The authors content analyzed 179 articles that directly addressed freemans work on stakeholde. This article examines the relationship between managements view on corporate social responsibility csr and firms actual csr efforts. Stakeholder theory advocates for treating all stakeholders with fairness. Modern corporation and private property was an exhortation to american managers to emulate the ethos of military officers by putting country before self and prioritizing the interests of the nation over those of shareholders and executives. Though still much used for this purpose, the corporate form has acquired a larger significance. Origin and development of the theories 811 comparative table between germany and us regarding 12 share and stakeholder capitalism 3. The economic argument milton friedman s theory assumes there are no economic externalities, moral hazards in the form of passalong costs, or monopolies. Since neither approach is complete without the other, we propose a new way of theorizing about organizations.
The authors specifically leave open the notion that the potential list of stakeholders could be quite broad. Kantian capitalism, in thomas beauchamp and norman bowie eds. Edward freeman inscribed the stakeholder as a key concept for business ethics and as a theoretical cornerstone for the development of corporate social responsibility csr over the past three decades. A stakeholder theory of the modern corporation semantic scholar. The ethic of capitalism is a kantian ethic because it insists upon individual choice as the key to social organization. It addresses morals and values in managing an organization, such as those related to corporate social responsibility, market economy, and social contract theory. This paper identifies a number of governance challenges for critics of capitalism. Stakeholder management and corporate performance sciencedirect. Stakeholder theorising and the corporatecentric world. Capitalism, corporations and the social contract business. This article provides a brief overview of stakeholder theory, clears up some widely held misconceptions, explains the importance of examining stakeholder theory from a variety of international perspectives and how this type of research will advance management theory, and introduces the other articles in the special issue.
Normative, macro, and networkfocused stakeholder marketing. Stakeholder theory of the modern corporation, freeman. Kantian capitalism, in ethical theory and business, 3d ed. There has long been a twoway exchange of ideas between the corporate world and the military. Edward freeman corporations have ceased to be merely legal devices through which the private business transactions of individuals may be carried on. The stakeholder theory has been advanced and justified in the management literature on the basis of its descriptive accuracy, instrumental power, and normative validity. In this article, we examine these three aspects of the theory. Stoner freeman gilbert management 6th edition free download list of ebooks and manuels about stoner freeman gilbert management 6th edition free download. Edward freeman date 1988 page start 97 page end 106 web address. This article summarizes the development of the stakeholder concept in the last decade.
Kantian capitalism scroll down the pdf to locate this reading add to my bookmarks export citation. The paper aims to define managerial implications of the strategic analysis and stakeholder management, which have a positive effect on the companys profitability and market value4. Stakeholder theory is the mainstream way of conceiving organizations, especially for profit corporations. Moving from a firmcentric to a societal perspective show all authors. The modern corporation and private property by berle and. This story has developed as a counterpoint to the standard modern day narrative of capitalism as a system whose only concern is the.
But all of these really exist, so his shareholder theory is false. Managerial capitalism stockholder theory is now seen to be inadequate on legal and economic grounds. Corporations have to take all of the stakeholder groups into account when making a decision. It is to this version of the normative stakeholder theory that the following description refers. Paper presented at the 1994 ruffin lectures, the darden school, university of virginia, charlottesville, va. Donaldson t preston l 1995 the stakeholder theory of the.
My thesis is that i can revitalize the concept of managerial capitalism. Concepts, evidence, and implications thomas donaldson georgetown university lee e. This paper explores the assumptions of philosophical pragmatism that underpin the theory and concludes that the theory does not qualify as normative. The stakeholder theory is a theory of organizational management and business ethics that accounts for multiple constituencies impacted by business entities like employees, suppliers, local communities, creditors, and others. Edward freeman introduction corporations have ceased to be merely legal devices through which the private business transactions of individuals may be carried on. A stakeholder theory of the modern corporation before talking about stakeholder theory, we must know the definition of stakeholder. For kant, the individual is the locus of moral responsibility because personal rationality is the source of moral principle. Stakeholder theory as a basis for capitalism springerlink. The modern corporation and private property by adolf berle and gardiner means 1932 remains one of the most cited works in management. Our paper explores how a seminal text influenced corporate governance systems in the united states and abroad. Edward freeman, a stakeholder theoy of the modern corporation.
