However, we have suggested that one can use TCE reasoning to see that if the cost of safeguards were assigned differently, then other arrangements may well be possible.

Frequently bought together

All other things being equal, stakeholders prefer to conduct business with stable organizations. Ramani and Thomas G. We are simply demonstrating that stakeholder theory can be applied easily to a wide variety of management topics. Business thinkers as diverse as Sumantra Ghoshal and Jeffrey Pfeffer have suggested that current mindsets about business are just not appropriate for the turbulent business environment of today.

01/04/ · Stakeholder Theory: The State of the Art R. Edward Freeman, Jeffrey S. Harrison, Andrew C. Wicks, Bidhan L. Parmar, Simone de Colle Cambridge University Press, Apr 1, - Business & EconomicsReviews: 1.

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11/08/2017 · While there is disagreement among stakeholder theorists about the scope and precise meaning of both “stakeholder” and “theory,” we shall take “stakeholder theory” to denote the body of research which has emerged in the last 15 years by scholars in management, business and society, and business ethics, in which the idea of “stakeholders” plays a crucial role.Cited by: 4187

Stakeholder Theory: The State of the Art - The Blackwell ...

11/08/2017 · Stakeholder Theory: The State of the Art. Thomas M. Jones, Search for more papers by this author. Andrew C. Wicks, Search for more papers by this author. R. Edward Freeman, Search for more papers by this author. Thomas M. Jones, Search for more papers by this author. Andrew C. Wicks,Cited by: 4187

01/06/ · stakeholder theory offers a new way to think about theory. To provide a defensible normative core, need to be able to Estimated Reading Time: 6 mins.

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Some features of the site may not work correctly. DOI: Parmar and R. Freeman and J. Harrison and Andrew C. Wicks and L. ParmarR. View via Stats.

Save to Library Save. Create Alert Alert. Share This Paper. Background Citations. Methods Citations. Citation Type. Has PDF. Publication Type. Stakeholder Theory as a Basis for Capitalism.

For the past 25 Outdoor Naked Mature, a group of scholars has developed the idea that a business has stakeholders - that is, there are groups and individuals who have a stake in the success or failure of Stat … Expand.

Stakeholder Theory As Shate Ethical Approach to Effective Management: applying the theory to multiple contexts. Objective — 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 … Expand. Stakeholder management: a Theoyr of its Arg capability and Thsory. Purpose — A central claim of stakeholder theory is that the purpose of business is to create value for various stakeholders.

However, managing diverse interests of stakeholders can be challenging in … Expand. Should the Stakehodler of Stakeholder Theory Be Discontinued Given Its Limitations.

Off views of stakeholder theory propose ways to transform societal problems into win-win solutions for the firm and society alike.

Yet, and despite its success in expanding the understanding of … Expand. View 2 excerpts, cites background. Managing Stakeholders for the Sake of Business and Society. Stakeholder Theory and the Resource-Based View Stakholder the Firm.

We start this article with Stakeholeer exploration of similarities between the resource-based view of the firm RBV and stakeholder theory at the time of their origination and then proceed with the … Expand. View 3 excerpts, cites background. Tensions in Stakeholder Theory. A Tje of tensions have been suggested between stakeholder theory and strategic management SM.

Following a brief review of the histories of stakeholder theory and mainstream SM, we argue that … Expand. Ethical Firm System and Stakeholder Management Theories: A Possible Convergence.

Body Paint Nackt paper presents a model for exploring the relationships between the stakeholder management theory SMT and the firm system theory FST which Stae interpreted from an ethical perspective.

FST … Expand. Highly Influenced. We briefly examine the early … Expand. Stakeholder Theory at the Cross Road: A Holistic Model for Business Government Scharfe Dessous Society. This short theory paper examines various issues related to the stakeholder theory in terms of … Expand.

A Feminist Reinterpretation of The Stakeholder Concept. While this concept has evolved and gained prominence Adt a method of integrating ethics into the … Expand. The Politics of Stakeholder Theory: Some Future Directions. The purpose of this paper is to enter the conversation about stakeholder theory with the goal of clarifying certain foundational issues.

I want to Thery, along with Boatright, that there is no … Expand. Stakeholder Theory and Organizational Ethics. View 2 excerpts, references background. Enhancing Stakeholder Practice: A Particularized Exploration of Community. Lack of specificity around stakeholder identity remains a serious obstacle to the further development of stakeholder theory and its adoption in actual practice by business managers. Nowhere is this … Expand. The lessons from stakeholder theory for U. Abstract It has been 20 years since Stakeholder Theory State Of The Art [Freeman, R.

