Although scholars have long known that entrepreneurship involves the interaction of countless individuals beyond the entrepreneur, traditional performance metrics are limited to capturing the economic value that is created for shareholders. Multiple scholars have suggested that it should be possible to develop a more complete assessment that is able to simultaneously capture both the economic and non-economic consequences of entrepreneurship that exist for the broader network of firm stakeholders. The purpose of this paper is to provide a more nuanced understanding (...) of entrepreneurial performance by operationalizing the concept of stakeholder capabilities. Building on concepts from stakeholder theory and the human development and capability approach in welfare economics, we argue that the pursuit of entrepreneurial opportunities can either create or destroy value for multiple stakeholders, and that this value is best conceived in terms of increases and decreases in individual capabilities. Approaching entrepreneurial performance from a stakeholder capabilities lens has implications for how we view entrepreneurs’ impact on society, what we mean by the creation and destruction of “value,” and how we define failure and success in entrepreneurship. (shrink)

Scant research has examined the effects of an organization’s stakeholder orientation on the cognition and attitudes of employees. Our study focuses on how one aspect of an organization’s objective, its stakeholder orientation, affects employee job satisfaction. Through seven studies utilizing different samples and measures, we theorize and demonstrate that employees with a higher perceived stakeholder orientation experience enhanced job satisfaction. We provide correlational field data and causal experimental evidence to show that increased employee perspective-taking is one potential mediator of this (...) effect. These results contribute to our understanding of job satisfaction and perspective-taking by showing how employee orientation toward other stakeholders affects their attitude toward their job and social cognition. We also expand the focus of stakeholder orientation beyond normative philosophy and toward understanding its effects on the cognitions and attitudes of organizational members to provide a basis for examining the behavioral implications of different stakeholder orientations. (shrink)

How should we distinguish between ethical and unethical ways of pursuing profit in a market? The market failures approach (MFA) to business ethics purports to provide an answer to this question. I argue that it fails to do so. The source of this failure is the MFA’s reliance on Pareto efficiency as a core ethical principle. Many ethically “preferred” tactics for seeking profit cannot be justified by appeal to Pareto efficiency. One important reason for this is that Pareto efficiency, as (...) understood by the theory of welfare economics upon which the MFA relies, assumes a static conception of efficiency. This is a problem because many ethically “preferred” tactics can only be justified by appeal to dynamic efficiency considerations. I argue that, instead of Pareto efficiency, we should look to the value of wealth creation to understand the ethical constraints on how market actors may pursue profit. (shrink)

There has, in recent decades, been considerable scholarship regarding the moral aspects of corporate governance, and differences in corporate governance practices around the world have been widely documented and investigated. In such a context, the claims associated with moral relativism are relevant. The purpose of this paper is to provide a detailed consideration of how the metaethical and normative claims of moral relativism in particular can be applied to corporate governance. This objective is achieved, firstly, by reviewing what is meant (...) by metaethical moral relativism and identifying two ways in which the metaethical claim can be assessed. The possibility of a single, morally superior model of corporate governance is subsequently considered through an analysis of prominent works justifying the shareholder and stakeholder approaches, together with a consideration of academic agreement in this area. The paper then draws on the work of Wong, firstly in providing an argument supporting metaethical moral relativism and secondly regarding values of tolerance and/or accommodation that can contribute to the normative claim. The paper concludes by proposing an argument that it is morally wrong to impose a model of corporate governance where there are differences in moral judgements relevant to corporate governance, or to interfere with a model in similar circumstances, and closes with consideration of the argument’s implications. (shrink)

This article argues that shareholder primacy cannot be defended on the grounds that there is something special about the position of shareholders that grounds a right to preferential treatment on part of management. The notions of property and contract, traditionally thought to ground such a right, are now widely recognized as incapable of playing that role. This leaves shareholder theorists with two options. They can either abandon the project of arguing for their view on broadly deontological grounds and try to (...) advance consequentialist arguments instead, or they can search for other morally relevant properties that could ground shareholder rights. The most sustained argument in the latter vein is Marcoux’s attempt to show that the vulnerability of shareholders mandates that managers are their fiduciaries. I show that this argument leads to the unacceptable conclusion that it would be unethical for corporations to make incomplete contracts with nonshareholding stakeholders. (shrink)

