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)

Abstract: In this article, I offer a proposal to clarify what I believe is the proper relation between value maximization and stakeholder theory, which I call enlightened value maximization. Enlightened value maximization utilizes much of the structure of stakeholder theory but accepts maximization of the long-run value of the firm as the criterion for making the requisite tradeoffs among its stakeholders, and specifies long-term value maximization or value seeking as the firm’s objective. This proposal therefore solves the problems that arise (...) from the multiple objectives that accompany traditional stakeholder theory. I also discuss the Balanced Scorecard, which is the managerial equivalent of stakeholder theory, explaining how this theory is flawed because it presents managers with a scorecard that gives no score—that is, no single-valued measure of how they have performed. Thus managers evaluated with such a system (which can easily have two dozen measures and provides no information on the tradeoffs between them) have no way to make principled or purposeful decisions. The solution is to define a true (single dimensional) score for measuring performance for the organization or division (and it must be consistent with the organization’s strategy), and as long as their score is defined properly, (and for lower levels in the organization it will generally not be value) this will enhance their contribution to the firm. (shrink)

This article details the personal involvement of the author in the early stages of the infamous Pinto fire case. The paper first presents an insider account of the context and decision environment within which he failed to initiate an early recall of defective vehicles. A cognitive script analysis of the personal experience is then offered as an explanation of factors that led to a decision that now is commonly seen as a definitive study in unethical corporate behavior. The main analytical (...) thesis is that script schemas that were guiding cognition and action at the time precluded consideration of issues in ethical terms because the scripts did not include ethical dimensions. (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)

Increasing recognition that the overall goals of environmental conservation and economic development are not conflicting but can be mutually reinforcing, has prompted calls for ‘environmentally sustainable’ economic development. Although there are difficulties in defining sustainable development in an analytically rigorous way, there is still a need to evolve a concept of sustainability that both distinguishes it from other post-war meanings of development and is useful for practical analysis and policymaking.

An integrity-based approach to ethics management combines a concern for the law with an emphasis on managerial responsibility for ethical behavior. Though integrity strategies may vary in design and scope, all strive to define companies’ guiding values, aspirations, and patterns of thought and conduct. When integrated into the day-to-day operations of an organization, such strategies can help prevent damaging ethical lapses while tapping into powerful human impulses for moral thought and action. Then an ethical framework becomes no longer a burdensome (...) constraint within which companies must operate, but the governing ethos of an organization. (shrink)

Our approach in this response is as folIows. In § I, we try to identify accurately Boatright’s central claims-both about Goodpaster’s original paper and about matters of substance independent of that paper. In § 2 and 3, we discuss the plausibility of those claims, first from a legal point of view and then from a moral point of view. Finally, in § 4, we defend the concept of paradox (and, in particular, the Stakeholder Paradox) as a limitation on practical reason (...) which is not necessarily to be lamented. In fact, we believe, some paradoxes are better preserved from rather than guided toward resolution. (shrink)

This article extends earlier research concerning the relationship between corporate social performance and corporate financial performance, with particular emphasis on methodological inconsistencies. Research in this area is extended in three critical areas. First, it focuses on a particular industry, the chemical industry. Second, it uses multiple sources of data-two that are perceptual based (KLD Index and Fortune reputation survey), and two that are performance based (TRI database and corporate philanthropy) in order to triangulate toward assessing corporate social performance. Third, it (...) uses the five most commonly applied accounting measures in the corporate social performance and corporate financial performance (CSP/CFP) literature to assess corporate financial performance. The results indicate that the a priori use of measures may actually predetermine the CSP/CFP relationship outcome. Surprisingly, Fortune and KLD indices very closely track one another, whereas TRI and corporate philanthropy differentiate between high and low social performers and do not correlate to the firm's financial performance. (shrink)

