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)

This paper argues that the notion of value has been overly simplified and narrowed to focus on economic returns. Stakeholder theory provides an appropriate lens for considering a more complex perspective of the value that stakeholders seek as well as new ways to measure it. We develop a four-factor perspective for defining value that includes, but extends beyond, the economic value stakeholders seek. To highlight its distinctiveness, we compare this perspective to three other popular performance perspectives. Recommendations are made regarding (...) performance measurement for both academic researchers and practitioners. The stakeholder perspective on value offered in this paper draws attention to those factors that are most closely associated with building more value for stakeholders, and in so doing, allows academics to better measure it and enhances managerial ability to create it. (shrink)

ABSTRACT:Global multi-stakeholder initiatives are important instruments that have the potential to improve the social and environmental sustainability of global supply chains. However, they often fail to comprehensively address the needs and interests of various supply-chain participants. While voluntary in nature, MSIs have most often been implemented through coercive approaches, resulting in friction among their participants and in systemic problems with decoupling. Additionally, in those cases in which deliberation was constrained between and amongst participants, collaborative approaches have often failed to materialize. (...) Our framework focuses on two key aspects of these breakdowns: assumptions about the orientation of MSI participants, and the deliberation processes that participants use to engage with each other to create these initiatives and sustain them over time. Drawing from stakeholder and deliberation theories, we revisit the concept of MSIs and show how their deliberative capacity may be enhanced in order to encourage participants to collaborate voluntarily. (shrink)

In this article we revisit the notion of stakeholder responsibility as a way to highlight the role that stakeholders have in creating anethical business context. We argue for modifying the prevailing focus on corporate responsibility to stakeholders, and giving more serious attention to the importance of stakeholder responsibility—to firms, and to other stakeholders who are part of the collective enterprise. We elaborate why stakeholder responsibility matters, and suggest how making stakeholder responsibility a central focus of academics and practitioners can redefine (...) the interaction between firms and stakeholders and ultimately enhance business excellence. (shrink)

In this article we revisit the notion of stakeholder responsibility as a way to highlight the role that stakeholders have in creating anethical business context. We argue for modifying the prevailing focus on corporate responsibility to stakeholders, and giving more serious attention to the importance of stakeholder responsibility—to firms, and to other stakeholders who are part of the collective enterprise. We elaborate why stakeholder responsibility matters, and suggest how making stakeholder responsibility a central focus of academics and practitioners can redefine (...) the interaction between firms and stakeholders and ultimately enhance business excellence. (shrink)

Stakeholder theory focuses on how more value is created if stakeholder relationships are governed by ethical principles such as integrity, respect, fairness, generosity and inclusiveness. However, it has not adequately addressed strategies that stakeholders perceive as harmful to their interests and how this perception can even lead some stakeholders to view the firm’s strategies as unethical. To fill the void, this paper directly addresses strategies that stakeholders perceive as harmful to their interests, or what we refer to as harmful stakeholder (...) strategies. Specifically, it identifies factors associated with stakeholder perceptions of harm that are likely to cause them to consider a strategy unethical, examines the negative implications for firms that pursue such strategies in terms of likely stakeholder responses and damage to stakeholder relationships, and provides theory to help explain how firms are likely to respond to stakeholder claims that a strategy is unethical, based on factors such as the strategic importance of the claim to the firm, how long the strategy has been in use, the costs of remediation, the risk of stakeholder mobilization or new regulation, and whether firms can reasonably rationalize their actions. Assessing harm allows a firm to make a more accurate estimate of the costs of a strategy and can assist managers in allocating resources intended to reduce or remediate harm. (shrink)

ABSTRACT:In this article we set the context for this special issue focusing on individual and organizational reintegration in the aftermath of transgressions that violate ethical and legal boundaries. Following a brief introduction to the topic we provide an overview of each of the four articles selected for this special issue. We then present a number of potentially fruitful empirical, theoretical, and normative directions management and ethics scholars might pursue in order to further advance this evolving literature.