Bowie1 some stakeholder years ago theory ed freeman of corporate and william responsibility. It also features indepth discussions of two important areas that stakeholder theory has helped to shape and define. This is only a partial representation of ed freemans published works on stakeholder theory. Scholars around the globe have published over 36,000 articles and books using stakeholder theory. Over the years freeman and other scholars who write about stakeholder theory have taken a pragmatic turn and moved away from the theory s kantian roots. It examines the ethical framework of milton friedmans argument and asks whether it necessarily rules out the wellbeing of nonshareholders as a corporate objective. Donaldson t preston l 1995 the stakeholder theory of the corporation concepts from sw 8300 at georgia state university. The academic debate has been dominated over the last ten years by the managerial version of the stakeholder concept.
The corporation has, in fact, become both a method of property tenure and a means of organizing. An interesting and important aspect of stakeholder theory is that it is comprehensive in its approach. Read, highlight, and take notes, across web, tablet, and phone. A stakeholder theory of the modern corporation kantian capitalism. Evan and freemans a stakeholder theory of the modern corporation. Stakeholder theory of the modern corporation university of dayton. Corporations are described as a web of stakeholders before. William evan and r freeman a stakeholder theory of the modern. 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 selfserving to business and ethics academics. Corporations are described as a web of stakeholders before whom managers have a multifiduciary responsibility. Paying attention to customers needs stable business processes sales. Stakeholder theory as a basis for capitalism request pdf. Freeman and evan a stakeholder theory of the modern corporation. Primarily he intended that the stakeholder would provide a new concept for the practice of.
The case of shell in ogoniland is elaborated to demonstrate that the managerial version does not pay sufficient respect to other interpretations of the concept. But, there are many different ways to take them into account for example, the last uaw strike. We must now develop and implement a stakeholder theory of the contemporary corporation. The purpose of this article is to pose several challenges to this assumption, from within the framework of managerial capitalism, and to suggest the bare bones of an alternative theory, a stakeholder theory of the modern corr. In this way, stakeholder theory is similar in large degree with alternative models of strategic management such as resource dependence theory, p. Freeman 1993 a stakeholder theory of the modern corporation. To be a coherent and genuinely alternative conception to the shareholder model, any moral stakeholder theory must meet the following conditions. Stakeholder is a person, group, organization, or system who affects or can be affected by an organizations actions. The arguments against capitalism and rightist extremism is, in this way, buffered as the paradigm rotates closer to a central, or a right closer to center perspective. Beauchamp and norman bowie eds, ethical theory and business. Stakeholder theory attempted to describe, prescribe, and derive alternatives for corporate governance that included and balanced a multitude of interests. Preston university of maryland, college park harry j. I believe ed originally intended to expand that paper into a larger project but eds philosophical.
Development and local circumstances in germany 16 3. But, there are many different ways to take them into account for example, kantian ethics utilitarian ethics rawls theory about justice. Nov 15, 2012 this article draws on the moral philosophy of immanuel kant to explore whether a corporate duty of beneficence to nonshareholders is consistent with the orthodox shareholder theory of the firm. The purpose of this paper is to enter the conversation about stakeholder theory with the goal of clarifying certain foundational issues. While clearly not a comprehensive list, the resources below provide a useful starting point to learn about the work that has been done in different areas and to chart fruitful future directions. These three aspects of the theory, although interrelated, are quite distinct.