Strategic management: A stakeholder approach. Marshfield, MA: Pittman Publishing. View 1 excerpt, references background. The Ethical and Environmental Limits of Stakeholder Theory. Abstract: We argue that though stakeholder theory has much to recommend it, particularly as a heuristic for thinking about business firms properly as involving the economic interests of Stakeholder Theory State Of The Art groups … Expand.

Business Ethics at the Millennium. Abstract: Business ethics, as a discipline, appears to be at a crossroads. Business Ethics and Stakeholder Analysis. Much has been written about Barbara Karlich Nackt analysis as a process by which to introduce ethical values into management decision-making. This paper takes a critical look at the assumptions behind this … Expand. Toward a Stakeholder Theory of the Firm: The Saturn Partnership.

This paper seeks to engage the organization theory community in contemporary debates Stakeholder Theory State Of The Art the role of the corporation in American society by using the case of the Saturn corporation to develop and … Expand. The Moral Basis of Stakeholder Theory. Stakeholder Theory State Of The Art theory Ballbusting Hannover an important and commonly used framework Stakwholder business ethics.

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The Darden School of Business Administration, The University of VirginiaThe Darden School of Business Administration, The University of VirginiaRobins School of Business, The University of RichmondThe Darden School of Business Administration, The University of VirginiaThe Darden School of Business Administration, The University of VirginiaThe Darden School of Business Administration, The University of Virginia. In this article, we review the major uses and adaptations of stakeholder theory across a broad array of disciplines such as business ethics, corporate strategy, finance, accounting, management, and marketing.

Learn About the New eReader. Downloaded times in the past 12 months. Published online 1 January Published in print 1 January This article draws on Stakeholder Theory: The State of the Art, by R. Edward Freeman, Jeffrey S. Harrison, Andrew C. Wicks, Bidhan L. We are grateful to our editor, Ms. Paula Parish, and to Cambridge University Press for permission to recast some of that material here.

We would also like to thank our editors, Jim Walsh and Art Brief, for their helpful and constructive comments. Bidhan L. Jeffrey S. Andrew C. Download Citations Add to favorites Track Citations. View article. References Aaltonen K. Stakeholder salience in global projects. International Journal of Project Management , 26 : — Google Scholar Achterkamp M. Google Scholar Ackerman R.

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Falbe C. From CSR1 to CSR2. Moving to CSR4: What to pack for the trip. Google Scholar Fredricksen H. Engineering Management , 52 3 : — Google Scholar Freeman R. Strategic management: A stakeholder approach , Boston: Pitman. The politics of stakeholder theory: Some future directions. Divergent stakeholder theory. She was only at SRI a few years. The description was included in the Strategic Plan report, with an illustration of a simple method of analyzing stakeholder expectations.

The Tavistock connection is an important addition to the story in Freeman The question that remains is the exact connection of Rhenman with SRI. Freeman is based on a private conversation between Freeman and Professor Kirk Hanson, then of Stanford, now of Santa Clara University. Hanson told Freeman that Rhenman had been a visitor at Stanford at around the same time as the stakeholder idea was being developed at SRI.

Stymne says that it was customary for Swedish doctoral students to spend a year in the USA; he does not mention where Rhenman chose to study. The appropriate background disciplines for stakeholder theory were, according to Slinger, psychoanalysis and social psychology, especially the theory of groups, and their allied disciplines.

Business disciplines were important, but they contained built-in assumptions about why stakeholders could be ignored, and why relationships were not the basis of business. Näsi rightly 20 21 22 We seek to rectify this situation in this book by showing how the stakeholder idea is relevant to the disciplines of business. However, we also believe that we need much stronger connection with the foundational disciplines such as psychoanalysis, social psychology, philosophy, history, literature, and the creative arts.

Slinger at p. We are indebted to Professor Jared Harris for this insight. Both contributions and rewards can take many forms, such as money, goods, information, status, power, prestige and so on.

Stymne tells of being a doctoral student sequestered in the attic of the Stockholm School of Economics, studying administration in the late s and early s. What one stakeholder contributes will serve as a reward for another. Through mutual adjustments, an unstable balance between contributions and rewards is temporarily created. Stymne 39 This passage locates the idea of stakeholders in the work of the Carnegie School and their idea of inducements and contributions.