Stakeholder theorists have traditionally objected to the neoclassical conception of the firm as a vehicle for maximizing profit or shareholder wealth, thus opening up space for controversial engagement with neoclassical economics. The present paper fills some of this space by elaborating the parallels between stakeholder theory and classical institutional economics, a heterodox school of economic thought that has long been critical of a broad range of neoclassical ideas. Rooted in the writings of Veblen and Commons, classical institutional economics explores how (...) the social provisioning process is coordinated or hindered by real-world business institutions. From this standpoint, stakeholder theory highlights the possibility of overcoming the institutionally ingrained conflicts and trade-offs for the sake of realizing common human interests in organizing the social provisioning process in an orderly and reasonable way. This argument not only illuminates the relationship of stakeholder theory to the wider societal context of modern capitalist economies but also elaborates novel aspects of the moral nature of stakeholder management. (shrink)

This paper studies the way supplier firms’ corporate social responsibility (CSR) affects their likelihood of being selected as new suppliers. Using a large sample of US public firms with detailed supply chain and CSR data, we provide empirical evidence that corporate customers prefer socially responsible suppliers, and that the effect is more prominent when the supplier industry is more competitive, the customer’s own CSR performance is better, or the supplier and the customer have more similar CSR focuses. Our paper contributes (...) to the literature of instrumental stakeholder theory (IST) by confirming corporate customer attraction as a desirable outcome of supplier CSR engagement. It complements the existing IST studies on customer responses by showing that CSR attracts not only final customers but also corporate customers. Moreover, by focusing on corporate customers’ revealed preferences for socially responsible suppliers, our paper also complements the stated-preference-based evidence in the literature of sustainable supply chain management. Our paper’s findings encourage supplier firm managers to invest in CSR to gain competitive advantages in the form of a higher likelihood of selection while simultaneously making positive contributions to society. (shrink)

One common justification for the pursuit of profit by business firms within a market economy is that profit is not an end in itself but a means to more efficiently produce and allocate resources. Profit, in short, is a mechanism that serves the market’s purpose of producing Pareto superior outcomes for society. This discussion examines whether such a justification, if correct, requires business managers to remain attentive to how their firm’s operation impacts the market’s purpose. In particular, it is argued (...) that the value of efficiency, despite views to the contrary, cannot be fully separated from the planning and intentions of business managers as long as those managers direct their firms in an ethically responsible fashion. This position is inspired by, and serves as a supportive clarification of Joseph Heath’s so-called “market failures approach” to business ethics. (shrink)

ABSTRACT:This article reviews four key orientations in environmental ethics that range from an instrumental understanding of sustainability to one that acknowledges the intrinsic value of sustainable behavior. It then shows that the current scholarly discourse around corporate sustainability management—as reflected in environment management, corporate social responsibility, and corporate political activity —mostly favors an instrumental perspective on sustainability. Sustainable business practices are viewed as anthropocentric and are conceptualized as a means to achieve competitive advantage. Based on these observations, we speculate about (...) what corporate sustainability management might look like if it applied ethical orientations that emphasize the intrinsic value of nature. This discussion also includes an introduction to two articles in this special section focused on the role of the environmental manager and sustainability standards, both of which offer paths for incorporating intrinsic valuation of the environment into sustainability management. (shrink)

ABSTRACTThe question of how to engage with stakeholders in situations of value conflict to create value that includes a plurality of conflicting stakeholder value perspectives represents one of the crucial current challenges of stakeholder engagement as well as of value creation stakeholder theory. To address this challenge, we conceptualize a discursive sharing process between affected stakeholders that is oriented toward discursive justification involving multiple procedural steps. This sharing process provides procedural guidance for firms and stakeholders to create pluralistic stakeholder value (...) through the discursive accommodation of diverging stakeholder value perspectives. The outcomes of such a discursive value-sharing process range from stakeholder value dissensus to low and increasing levels of stakeholder value congruence to stakeholder value consensus. Hence, this article contributes to the emerging literature on integrative stakeholder engagement by conceptualizing a procedural framework that is neither overly oriented towards dissensus nor consensus. (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)