Corporate social responsibility (CSR) has become indispensable in modern business discourse; yet identifying and defining what CSR means is open to contest. Although such contestation is not uncommon with concepts found in the social sciences, for CSR it presents some difficulty for theoretical and empirical analysis, especially with regards to verifying that diverse application of the concept is consistent or concomitant. On the other hand, it seems unfeasible that the diversity of issues addressed under the CSR umbrella would yield to (...) a singular universal definition. Gallie, an eminent philosophical scholar, proposed the essentially contested concepts (ECC) theory in 1956 to address concepts that by their very nature engender perpetual disputes. He pointed out that there are certain concepts which by their very nature are inevitably contested and prescribed seven criteria for evaluating such concepts. This article examines these criteria to discover if CSR is an essentially contested concept and in that case, to construe if such a change in perception will resolve the definitional crisis. The analysis suggests that CSR is an ECC and this explains the potential for several conceptions of CSR, however, it does not totally obviate the need for a definition of its core or common reference point, if only to ensure that the contestants are dealing with an identical subject matter. (shrink)

This article presents a critical examination of the process of stakeholder dialogue in the Corporate Social Responsibility (CSR) field. It utilises data from a three-year research project into stakeholder dialogue processes to discuss three central themes: first, what is meant by the term ‘dialogue’, both from a theoretical perspective and from its practical application within CSR; second, the challenges of creating effective dialogue; and third, measuring and assessing the potential outcomes of dialogue. In providing a critical overview of these themes, (...) the article examines the nature of organisational learning through stakeholder engagement and dialogue. It questions the motives behind engagement in dialogue and highlights some of the potential challenges for organisational learning posed by opting for a stakeholder dialogue approach. It argues that organisations engaging in stakeholder dialogue must have a clear understanding of the implications of undertaking a dialogue process and have a long-term perspective regarding the outcomes and learning likely to emerge from it. While stakeholder dialogue may produce significant results, it is argued, many of these may be difficult to quantify on a short-term basis. (shrink)

A recent literature applies economic reasoning to restrict corporate social responsibility (CSR) to profitable opportunities. The underlying theory of the firmassumes widespread public company ownership and a net positive contribution to social welfare in relatively unfettered markets. This modern economic approach posits strict fiduciary responsibility of agents. Management, in this fiduciary role, should have no CSR discretion beyond the requirements of minimalist laws and customary ethics. Any profitable CSR option can be undertaken. Any unprofitable CSR action is defined as discretionary (...) altruism prohibited to fiduciary agents and recommended against for shareowners acting through the corporate form. The modern economic position shifts all unprofitable social issues into the sphere of public policy—which is then influenced by business on the basis of economic self-interest. There are two points of relaxation in this position. First, a firm may need to practice prudential altruism to forestall more costly action by governments and stakeholders. Second, management must consider productivity effects of employee sentiments about social issues and stakeholders. (shrink)

This paper contrasts the normative foundations of the stakeholder and shareholder theories of the firm. It demonstrates how the shareholder theory of the firm appears to have at least as much normative support as stakeholder theory and suggests that a way forward may be for a variant of pure shareholder theory to emerge.

Recently within the critical accounting literature Funnell (1998) has argued that accounting was implicated in the Holocaust. This charge is primarily related to the technical, mathematical nature of accounting and its ability to dehumanise individuals. Broadbent (1998, see also DeMoss and McCann, 1997) has also contended that "accounting logic" excludes emotion. She suggests that a more emancipatory form of accounting could be possible if emotion were given a voice and allowed to be heard within accounting discourse (see also Kjonstad and (...) Wilmott, 1995). This paper contends that emotion should be introduced into accounting education and in particular emotional commitment to other individuals should be encouraged. It is suggested that one way to do this may be through business ethics education. It is also suggested that increasing ethical commitment to other individuals may go some way towards combating the tendency for accountancy to dehumanise other people. While there have been specific studies of ethics and accounting education there has, as yet, been little open debate about what the objectives of accounting ethics education should be or the specific techniques that could be used to meet the desired aims. This paper contends that accountancy has become dangerously dehumanised and that one of the most important objectives for any business ethics education must be to develop an empathy with "the other". The paper studies the developments within the medical, legal and engineering profession in order to suggest some specific methods which could be employed in order to re-humanise accountancy and develop a sense of moral commitment towards other individuals. (shrink)

This paper contrasts the normative foundations of the stakeholder and shareholder theories of the firm. It demonstrates how the shareholder theory of the firm appears to have at least as much normative support as stakeholder theory and suggests that a way forward may be for a variant of pure shareholder theory to emerge.