Friction among stakeholders becomes the source of organizational innovation, and in fact saves the modern corporation from the bureaucratic fate envisioned by Schumpeter.

Organizational goals are a function of these several groups, rather than of one. Of course these thinkers owe much, as they acknowledge, to Barnard It comes from and may expand to all the world; it is rooted deeply in the past, it faces toward the endless future. Barnard , 24 See Simon The fourth edition, which was consulted here, was published in See especially ff. Additional underlying ideas A number of scholars have suggested that in addition to those already suggested there were many who could be seen as early stakeholder theorists.

In particular, Preston and Sapienza have traced the origins of the underlying idea of stakeholders further back from SRI and Rhenman to some early documents at both Johnson and Johnson and at Sears. The classic formal statement by Harvard law professor E. Merrick Dodd appeared in Berle, who at that time defended conventional views. In , General Robert E. Irwin Miller, chairman of the Cummins Engine Company, articulates the responsibilities of the executive along similar lines.

He claims that the power of the manager must be used responsibly towards shareholders, customers, suppliers, employees, government, community, and society. It is perhaps the clearest articulation of the modern stakeholder theory without using the term.

We are grateful to his son, Will Miller, CEO of Irwin Financial, for this reference and a conversation about the way in which the Miller family has always tried to run its companies along stakeholder lines. We discuss this version of leadership and use Will Miller as an example in Freeman, Harrison, and Wicks , Chapter 6. He locates the concept partly in the view of business as a social institution put forward by Robert Owen, John Ruskin, and others.

He singles out the work of George Goyder and Samuel Courtauld. In fact Follet can also be seen as a founder of the human relations school, which gave rise to the work of theorists such as Bion, Lewin, and others. Finally, in a recent article Shah and Bhaskar have suggested that the basic idea of the modern stakeholder concept can be traced to ancient Indian scriptures.

We shall return to this theme in Chapter 9. While Freeman has often suggested that his role in the development of stakeholder theory has been to show how the concept was developed by others, and to take it seriously as a management principle, the evolution of the modern idea is often traced to his book. We believe that it is therefore instructive to look at how that book came to be written. This is especially important given the diffuse nature of the development of ideas like stakeholder theory.

This note is due to Slinger. This fascinating story is told in Chapter 1 of Slinger We are grateful to Dr. Harish Srivatsava for helpful conversations on this issue and for pointing out to us the work of Professor N.

Hence we tell the following personal and idiosyncratic story. Emshoff, a former student under Ackoff. Ackoff had written about the idea, extensively in Redesigning the Future Lynn Oppenheim, a psychologist. What no one knew was that Ackoff was in a period of reasonable hostility towards academic philoso phers.

But none of this mattered since he was out of the country when Freeman interviewed, and left these hiring decisions to others. However, the use of the idea at that time was mainly as a way of organizing thinking about the external environment, or in thinking about system design.

At around the same time Ian Mitroff was visiting at the Busch Center, and he and Emshoff and Richard Mason were working on strategic assumptions analysis, a project in which the stakeholder idea was used to organize the assumptions that executives made about their external environment.

Freeman was a very junior person, without even a faculty appointment at the lowest level. He listened intently to these senior people discussing how they interpreted the stakeholder idea.

There seemed to him to be a common thread in the seminar, and that was the reluctance of any of these management thinkers to talk about issues of values, ethics, or justice. The design involved a number of real stakeholders in the training and, over time, the team created a very successful experience.

But they did develop a useful way of thinking about stakeholder behavior in terms of thinking through actual behavior, cooperative potential, and competitive threat for each stakeholder group.

For a modern version of these techniques see Freeman, Harrison, and Wicks , Chapter 5, and Harrison and St. John The questions which Freeman had during this time were pretty straightforward: i Could one develop a method for executives to strategically manage stakeholder relationships as a routine ongoing part of their day-to-day activities?

He began to read widely in strategy, organization theory, management history, systems theory, and a burgeoning literature on corporate social responsibility. In serendipity again entered the equation.

He chose the academic route and was fortunate to be offered a position as assistant professor in the Management Department at Wharton. Freeman set himself the rather clear tasks of working out the stakeholder approach to strategy in a book, and of writing as many scholarly articles as he could to develop the ideas. It was really at this point that Freeman entered the academic world of management theory.