Business ethics scholars have proposed strategies for mitigating the ill effects brought on by a wealth maximization business strategy by urging managers to either embrace corporate social responsibility (CSR) or to manage according to stakeholder theory. In this article I argue that these strategies are often ineffective in bringing about the behavior they promote because it is antithetical to the nature and logic of capitalism. I examine the organizing principles of capitalism and the role it assigns to capitalists, and juxtapose (...) these with the behavior prescribed by three normative frameworks: strategic management theory (SMT), the CSR initiative, and stakeholder theory. Unlike the behaviors prescribed by the CSR initiative and stakeholder management theory, the behavior prescribed by SMT is consistent with the role of capitalists as defined by the organizing principles of capitalism, and SMT's “rules” have instilled habits that have, in turn, been able to mold managers’ aspirations and purposes. CSR and stakeholder theory must not only combat the habits instilled by the entrenched SMT, they must also find some way of instilling habits that run contrary to those defined by the nature and logic of capitalism itself. (shrink)

ABSTRACT:The link between firm corporate social performance (CSP) and executive compensation could be driven by a sorting effect (a firm’s CSP is related to the initial levels of compensation of newly hired executives), or by an incentive effect (incumbent executives are rewarded for past firm CSP). Existing empirical work focuses exclusively on the incentive effect. In contrast, in this paper we explore the sorting effect of firm CSP on the initial compensation of newly hired executives. In doing so, we develop (...) a novel theoretical approach based on an integration of stakeholder theory and human capital theory, suggesting a positive association between the initial compensation of executives and firm CSP strengths and concerns. It also suggests that the strength of this relationship varies between different executive roles (as a function of stakeholder-management responsibilities). We find support for this theoretical framework in a large sample of newly-hired executives employed by Standard & Poor 1500 firms. (shrink)

Stakeholder engagement has grown into a widely used yet often unclear construct in business and society research. The literature lacks a unified understanding of the essentials of stakeholder engagement, and the fragmented use of the stakeholder engagement construct challenges its development and legitimacy. The purpose of this article is to clarify the construct of stakeholder engagement to unfold the full potential of stakeholder engagement research. We conduct a literature review on 90 articles in leading academic journals focusing on stakeholder engagement (...) in the business and society, management and strategy, and environmental management and environmental policy literatures. We present a descriptive analysis of stakeholder engagement research for a 15-year period, and we identify the moral, strategic, and pragmatic components of stakeholder engagement as well as its aims, activities, and impacts. Moreover, we offer an inclusive stakeholder engagement definition and provide a guide to organizing the research. Finally, we complement the current understanding with a largely overlooked dark side of stakeholder engagement. We conclude with future research avenues for stakeholder engagement research. (shrink)

ABSTRACT:In this article we investigate a philosophical problem for normative business ethics theory suggested by a phenomenon that contemporary psychologists call “bounded ethicality,” which can be identified with the putative fact that well-intentioned people, constrained by psychological limitations, make ethical choices inconsistent with their own ethical beliefs and commitments. When one combines the idea that bounded ethicality is pervasive with the idea that a person morally ought to do something only if she can, it raises a doubt about the practical (...) relevance of the moral principles that business ethics theory prescribes. We call this doubt the Radical Behavioral Challenge. It consists in the idea that people cannot generally conform to the normative ethical principles that business ethics theorists prescribe, and that these principles are therefore practically irrelevant. We answer the Radical Behavioral Challenge and explore normative implications of our answer. (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)

Happiness, defined as a state of well-being and contentment, is a central human goal. Despite advances in customer behavior research related to value co-creation, the link between customer happiness and these behaviors remains unclear. This study therefore examines customers’ in-role participation behavior and extra-role citizenship behavior to determine their influence on customers’ happiness. Customer participation and citizenship behaviors relate positively to customers’ perceptions of both service performance and their contributions to others’ welfare. In addition, collectivism moderates the relationship between perceived (...) contributions to others’ welfare and happiness; individualism instead moderates the relationship between perceived service performance and happiness. These findings provide both managerial implications and directions for business marketing ethics. (shrink)

Motivated by the ongoing controversy surrounding corporate tax, this article presents a study that explores stakeholder expectations of corporate tax in the context of UK business. We conduct a qualitative analysis of in-depth interviews with representatives of community groups, as well as interviews with those representing business groups. We then identify eight themes that together describe “what” companies need to do, “how” they need to do it, and “why” they need to do it, if they wish to appeal to a (...) wide group of interested parties. We discuss our findings based on the corporate social responsibility literature and propose novel ways for community groups and business groups to connect on the topic of corporate tax, suggesting opportunities and themes for dialogue and potential steps to co-create solutions in a stakeholder society. (shrink)