This article investigates corporate social responsibility (CSR) as an institution within UK multi-national corporations (MNCs). In the context of the literature on the institutionalization of CSR and on critical CSR, it presents two main findings. First, it contributes to the CSR mainstream literature by confirming that CSR has not only become institutionalized in society but that a form of this institution is also present within MNCs. Secondly, it contributes to the critical CSR literature by suggesting that unlike broader notions of (...) CSR shared between multiple stakeholders, MNCs practise a form of CSR that undermines the broader stakeholder concept. By increasingly focusing on strategic forms of CSR activity, MNCs are moving away from a societal understanding of CSR that focuses on redressing the impacts of their operations through stakeholder concerns, back to any activity that supports traditional business imperatives. The implications of this shift are considered using institutional theory to evaluate macro-institutional pressures for CSR activity and the agency of powerful incumbents in the contested field of CSR. (shrink)

In their article, “Shrewd Bargaining on the Moral Frontier,” J. Gregory Dees and Peter C. Crampton challenge us with a puzzle about deception in bargaining. How can the practice of misleading others about our settlement preferences—the terms on which we are willing to come to an agreement —possibly be justified? On any standard ethical theory, they claim, Brer Rabbit's trick of professing fear of the briar patch in order to avoid being eaten by the fox would seem to be wrong, (...) and yet we read this tale to our children for their moral edification. The discussion by Dees and Crampton of this apparent inconsistency is penetrating, instructive, and well-informed. It is also a delight to read. (shrink)

This book explores the impact of neuroscience research over the past 20 or more years on brain function as it affects moral decisions. Findings show that the mind and brain are very close, if not the same, and that the brain 'makes' the mind. This is bringing about a change of focus from examining mental activity to the physical activity of the brain to understand thinking and behavior. We are discovering that the physical features of the brain play the major (...) role in shaping our thoughts and emotions, including the way we deal with 'moral' issues. This book sets out the historical framework of the transition from 'mentalism' to 'physicalism', shows how the physical brain works in moral decisions and then examines three broad areas of moral decision-making - the brain in 'bad' acts, the brain in decisions involving sexual relations, and the brain in money decision-making. (shrink)

This article reports the findings, analysis, and commentary on survey results of academicians in the Social Issues in Management (SIM) field. The three major themes guiding the study were (a) current and future research in the SIM field, (b) strengths and weaknesses of research in the SIM field, and (c) research versus management practice in the SIM field. A number of specific questions were posed: What are the current topics on which you are conducting research? What topics do you see (...) as most important for the SIM field for the balance of the 1990s? What recent articles will most impact SIM research in the 1990s? What are the strengths and weaknesses of current SIM research? What topics will be most relevant to practicing managers? What recommendations do you propose for bridging the gap between SIM research and management practice? The experts' responses were categorized and discussed so that current and future scholars might have a basepoint for evaluating future research. The analysis and commentary concludes with a SIM research framework for the 1990s. (shrink)

This article presents a critical examination of the process of stakeholder dialogue in the Corporate Social Responsibility (CSR) field. It utilises data from a three-year research project into stakeholder dialogue processes to discuss three central themes: first, what is meant by the term ‘dialogue’, both from a theoretical perspective and from its practical application within CSR; second, the challenges of creating effective dialogue; and third, measuring and assessing the potential outcomes of dialogue. In providing a critical overview of these themes, (...) the article examines the nature of organisational learning through stakeholder engagement and dialogue. It questions the motives behind engagement in dialogue and highlights some of the potential challenges for organisational learning posed by opting for a stakeholder dialogue approach. It argues that organisations engaging in stakeholder dialogue must have a clear understanding of the implications of undertaking a dialogue process and have a long-term perspective regarding the outcomes and learning likely to emerge from it. While stakeholder dialogue may produce significant results, it is argued, many of these may be difficult to quantify on a short-term basis. (shrink)

A primary issue in the field of business and society over the past 25 years has been the relationship between corporate social performance and corporate financial performance. Recently, Griffin and Mahon (1997) presented a table categorizing studies that have investigated this relationship. Motivated by concerns with this table, as well as a desire to account for progress in research in this area, the authors reconstructed it. The authors present a portrait of this relationship that is (a) substantially different from that (...) shown in the Griffin and Mahon table and (b) more consistent with the latest research on the topic. (shrink)