See Chapter 3 for an outline of a different view based on philosophical pragmatism. And he knew that he was getting the clinical experience through consulting projects with real executives dealing with this real problem, what we have earlier called the problem of managerial mindsets. When a company expert guaranteed that he knew what a particular stakeholder group wanted from the company, and it turned out to be wrong, Freeman began to question the idea that structuring a team of stakeholder experts was necessarily the best way to run a strategic planning process.

The clinical lessons were countless. Jim Post of Boston University invited him to give a talk to the Social Issues in Management Division in in Detroit. During this time Freeman began to work with Professor William Evan, a distinguished sociologist at Penn. Evan saw collaborating with Freeman on stakeholder theory as a way to democratize the large corporation. They planned a book that would deal with the normative implications of re-conceptualizing the corporate governance debate in stakeholder terms.

Freeman claims that Evan gave him the courage to tackle the normative dimension in an intellectual atmosphere — the modern, twentieth-century business school — that disdained such analysis. Freeman credits Evan for the inspiration necessary to tackle what we have called the problem of the ethics of capitalism. In the summer of he sat down at his home in Princeton Junction, New Jersey, and drafted the initial manuscript of Strategic Management: A Stakeholder Approach.

In addition, Freeman tried to track down the origins of the stakeholder idea and give credit to its originators and the people whose work he had found so useful. Edwin Epstein, of the University of California, Berkeley, was the editor of a new series, and had encouraged Freeman to work on these ideas. The book was published in with a copyright.

During late and early , Freeman made extensive revisions based on notes and conversations with Gordon Sollars, now a professor at Fairleigh Dickenson University, and Edwin Hartman, now a professor at New York University, as well as Roberts and Epstein. The original and only print run of the book was only 2, A recent check of Google Scholar suggests roughly 4, citations. Walsh Walsh wonders how the stakeholder idea became a rallying point for issues such as corporate social responsibility when Freeman explicitly rejects them.

Walsh 41 42 It is worth noting that Freeman thought that this book was an important sequel to Freeman However, it was not very widely read; Google Scholar lists only citations. And, it was fundamentally about business — about solving what we have called here the problem of value creation and trade. The point of the book was clear to us — in what way could executives and academics think about strategy or strategic management if they took the stakeholder concept seriously, or as the basic unit of analysis of whatever framework they applied?

Freeman took this to be a matter of common sense and practicality, rather than some deep academic insight. Executives found thinking about stakeholder relationships very helpful for dealing with the kinds of change that were confronting their corporations. It seemed to bring some clarity to what we have called the problem of value creation and trade. Again I was trained as a philosopher, so what was important to me was the overall logic of the argument.

Surely the insights of thinkers like Freud or Harry Levinson in management, or Graham Allison in politics, did not become questionable because of their methods, but because of their logic. I confess to paying no attention to methods.

However, I thought that all of this stuff was just silly window dressing. I thought I was doing all three and that any good theory or narrative ought to do all three.

No matter what you stand for, no matter what your ultimate purpose may be, you must take into account the effects of your actions on others, as well as their potential effects on you. Doing so means that you have to understand stakeholder behaviors, values, and backgrounds or contexts, including the societal context.

We can apply these ideas to think through new structures, processes, and business functions, and we can especially rethink how the strategic planning process works to take stakeholders into account. Stakeholder interests need to be balanced over time. This argument has a number of implications. Groups and individuals behave, not issues. We are indebted to Professor John Kay for the phrasing of the issue at a conference of the European Association of Business in Society, held in Ghent in Second, the book was overly analytical.

One can get the view that if we draw the stakeholder maps accurately enough — model and predict their behavior — then we can cast out uncertainty from the strategic thinking process.

Obviously there are limits to our ability to analyze, and just as obviously we can use analysis to hide behind, rather than going out and actively creating capabilities for dealing with, stakeholders. Again, part of this weakness came from relying on the strategic planning literature of the time.

This tension served neither audience very well. At Wharton Freeman taught primarily business policy and principles of management. At Minnesota he had the opportunity to immerse himself in the business ethics literature, and to try and contribute to it.

Once again serendipity played a large part in the decision. They were commuting three hours a day when everything worked , and the chance for both to have jobs in Minneapolis meant that they could actually spend a lot of time together. In the family, now including their nine month old son, decided to move to Virginia and the Darden School. Again the role of serendipity emerged.

While he was at Minnesota, Dan Gilbert was a doctoral student. While some of the insights about corporate governance may be interesting, the chapters on recasting the functions of business along stakeholder lines were misguided. The underlying issue is the separation of business and ethics in the foundational disciplines of business, not the practical organization and working of these disciplines.