For decades, scholars have debated the corporate objective. Scholars have either advocated a corporate objective focused on generating value for shareholders or creating value for multiple groups of stakeholders. Although it has been established that the corporate objective can shape many aspects of the corporation—including culture, compensation, and decision making—to date, scholars have not yet explored its psychological impact; particularly, how the corporate objective might influence employee well-being. In this article, we explore how two views of the corporate objective affect (...) employee self-determination, a key component of overall psychological need satisfaction and well-being. We hypothesize that a corporate objective based on creating value for multiple stakeholders will increase employee psychological need satisfaction as compared to one focused on creating value for only shareholders. Across four experimental studies and one field survey, we find consistent support for our hypotheses and test three facets of a stakeholder-focused corporate objective. Theoretical implications and future research directions are discussed. (shrink)

Michael Walzer is one of the most distinguished political philosophers and social critics of this century. His ideas have had great import and influence in political philosophy and political discussion, yet very few of his ideas have been incorporated explicitly into the business ethics literature. We argue that Walzer’s work provides an important conceptual canvas for business ethics scholars that has not been adequately explored. Scholars in business ethics often borrow from political theory and philosophy to generate new insights and (...) develop new substantive contributions. Many valuable theoretical resources are already used extensively—particularly Aristotle, Kant, Marx and a variety of utilitarian philosophers. Walzer offers another set of resources to bring to the conversation of what business ethics is and how business ethicists add value. This paper provides an opportunity to delve further into Walzer’s writings, particularly themes that are tied to business ethics, and to illustrate how his ideas can be extended to reshape our understanding of the field and develop new perspectives on ethical issues in commerce. (shrink)

There is a long and distinguished history of ethical thought in both business and medicine dating back to ancient times. Yet, the emergence of distinct academic disciplines ("business ethics" and "bioethics") which are also tied to broader social movements is a very recent phenomenon. In spite of the apparent affinities that would seem to emerge from this connection, many have argued that the differences between business and medicine make any constructive interaction between business ethics and bioethics minimal. Indeed, little has (...) been done to specifically examine the potential for collaboration and interdisciplinary research. This paper argues that there is considerable potential for constructive interaction between these two movements based on three major arguments: that the differences between medicine and business have been exaggerated, that both the fields face a number of urgent problems that are common to each, and that the model of bioethics can serve as a useful guide for business ethicists. (shrink)

There is a long and distinguished history of ethical thought in both business and medicine dating back to ancient times. Yet, the emergence of distinct academic disciplines [“business ethics” and “bioethics”) which are also tied to broader social movements is a very recent phenomenon. In spite of the apparent affinities that would seem to emerge from this connection, many have argued that the differences between business and medicine make any constructive interaction between business ethics and bioethics minimal. Indeed, little has (...) been done to specifically examine the potential for collaboration and interdisciplinary research. This paper argues that there is considerable potential for constructive interaction between these two movements based on three major arguments: that the differences between medicine and business have been exaggerated, that both fields face a number of urgent problems that are common to each, and that the model of bioethics can serve as a useful guide for business ethicists. (shrink)

For undergraduate business ethics courses. The ethical training business students need to be successful in today's challenging business world. Recent scandals have created a mistrust that has spread through the entire business sector, jeopardizing public confidence in the stock market and economy. Now more than ever, it's important for students to understand the moral foundations, rules, and implications that are vital to the core of business. Business Ethics 1e presents an in-depth introduction of business ethics that emphasizes the role of (...) ethics as a critical part to management success. (shrink)

Abstract:Recent work on the subject speaks to the importance trust has for firm performance (e.g., Hagen and Choe, 1999; Hill, 1995). Yet little work has been done to show how context affects the ability of firms to create trust in relationships with key stakeholders. This paper looks at how the institutional environment may affect the performance of different strategies for managing firm-stakeholder relationships, and in turn, how this affects firm performance. The authors put forward propositions that build on these theoretical (...) insights and offer prospects for future empirical work. (shrink)

There is growing appreciation of the challenges posed by our current economic activity in terms of the natural environment. Increasingly, people have come to appreciate that business must not only be more aware of its environmental impact, but also must be more environmentally sustainable in its core operations. Academic theories of management influence managerial practice. They clarify what is important to the corporation, and where managers and employees should direct their attention. The focus of this paper is to explore the (...) extent to which three possible managerial mindsets—shareholder value maximization, stakeholder value maximization, and the triple bottom line—may either enhance or inhibit the ability of corporations to manage in an environmentally sustainable way. We discuss the implications of each of these mindsets and highlight their relative strengths and weaknesses, noting that all three hold promise, but each has limitations in enabling managers to operate sustainably. (shrink)

The subject of journal quality has received little attention in the business ethics literature. While there are reasons for this past neglect, there are important new considerations which make it vital that researchers now address this topic. First, virtually all business school departments use evaluations of journal quality as an important indicator of scholarly achievement, yet business ethics has no such studies. Second, as many schools are beginning to ask ethicists to publish in the wider management literature, it is important (...) to find a way to compare journal quality across these domains. In the absence of such studies, performance review committees (including tenure decisions) may well make incorrect inferences about journal quality within business ethics or assume that ethics journals are not prestigious unless a candidate can provide evidence to the contrary (i.e. as in a study like this one). This study addresses these two issues. It relies on an opinion-based survey to establish journal quality by incorporating a list of journals within business ethics and the wider management literature. The target population is active business ethics researchers within the Society for Business Ethics (SBE). We present the results of the study and discuss their implications. (shrink)