This article develops an integrative perspective on corporate responsibility by synthesising competing perspectives on the responsibility of the corporation at the organisational and societal levels of analysis. We review three major corporate responsibility perspectives, which we refer to as economic, critical, and politico-ethical. We analyse the major potential uses and pitfalls of the perspectives, and integrate the debate on these two levels. Our synthesis concludes that when a society has a robust division of moral labour in place, the responsibility of (...) a corporation may be economic without jeopardising democracy and sustainability. Moreover, the economic role of corporations neither signifies the absence of deliberative democratic mechanisms nor business practices extending beyond compliance. The study underscores the value of integrating different perspectives and multiple levels of analysis to present comprehensive descriptions and prescriptions of the responsibility phenomenon. (shrink)

At a time when some are questioning the relevancy of business education in general, others are now asking whether MBA programs should be blamed for society’s declining trust in business and the numerous corporate ethical failures of recent decades. Whether the full blame lies with business schools or not, MBA instructors are actively seeking more effective ways to help students adopt more practical and ethical managerial paradigms. Because trust theory is simple and robust and outlines the basic mental processes that (...) drive economic exchange while simultaneously prioritizing ethical behavior, in this article, we argue that it is distinctively suited to operationalize stakeholder theory in the classroom, providing MBA students with both a principled and a practical foundation or thematic platform for their MBA coursework and subsequent careers. We also discuss potential challenges and limitations and provide recommendations for future research. (shrink)

Will stakeholder theory continue to transform how we think about business and society? On the occasion of this journal’s 60th anniversary, this review article examines the journal’s role in shaping stakeholder theory to date and suggests that it still has transformative potential. We conducted a bibliometric analysis of co-citations in the literature from 1984 to 2020. Reporting these results, we examine the field’s evolving structure. Contextualized theoretically as an accomplishment of institutional work—the creation of a meaningful and innovative field ideology—this (...) structure is remarkable for how it integrates ethical and behavioral arguments, invites engagement from adjacent domains, and arrives at important insights for business and society. We advance a research agenda consistent with this larger institutional project. (shrink)

Corporate social responsibility focuses organizational inquiry on the role of business in society and corporate social performance provides a framework comprised of principles, processes and outcomes describing CSR performance. Virtuous social responsiveness describes CSP from a humanistic management perspective, providing an alternative principle of social responsibility as the basis from which processes and outcomes flow. Incorporating humanistic management assumptions into the role of business in society leads to social performance predicated on well-being creation and dignity promotion. VSR requires a principle (...) of social responsibility grounded in eudaemonia, positioning well-being creation as the common good, as opposed to wealth creation. Dignity promotion within stakeholder relationships is a second requirement for VSR, indicated by altruist stakeholder culture and a collectivistic organizational identity orientation. Theoretical propositions are developed to describe a humanistic management perspective on CSP. A current example of an organization engaging in VSR is provided, illustrating potential CSP outcomes. A discussion of the importance of VSR is presented, along with implications and future research. (shrink)

Over the past decades, the modernization of agriculture in the Western world has contributed not only to a rapid increase in food production but also to environmental and societal concerns over issues such as greenhouse gas emissions, soil quality and biodiversity loss. Many of these concerns, for example those related to animal welfare or labor conditions, are stuck in controversies and apparently deadlocked debates. As a result we observe a paradox in which a wide range of corporate social responsibility initiatives, (...) originally seeking to reconnect agriculture and society, frequently provoke debate, conflict, and protests. In order to make sense of this pattern, the present paper contends that Western agriculture is marked by moral complexity, i.e., the tendency of multiple legitimate moral standpoints to proliferate without the realistic prospect of a consensus. This contention is buttressed by a conceptual framework that draws inspiration the contemporary business ethics and systems-theoretic scholarship. From the systems-theoretic point of view, the evolution of moral complexity is traced back to the processes of agricultural modernization, specialization, and differentiation, each of which suppresses the responsiveness of the economic and legal institutions to the full range of societal and environmental concerns about agriculture. From the business ethics point of view, moral complexity is shown to prevent the transformation of the ethical responsibilities into the legal and economic responsibilities despite the ongoing institutionalization of CSR. Navigating moral complexity is shown to require moral judgments which are necessarily personal and contestable. These judgments are implicated in those CSR initiatives that require dealing with trade-offs among the different sustainability issues. (shrink)

We theorize that, in the current development of business ethics, there is a fruitful evolution that dissolves the dichotomy between the normative and behavioral research approaches developed, respectively, by philosophers and social scientists; this approach avoids many of the limitations originated by such distinction by reconnecting their two separate narratives. We call this emerging research model Humanistic Business Ethics (HBE) as it emphasizes the centrality of the human dimension of business and the importance of adopting a richer concept of humanity (...) in business ethics research. We argue that this specific research model in business ethics emerges when scholars combine a pragmatist philosophical approach with some key ideas coming from stakeholder theory, which we summarize and connect. By leveraging collaboration across ethics, economics, psychology, and entrepreneurship, HBE can help business and society scholars undertake fruitful inquiries into the way business works (and should work) at its best. (shrink)

Business Ethics: A European Review, EarlyView.

