, both for theory and practice, and should therefore be abandoned. We highlight examples of exemplary research that integrate economic and moral considerations, and point the way to a business ethics discipline that breaks new ground by putting ideas and narratives about businesstogetherwith ideas and narratives about ethics.

The capability approach to social justice construes a person's well-being in terms of the substantive freedoms people value. John Alexander engages with the rapidly growing body of literature on the capability approach in economics, inequality, poverty measurement and development studies. Critically assessing Sen and Nussbaum's work in normative economics, social ethics and political philosophy, Alexander develops a unified vision of the capability approach embodying the ideal of creating the greatest possible condition for the realization of basic capabilities for all. He (...) then assesses this vision as a political theory arguing that capabilities are necessary but not sufficient for overcoming conditions of domination. The book calls for a more intimate relationship between individual liberty and the freedom of the political community as a whole. (shrink)

ABSTRACT:Employing utilitarian criteria, Jones and Felps, in “Shareholder Wealth Maximization and Social Welfare: A Utilitarian Critique” (Business Ethics Quarterly23[2]: 207–38), examined the sequential logic leading from shareholder wealth maximization to maximal social welfare and uncovered several serious empirical and conceptual shortcomings. After rendering shareholder wealth maximization seriously compromised as an objective for corporate operations, they provided a set of criteria regarding what a replacement corporate objective would look like, but do not offer a specific alternative. In this article, we draw (...) on neo-utilitarian thought to advance a refined version of normative stakeholder theory that we believe addresses a major remaining criticism of extant versions, their lack of specificity. More particularly, we provide a single-valued objective function for the corporation—stakeholder happiness enhancement—that would allow managers to make principled choices between/among policy options when stakeholder interests conflict. (shrink)

ABSTRACT:Many scholars and managers endorse the idea that the primary purpose of the firm is to make money for its owners. This shareholder wealth maximization objective is justified on the grounds that it maximizes social welfare. In this article, the first of a two-part set, we argue that, although this shareholder primacy model may have been appropriate in an earlier era, it no longer is, given our current state of economic and social affairs. To make our case, we employ a (...) utilitarian moral standard and examine the apparent logical sequence behind the link between shareholder wealth maximization and social welfare. Upon close empirical and conceptual scrutiny, we find that utilitarian criteria do not support the shareholder model; that is, shareholder wealth maximization is only weakly linked to social welfare maximization. In view of the dubious validity of this sequential argument, we outline some of the features of a superior corporate objective—a variant of normative stakeholder theory. In the second article, we will advance and defend our preferred alternative and then discuss some institutional arrangements under which it could be implemented. (shrink)

In modern societies entrepreneurship and innovation are widely seen as key sources of economic growth and welfare increases. Yet entrepreneurial innovation has also meant losses and hardships for some members of society: it is destructive of some stakeholders’ wellbeing even as it creates new wellbeing among other stakeholders. Both the positive benefits and negative externalities of innovation are problematic because entrepreneurs initiate new ventures before their private profitability and/or social costs can be fully recognized. In this paper we consider three (...) analytical frameworks within which these issues might be examined: pre-commitments, contractarianism, and an entrepreneurial framework. We conclude that the intersection of stakeholder theory and entrepreneurial innovation is a potentially rich arena for research. (shrink)

In this article, we offer an approach of how participative stakeholder innovation can be evaluated in complex multistakeholder settings that address wicked issues. Based on the principle of mutual value creation, we present an evaluation framework that accounts for the social interaction process during which stakeholders integrate their resources and capabilities to develop innovative products and services. To assess this evaluation framework, we collected multiple data from the case study of the Swiss Cardiovascular Network, which represents a multistakeholder setting related (...) to the prevention of cardiovascular disease. Our findings indicate that the evaluation dimensions of the stakeholders’ mindsets, the process and context of the stakeholder interactions, as well as the outcomes are useful concepts to account for a cooperative process of innovation in a multistakeholder setting. We discuss both the theoretical and practical insights of our analysis for participative stakeholder innovation. (shrink)

Why should I be rational? -- Reasonableness-- Scientific objectivity -- Is scientific neutrality a myth? -- Humaneness -- The prevalence of humbug -- The rationality of voting -- Newcomb's problem demystified.

Stakeholder literature tends to presume that effective stakeholder dialogue, occurring directly or indirectly, among a focal firm, local communities, governments, and nongovernmental organizations is desirable for successful firm–stakeholder relationships. Even if theoretically desirable, effective dialogue does not always occur. There are two key theory-informing lessons in Botnia’s Fray Bentos successful green field pulp mill investment and start-up in Western Uruguay. First, critics could not halt the project politically supported by Uruguay in an expanding multi-party international dispute. Second, the Botnia corporate (...) communications process did not succeed in building consensus relationships, and attention was not paid to discourse creating shared meanings among all stakeholders. Participatory relationships were few, and successful dialogue was at best limited to supporters. This article uses discursive analysis to examine how newspaper and press release texts and language used therein both shaped and reflected the dynamically changing nature of firm–stakeholder relations in the Fray Bentos dispute. Despite the focal firm’s professed good intentions to create participatory relationships with its stakeholders during the building project, various stakeholders opposed the project and Botnia was caught in the crossfire of heated debate between Uruguay and Argentina. Three different frames changing over time are identified: the investment frame, the conflict frame, and the political frame. The analysis shows that the relationships between the focal firm and stakeholders involved many meanings only partly shared, due in part to a lack of corporate appreciation for the role of language in managing firm–stakeholder relationships. (shrink)