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Ethics and Incentives: An Evaluation and Development of Stakeholder Theory in the Health Care Industry

Published online by Cambridge University Press:  23 January 2015

Heather Elms ,
Shawn Berman  and
Andrew C. Wicks
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Abstract:

This paper utilizes a qualitative case study of the health care industry and a recent legal case to demonstrate that stakeholder theory’s focus on ethics, without recognition of the effects of incentives, severely limits the theory’s ability to provide managerial direction and explain managerial behavior. While ethics provide a basis for stakeholder prioritization, incentives influence whether managerial action is consistent with that prioritization. Our health care examples highlight this and other limitations of stakeholder theory and demonstrate the explanatory and directive power added by the inclusion of the interactive effects of ethics and incentives in stakeholder ordering.

Type
Articles
Information
Business Ethics Quarterly , Volume 12 , Issue 4 , October 2002 , pp. 413 - 432
Copyright
Copyright © Society for Business Ethics 2002

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