Evan wrote ed an was article kind offering enough a to kantian allow stakeholder theory of corporate responsibility. Strategic and moral motivation for corporate social. Preston university of maryland the stakeholder theory has been advanced and justified in the man agement literature on the basis of its descriptive accuracy, instrumen tal power, and normative validity. Freeman, a stakeholder theory of the modern corporation. Bowie says this is why he decided to develop a fullblown kantian theory of the firm. Legitimacy is a claim on a firm, based upon a contractual or legal obligation, a moral right, an at. Drawing on formulation of both normative and instrumental stakeholder theory, we argue that firms with a strong ethical identity achieve greater degree of stakeholder satisfaction, which in turn, positively influence the firms financial performance. But a kantian theory of stakeholder relationships is not, i believe, a complete kantian theory of the modern corporation. Their combined citations are counted only for the first article. Morality and ethical theory morality and prudence morality and law rule of conscience approaches to the study of morality justification in ethics relativism and objectivity of belief moral disagreements problem of egoism normative ethical.
Sep 22, 2006 unlike the principle underlying the welfare state, the maxim of capitalism meets the tests both of economic efficiency and kantian morality. Download pdf william evan and r freeman a stakeholder theory of the modern corporation kantian capitalism 9n0k5wr2154v. The principle is moral because it can be universalized without running into the law of noncontradiction. In this article, we empirically assess the impact of the corporate ethical identity cei on the firms financial performance. Kantian capitalism scroll down the pdf to locate this reading. Stakeholder theory has been a popular heuristic for describing. Stakeholder management and corporate performance lee e. In order to ensure that corporations act in socially responsible ways.
The authors content analyzed 179 articles that directly addressed freemans work on stakeholder theory and found five themes. Includes bibliographical references preface ethical theory and business practice. Implications for business and society theory and research. Corporate governance issues highlight any and all relationships that may exist between a firm and its partners. William evan and r freeman a stakeholder theory of the. The word stakeholder in its current use first appeared in an internal memorandum at the stanford research institute in 1963. Concepts similar to modern stakeholder theory can be traced back to longstanding philosophical views about the nature of civil society itself and the relations between individuals. A stakeholder approach, cambridge university press, new york. The book concludes by arguing that we should reframe capitalism in the terms of stakeholder theory so that we come to see business as creating value for stakeholders. Stakeholder theory claims to promote moral values in business and this claim is generally accepted. Over the last thirty years the field of stakeholder theory has proposed a distinctive answer.
However, freeman s stakeholder theory took a pragmatic turn, and itook up the challenge of presenting a kantian theory of business ethics. Paying attention to customers needs stable business processes sales of products and purchases of raw materials. Beginning with a discussion of the origins and development of stakeholder theory, it shows how this corpus of theory has influenced a variety of different fields, including strategic management, finance, accounting, management, marketing, law, health care, public policy, and environment. It focuses on the practices of 111 dutch firms with respect to five stakeholder groupsemployees, supplies, customers, competitors and society at largeand their use of organisational instruments.
In order to better appreciate the extent to which people have identified the theory with ethics, we should note that various versions of the article titled a stakeholder theory of the modern corporation. Pdf a moral stakeholder theory of the firm semantic. A stakeholder theory of the modern corporation by r. We find that the moral intrinsic motive, which holds. Howell professor of governance and regulation issn. Pdf a moral stakeholder theory of the firm semantic scholar. Toward a comprehensive model of stakeholder management. Stakeholder theory as an ethical approach to effective. To each according to what he and the instruments he owns produces friedman, 2002, 16162. Over the past two decades ed and ihave continued a friendly debate about the role of pragmatism in business ethics. Edward freeman extract from version published in joseph r.
William evan and r freeman a stakeholder theory of the modern corporation kantian capitalism free download as pdf file. Yet, literature shows that the theory is fundamentally strategic and only incidentally normative. Kantian capitalism, in ethical theory and business, 3rd ed. A kantian theory of capitalism, business ethics quarterly. Attributes of valuecreating stakeholder relationships. Sapienza university of baltimore the proposition that business corporations can and should serve the interests of multiple stakeholders, rather than simply those of shareholders, is enjoying a considerable current vogue. International journal of applied institutional governance volume 1 issue 1 the stakeholder theory in the modern global business environment tony ike nwanji phd researcher on corporate governance kerry e. This form of theory is explicitly and unabashedly normative, demonstrating how managers can create morally sound approaches to business.