Abstract
In this article, we will outline the principles of stakeholder capitalism and describe how this view rejects problematic assumptions in the current narratives of capitalism. Traditional narratives of capitalism rely upon the assumptions of competition, limited resources, and a winner-take-all mentality as fundamental to business and economic activity. These approaches leave little room for ethical analysis, have a simplistic view of human beings, and focus on value-capture rather than value-creation. We argue these assumptions about capitalism are inadequate and leave four problems in their wake. We wish to reframe the narrative of capitalism around the reinforcing concepts of stakeholders coupled with value creation and trade. If we think about how a society can sustain a system of voluntary value creation and trade, then capitalism can once more become a useful concept.
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R. Edward Freeman is the Academic Director of the Business Roundtable Institute for Corporate Ethics. He is Elis and Signe Olsson Professor of Business Administration at The Darden School and heads Darden’s Olsson Center for Applied Ethics, one of the world’s leading academic centers for the study of ethics. Freeman has written or edited 10 books on business ethics, environmental management, and strategic management. His latest book, Environmentalism and the New Logic of Business, How Firms Can be Profitable and Leave Our Children a Living Planet, helps executives meet the challenge of being profitable while being environmentally responsible. He has also authored more than 40 Darden case studies. Freeman serves on the advisory board of University of Virginia Institute for Practical Ethics.
Kirsten Martin is an assistant professor at The Catholic University of America where she teaches management theory and strategy. Martin received her Ph.D. and MBA from the University of Virginia’s Darden School of Business and her B.S. Engineering from the University of Michigan. Martin’s research focuses on technology, business, and ethics.
Bidhan Parmar is a doctoral student in the Ethics, Entrepreneurship and Strategy program.
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Freeman, R.E., Martin, K. & Parmar, B. Stakeholder Capitalism. J Bus Ethics 74, 303–314 (2007). https://doi.org/10.1007/s10551-007-9517-y
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DOI: https://doi.org/10.1007/s10551-007-9517-y