This book is an attempt to correct some of these inadequacies and resulting misinterpretations in stakeholder theory as it has developed. Like any useful idea, the development of stakeholder theory has been haphazard. There is a tendency to attribute too much intentionality to its developers. It is time for us to be clearer about our underlying approach and method. There are many classes Freeman could have picked to sit in on, and many other topics were covered by the class. Indeed, traditional philosophers who teach business ethics and read the Journal of Business Ethics and Business Ethics Quarterly may also not recognize the kind of arguments that we use here.

While we respect, reference, and quote the bodies of literature that are contained in these and many other management and philosophy journals in the succeeding chapters, our approach is somewhat different. In this short chapter we shall try to say what our view is about this pragmatism and why we believe that it can serve as a set of unifying ideas around a body of literature that has begun to change the underlying narrative about business. As philosophical pragmatists we do not have much to say about these debates.

Think of stakeholder theory as a genre of management theory. There is enough commonality across these uses to see them as part of the same genre, but enough diversity to allow them to function in an array of settings and serve different purposes. In the following brief sections we shall try to clarify our pragmatist approach. We begin with an analysis of several recent critiques of business schools in general to set the context for what we hope to offer as an alternative approach.

We then describe the pragmatist alternative, focusing on the recent work of philosopher Richard Rorty. A number of recent critiques have begun the process of selfexamination with regard to this assumption.

Pfeffer and Fong have suggested that the whole idea of the MBA is suspect. In a recent book, management theorist Henry Mintzberg has delivered a blistering critique of business education.

Mintzberg sees management differently from Pfeffer and Fong, as a craft rather than a science. Consequently, MBAs have become exploiters rather than explorers and innovators. They enact the dominant narrative. Ghoshal writes: In courses on corporate governance grounded in agency theory, we have taught our students that managers cannot be trusted to do their jobs — which, of course, is to maximize shareholder value … In courses on organization design, grounded in transaction cost economics, we have preached the need for tight monitoring and 2 A useful set of distinctions around knowledge can be found in William Dray I am not really a man of science, not an experimenter, and not a thinker.

I am nothing but by temperament a conquistador — an adventurer, if you want to translate the term — with the curiosity, the boldness, and the tenacity that belong to that type of being.

Bailey and Ford In short, Ghoshal suggests that we get theory wrong, management wrong, and social science wrong and we should not be surprised at the resulting moral decline of business. We should not be surprised by what we have called the problem of managerial mindsets.

The upshot of these critiques can be diagnosed into the three interconnected problems we suggested in Chapter 1. In fact business is a deeply human institution and to see it as anything less misses the mark. We continue that line of thought here as we try and diagnose a further level of detail in these three problems. The result is that a kind of early twentieth-century positivism has overtaken business schools. This became clear to us after many years of writing letters for promotion and tenure for colleagues at many business schools around the world, and serving on the tenure and promotion committees at the various institutions where we have worked.

Theory is important only to the extent that it leads to testable propositions and measurable hypotheses. While in the physical sciences it is generally assumed, probably with good reason, that any important factor which determines the observed events will itself be directly observable and measurable, in the study of such complex phenomena as the market, which depend on the actions of many individuals, all the circumstances which will determine the outcome of a process, for reasons which I shall explain later, will hardly ever be fully known or measurable.

And while in the physical sciences the investigator will be able to measure what, on the basis of a prima facie theory, he thinks important, in the social sciences often that is treated as important which happens to be accessible to measurement. This is sometimes carried to the point where it is demanded that our theories must be formulated in such terms that they refer only to measurable magnitudes. Hayek, 3 The three problems are the problem of value creation and trade, the problem of the ethics of capitalism, and the problem of managerial mindsets.

See Chapter 1. And we are not arguing that empirical investigations into business phenomena do not yield interesting insights. James and Dewey, Putnam and Rawls, Rorty and Goodman have all put forward similar arguments. Putnam then analyzes 4 This section draws heavily on Jared Harris and R.

Edward Freeman Has the corporation provided economic value, or moral value? How can such things be disentangled? Friedman ; Jensen is also both descriptive and value laden. This is precisely the point of the critiques of business schools, that a false sense of knowledge pervades them. We teach and act as if we have created complete, or near-complete, causal theories about business.