Several critics have maintained that there are some critical differences between the ethics of medicine and the ethics of business such that health care should remain as free as possible from the influence of business. In particular, it has been suggested that the core moral identity of those in medical practice, and their accompanying institutions, are not only antagonistic, but effectively opposed to their counterparts in business. This paper attempts to challenge such a sharp contrast and suggests that a reformulation, (...) where the two are seen as fundamentally similar is both appropriate and compelling. Indeed, as we contemplate the direction of proposed comprehensive reforms in health care, such an understanding of the moral framework of medicine and business is essential. (shrink)

Abstract:Total Quality Management (TQM) has been the object of extensive discussion within the popular literature and is increasingly of interest among management scholars. Recent scholarship has focused on the theoretical foundations of TQM, particularly what makes it work, why so many firms have had problems implementing it, and under what circumstances it may create a sustainable advantage for individual firms. This paper extends the work in theory development regarding TQM and offers an empirically testable theoretical model of its function. The (...) central claim of the paper is that embedded within TQM there are a set of moral values (“value dynamics”) that must be developed and maintained if it is to work, and that seeing them as moral values has significant theoretical and practical implications. That is, how TQM is understood and “enacted” (Weick 1979) by managers plays a significant role in determining its success. The discussion is linked to the ethics literature, normative implications of the model are explored, and directions for future research are outlined. (shrink)

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. (shrink)

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. (shrink)

The dialogue about the future of health care in the US has been impeded by flawed conceptions about medicine and business. The present paper re-examines some of the underlying assumptions about both medicine and business, and uses more nuanced readings of both terms to frame debates about the ACA and the emerging health care environment.

Many observers claim that business has become a powerful force in medicine and that the future of health care cannot escape that reality, even though some scholars lament it. The U.S. recently experienced the most devastating recession since the Great Depression. As health care costs rise, we face additional pressure to rein in health care spending. We also have important new legislation that could well mark a significant shift in how health care is provided and who has access to care, (...) namely the Affordable Care Act. These changes underscore the need to bring new thinking to the conversation about health care and to move beyond conceptual and practical obstacles that inhibit our progress.In this paper we do not to claim to have solutions. Rather, our aim is to try to identify some obstacles to fostering a better conversation about the future of health care and to envisioning a better health care system. (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)

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)

Although researchers have begun to examine how firms manage their entire web of stakeholder relationships, the component relationships also require theoretical and empirical examination. Several studies have found that Employee Stock Ownership Plans (ESOPs) have a positive impact on firm performance. The authors explain these results by hypothesizing that ESOPs, when combined with employee participation programs, forge a stakeholder relationship between management and employees. The authors offer criteria for identifying stakeholder relationships, provide background on ESOPs, analyze why they contribute to (...) establishing such a relationship, and examine how published empirical research supports this analysis. The authors conclude by suggesting directions for future research. (shrink)

In his Ruffin Lecture, Bowie attempts to offer a Kantian theory of capitalism, and this strikes me as a constructive and important thing to do. Bowie’s proposal contributes to a new direction in research that I believe is critical: offering alternative interpretations of capitalism, specifically, theories based in moral concepts which are designed to make room for normative inquiry. In contrast, much of the work in business ethics has focused on the application of moral principles or ideas to specific problems (...) in business. These efforts work largely within the accepted meanings of “business” offered by economists, strategists and others, and then try to import moral concepts to identify and analyze various ethical problems. Several recent works in ethics suggest that this approach hasn’t addressed underlying assumptions about ethics and business which tend to make “ethical” approaches either directly conflicting with the logic of “business” or largely irrelevant to it. As such, the “problems” approach to doing ethics doesn’t address the substantial difficulties created by the conceptual terrain to which it was applied. Without more comprehensive and systematic attention to how researchers understand the conceptual underpinnings of capitalism, the contributions of such efforts will be limited and tenuous—that is, they will make projects which attempt to “apply” ethics onto business seem naive or implausible to people outside the community of business ethicists. (shrink)

This paper explores the subject of ethics expertise. We suggest that this is a topic which has been badly neglected despite ongoing discussions about subjects which presuppose a particular conception of expertise (e.g., codes of conduct, certification requirements). In addition, given significant challenges to any conception of ethical expertise, we try to determine whether it is possible to provide a meaningful and substantive account of it. The paper moves from more abstract discussion of the idea to grounding a particular model, (...) providing substance to it, and discussing specific traits or qualities of ethics experts. (shrink)