The actions of “world‐based” multinational corporations (MNCs) have effectively decoupled the revenue generation and the production sides of the business equation. This decoupling has led to an end of “virtuous capitalism,” which has widespread ramifications for the societies within highly developed countries as well as those in developing and underdeveloped nations. This article presents an overview of the defining aspects of virtuous corporations and the linkages to virtuous capitalism. It then describes the actions of Apple Computer as emblematic of an (...) MNC that is nonvirtuous in its practices. The article then discusses how the encouragement of globalized trade has prompted the shift away from virtuous capitalism and closes with a summary of possible actions that could reverse the decline in corporate virtue. (shrink)

To contribute to the continuing challenge of explaining how managers identify stakeholders and assess their salience, in this article, we chronicle the history, assess the impact, and evaluate the possibilities opened by Mitchell, Agle, and Wood (MAW-1997). We do so through two types of qualitative analysis, and also through utilizing a quantitative network analysis tool. The first qualitative analysis categorizes the major contributions of the most influential papers succeeding MAW-1997; the second identifies and compares the relevant issues with MAW-1997 at (...) the time of initial publication and today. We apply main path analysis, a quantitative tool, to map how this scholarly domain has evolved. These three analyses robustly depict the impact of MAW-1997 and the ensuing scholarly conversation, and they enable us to illustrate the current state and trajectory of stakeholder identification and salience scholarship. We close by discussing pressing topics related to the broader body of stakeholder theory literature. (shrink)

PurposeAs interest in technology ethics is increasing, so is the interest in bringing schools of ethics from non-Western philosophical traditions to the field, particularly when it comes to information and communication technology. In light of this development and recent publications that result from it, this paper aims to present responds critically to recent work on Confucian virtue ethics (CVE) and technology.Design/methodology/approachFour critiques are presented as theoretical challenges to CVE in technology, claiming that current literature insufficiently addresses: overall applicability, collective ethics (...) issues, epistemic overconfidence within technology corporations and amplification of epistemic overconfidence by the implementation of CVE. These challenges make use of general CVE literature and work on technology critique, political philosophy, epistemology and business ethics.FindingsImplementing CVE in technology may yield some benefits, but these may be outweighed by other outcomes, include strengthening hierarchies, widening inequities, increasing, rather than limiting, predictive activity, personal data collection, misinformation, privacy violations and challenges to the democratic process.Originality/valueThough not directly advocating against CVE, the paper reveals hitherto unidentified and serious issues that should be addressed before CVE are used to inform ethics guidelines or regulatory policies. It also serves as a foundation for further inquiry into how Eastern philosophy more broadly can inform technology ethics in the West. (shrink)

Accountability for corporate social responsibility (CSR) and its societal challenges is undetermined, and it is unclear whether business or society should carry these responsibilities. Despite severe criticism from some, many organizations continue to invest in and promote CSR. The purpose of this multiple-case study was to increase the understanding of the phenomenon from the perspective of a purposeful sample of participants who contribute to CSR execution and who were representatives of the 10 organizations identified as active promoters. The participant corporations (...) (case studies), in Europe and North America, were mainly in the telecommunications industry. Study data came from 11 face-to-face, semistructured interviews with chief executive officers (CEOs) and other CSR key participants, a review of corporate archival records, and a review of other sources regarding the effective implementation of CSR in these organizations. The conceptual framework consisted of Carroll’s constructs of CSR based on economic, legal, social, and discretionary elements. The constant comparative method was used to analyze the interview data and identify factors leading corporations to continue to engage in CSR. These factors were economic, social impact, legal compliance, or good reputation, sponsored by transformational or adaptive leaderships and endorsed by visionary CEOs. The findings may enlighten and motivate other organizations to engage in CSR programs and connect stakeholders’ contribution to a broadened positive social change. (shrink)