This thoughtful new abridgment is enriched by the brilliant commentary which accompanies it. In it, Laurence Dickey argues that the _Wealth of Nations_ contains--and conceals--a great deal of how Smith actually thought a commercial society works. Guided by his conviction that the so-called Adam Smith Problem--the relationship between ethics and economics in Smith's thinking--is a core element in the argument of the work itself, Dickey's commentary focuses on the devices Smith uses to ground his economics in broadly ethical and social (...) categories. An unparalleled guide to an often difficult and perplexing work. (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.

‘Responsibility’, ‘accountability’ and ‘governance’ are key terms within business ethics. This paper aims to construct a framework to help us understand the relationships between these terms. I first of all analyse the concept of responsibility to show the place of accountability within it, then move to analyse accountability as a sub–concept of responsibility, then finally attempt to show how accountability along with responsibility in general figures within governance structures. While obviously not as complex as the concept of responsibility of which (...) it is part, the sub–concept of accountability is somewhat more complex than often seems to be supposed. The view taken of governance is that as a concept it is relatively straightforward. It acquires complexity only with the involvement of responsibility along with accountability and other aspects of responsibility. The vexed questions as to how these are to be applied lie at the heart of disputes about corporate governance. Though not offering a solution to those disputes, the fact that they arise from the involvement of responsibility, accountability and related matters means that the analysis of concepts given here does offer a framework for thinking about these disputes more clearly. (shrink)

This is a new release of the original 1949 edition.

Much has been written about stakeholder analysis as a process by which to introduce ethical values into management decision-making. This paper takes a critical look at the assumptions behind this idea, in an effort to understand better the meaning of ethical management decisions.A distinction is made between stakeholder analysis and stakeholder synthesis. The two most natural kinds of stakeholder synthesis are then defined and discussed: strategic and multi-fiduciary. Paradoxically, the former appears to yield business without ethics and the latter appears (...) to yield ethics without business. The paper concludes by suggesting that a third approach to stakeholder thinking needs to be developed, one that avoids the paradox just mentioned and that clarifies for managers (and directors) the legitimate role of ethical considerations in decision-making. (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)

Abstract:After a decade of intensive debate, stakeholder ideas have come to exert a significant influence on academic management thinking, but normative stakeholder theory itself appears to be in considerable disarray. This paper attempts to untangle the confusion and to prepare the ground for a more productive approach to the normative stakeholder problem. The paper identifies three distinct kinds of normative stakeholder theory and three different levels of claim that can be made by such theories, and uses this classification to argue (...) that stakeholder theorists have consistently pitched their sights either too high or too low to engage effectively with the rival shareholder theory. To the extent that they have their sights too high they have also undermined their own position by sacrificing credibility and introducing major problems of derivation. (shrink)

We argue that though stakeholder theory has much to recommend it, particularly as a heuristic for thinking about business firmsproperly as involving the economic interests of other groups beyond those of the shareholders or other equity owners, the theory is limited by its focus on the interests of human participants in business enterprise. Stakeholder theory runs into intractable philosophicaldifficulty in providing credible ethical principles for business managers in dealing with some topics, such as the natural environment,that do not directly involve (...) human beings within a business firm or who engage in transactions with a firm. Corporate decision-makingmust include an appreciation of these ethical values even though they cannot be captured in stakeholder theory. (shrink)

Abstract: Stakeholder theorists have typically offered both a business case and an ethics case for business ethics. I evaluate arguments for both approaches and find them wanting. I then shift the focus from ethics to law and ask: “Why should corporations obey the law?” Contrary to what shareholder theories typically imply, neoclassical or profit maximization theories of the firm can offer answers based only on instrumental justifications. Instrumental justifications for obeying the law, however, are pragmatically and normatively incoherent. This is (...) because the modern corporation is a legal artifact. It exists because communities create the legal framework necessary for its existence. Individual corporations can therefore be said to owe their existence to a partnership (what might be called a social contract) between shareholders and governments, a partnership that is itself built on the shared though often implicit understanding that corporations have an unconditional (categorical) obligation both to obey the law and to treat their stakeholders ethically while generating wealth for their shareholders. (shrink)

Definitions of what it is to be a stakeholder are divided into "claimant" definitions requiring some sort of claim on the services of a business, "influencer" definitions requiring only a capacity to influence the workings of the business, and "combinatory" definitions allowing for either or both of these requirements. It is argued that for the purposes of business ethics, stakeholding has to be about improving the moral conduct of businesses by directing them at serving more than just the interests of (...) owners. On that basis, influencer definitions are eliminated on the grounds that they only concern morally neutral strategic considerations and combinatory definitions on the grounds that the combining of ethical and strategic considerations they promise can be less confusingly achieved through an exclusively claimant definition. It is concluded that for the purposes of business ethics, stakeholders are claimants towards whom businesses owe perfect or imperfect moral duties beyond those generally owed to people at large. (shrink)

Can we achieve greater fairness by reforming the corporation? Some recent progressive critics of the corporation arguethat we can achieve greater social justice both inside and outside the corporation by simply rewriting or reinterpreting corporate rulesto favor non-stockholders over stockholders. But the progressive program for reforming the corporation rests on a critical assumption,which I challenge in this essay, namely that the rules of the corporation matter, so that changing them can effect a lasting redistribution of wealth from stockholders to non-stockholders. (...) This essay uses a critique of the progressive reform program to argue that the rules ofthe corporation are distributively neutral. The corporation isn't rigged against non-stockholders, and changing its rules will not improve the bargaining power of non-stockholders. However, while the rules may be epiphenomenal from the standpoint of distributive justice, they can have substantial impacts on the corporation's efficiency. As a result, the proposed reforms may hurt the corporation's capacity to generate benefits for all the parties concerned. (shrink)

This paper discusses the normative ethical theory of the business firm advanced principally by William E. Evan and R. Edward Freeman. According to their stakeholder theory, the firm should be managed for the benefit of its stakeholders: indeed, management has a fiduciary obligation to stakeholders to act as their agent. In this paper I seek to clarify the theory by discussing the concept of a stakeholder and by distinguishing stakeholder theory from two varieties of stockholder theory-I call them ‘pure’ and (...) ‘tinged.’ I argue that the distinctive claims of stakeholder theory, as contrasted with tinged stockholder theories, have been inadequately supported by argument. (shrink)