This book celebrates the work of Patricia Werhane, an iconic figure in business ethics. This festschrift is a collection of articles that build on Werhane’s contributions to business ethics in such areas as Employee Rights, the Legacy of Adam Smith, Moral Imagination, Women in Business, the development of the field of business ethics, and her contributions to such fields as Health Care, Education, Teaching, and Philosophy. All papers are new contributions to the management literature written by well-known business ethicists, such (...) as Norman Bowie, Richard De George, Ronald Duska, Edwin Hartman, Michael Hoffman, Mollie Painter-Morland, Mark Schwartz, Andrew Wicks, and others. The volume is comprised of articles that reflect on Werhane’s work as well as build on it as a way to advance further research. At the end of the festschrift, Pat Werhane provides responses to each chapter. The first chapter of the book also includes the overview of Patricia Werhane’s work and her academic career. The book is written to appeal to management scholars and graduate students interested in the areas of Business Ethics, Modern Capitalism, and Human Rights. Patricia Werhane is one of the most distinguished figures in the field of business ethics. She was a founder of the field, she is one of its leading scholars, and she has had a profound impact on the world of business practice. Among her many accomplishments, Pat is known for her original work on moral imagination, she is an acclaimed authority on employee rights in the workplace, and she is one of the leading scholars on Adam Smith. Having been active in Academia for over 50 years, Werhane is a prolific author of over a hundred articles and book chapters, and the author or editor of twenty-seven books, including Adam Smith and his Legacy for Modern Capitalism, Moral Imagination and Management Decision-Making, and co-authored books Organization Ethics in Health Care, Alleviating Poverty Through Profitable Partnerships, Obstacles to Ethical Decision-Making, Corporate Responsibility: The American Experience, and Research Approaches to Business Ethics and Corporate Responsibility. (shrink)

Public trust in business is one of the most important but least understood issues for business leaders, public officials, employees, NGOs and other key stakeholders. This book provides much-needed thinking on the topic. Drawing on the expertise of an international array of experts from academic disciplines including business, sociology, political science and philosophy, it explores long-term strategies for building and maintaining public trust in business. The authors look to new ways of moving forward by carefully blending the latest academic research (...) with conclusions for future research and practice. They address core drivers of public trust, how to manage it effectively, the consequences of low public trust, and how best to trust challenges and restore trust when it has been lost. This is a must-read for business practitioners, policy makers and students taking courses in corporate social responsibility or business ethics. (shrink)

Nowadays businesses are often expected to create not just financial, but multiple kinds of value—and they report on this using numbers and narratives. Multiple-value accounting narratives, such as those required by the Integrated Reporting framework, are often met with suspicion: accounting scholars have argued that inconsistencies between narratives and performances show that narratives are used for impression management rather than to accurately report the (ir)responsible behavior of companies. This paper proposes to assess narratives beyond inconsistencies with reported performances. Starting from (...) the idea that performances are delivered in response to the kinds of value in the situation of the company, we argue that narratives and performances should be analyzed together as interrelated elements and considered in relation to the kinds of value in the situation. The paper transforms the common consequentialist view on which value should be “increased,” into the value pluralist view that something being of value can require many different performances such as for example respecting, maximizing, admiring, maintaining, using, and bringing it about. From this perspective, multiple-value accounting narratives logically precede the reporting of performances and should identify the kinds of value in the situation to which the company ought to respond, which performances are required by these kinds of value, and which indicators and targets should be used to report on these performances. A brief analysis of the annual report of Unilever illustrates how such metaethical criteria can help assess and develop multiple-value accounting narratives. (shrink)

Norman Bowie wrote an article on the moral obligations of multinational corporations in 1987. This paper is a response to Bowie, but more importantly, it is designed to articulate the force and substance of the pragmatist philosophy developed by Richard Rorty. In his article, Bowie suggested that moral universalism (which he endorses) is the only credible method of doing business ethics across cultures and that cultural relativism and ethnocentrism are not. Bowie, in a manner surprisingly common among contemporary philosophers, lumps (...) Rorty into a bad guy category without careful analysis of his philosophy and ascribes to him views which clearly do not fit. I attempt to provide both a more careful articulation of Rorty's views, and to use his pragmatism to illustrate an approach to business ethics which is more fruitful than Bowie's. This brand of philosophy follows the Enlightenment spirit of toleration and attempts to set aside questions of Truth, whether religious or philosophical, and have ethics centered around what James called that which is good in the way of belief. Rather than looking for metaphysical foundations or some type of external justification, ethicists perform their craft from within the cultural traditions, narratives and practices of their society. (shrink)