Ferraro, Pfeffer, and Sutton ; Frank, Gilovich, and Regan , in showing that we enact the very theories of social science that we propose — and therefore demonstrating that the moral consequences are indistinguishable from the theories themselves — highlight the danger of attempting to separate business from ethics.

If we treat the world of business as discovered, not created, we absolve managers of their responsibility for its structure.

That business decisions have moral content is inescapable; pretending that the two are divisible at best obscures important considerations and at worst paradoxically encourages a particular set of ethical norms that may be unintended. He argued that the idea of representation made no sense, that it was based on taking vision as a foundational sense, and 6 See Rosenthal and Buchholz ; Gutting ; Westbrook ; and Rorty for a complete history. Rather, language is a tool, not a representation.

There simply is no other way to deal with the world other than through language. In short, Rorty turns us back to Socrates, focused on how we should live. Or, can we do better? Can our future be made better than our present? Pragmatists like Rorty believe that there are only two interesting projects for us to engage. See Freeman Rorty 9 Rorty claims that rather than trendy postmodern theorizing, we need to reread Nietzsche and Emerson on how we can undertake the project of selfcreation.

Equally, we need to read Whitman and Dewey, who emphasize that we must have solidarity with others for the individual to be able to accomplish any of her projects, implying that we are constantly trying to remake our communication. This positivist view of management theory, decried by at least Ghoshal and Mintzberg, simply eschews individual difference. Management theorists should be in the thick of this re-description, not at its periphery.

That is a long story, but one that needs telling, and the current volume is offered in this spirit. In their critique of positivism, Wicks and Freeman isolate a range of problematic assumptions related to the core belief that science is the only method of generating knowledge. Science becomes, on this view, a fully moral endeavor, as Rudner laid out many years ago.

Ethics and science are grounded in the world, in the human institutions we have created. Ethics and other nonscience disciplines are not categorically below or above science as a method of inquiry to help generate knowledge of the world.

Science is especially helpful in testing existing beliefs and allowing us to discern reasons to come up with better explanations. However, it is not a privileged form of discourse; it is part of our efforts to make sense of the world like other nonscience disciplines , and it cannot address the important questions for us i.

It throws out the intersubjective agreement that is so important to any form of inquiry, especially science, for the sake of human purpose. Instead, the pragmatist would push us to address front and center the larger purposes of inquiry and the importance of values to the study of organizations.

In thinking about usefulness, the pragmatism of Wicks and Freeman encompasses two dimensions simultaneously: the epistemological is it useful in terms of providing credible, reliable information on the subjects at issue?

It is the criterion of usefulness that allows the pragmatist to make judgments about inquiry where the positivist and anti-positivist could not. In thinking about pragmatism and how it might move the conversation forward in a different direction, Wicks and Freeman highlight some of its core features.

Especially in a pluralistic society there will be widespread disagreement about such matters. A third notion is enactment. For Weick, reality is enacted rather than discovered. People make choices and impose meaning on their experiences rather than having meaning determined for them by nonhuman forces. This puts emphasis on human choice, language, and agency within the larger context of a community, culture, and patterns of discourse — all things that are central to pragmatism.

Rather, sense-making occurs within existing social structures and practices, such that any new efforts need to be understood and evaluated in terms of what already is. It is only on that basis that the community can determine whether the new meanings are an improvement or a regression. At bottom, all these innovations put an emphasis on narrative, on particular human beings and human communities, and on the choices individuals make — factors that highlight the centrality of ethics.

In looking at the broader domain of organization studies and how they can be reshaped, pragmatism provides guidance as well. Strengthen the theory—practice link Pragmatism does not take sides in debates between theory and practice, seeing instead that both are important touchstones in sorting out how we live better. Multiple methods and forms of evidence Rather than focusing strictly either on particular methods as privileged or on claiming that all methods are as good as each other, pragmatism puts an emphasis on asking good questions and allowing the mode of inquiry to emerge from that, recognizing that there is room for both qualitative and quantitative methods.

Direct linkage of ethics and mainstream management literature The pragmatic criterion of value provides the impetus to bring together both the ethics and management literatures. Management scholars cannot escape the fundamentally moral quality of their work, both in terms of their assumptions and the implications. Pragmatism creates a context for thinking about how organization studies might move forward in a way that makes ethics, science, and other disciplines central and essential players.

No one mode, and no single discipline, has a monopoly on insight. An analysis of markets tells us a lot about business, but it does not give us the whole story. An understanding of creativity and its sources may help us to develop leaders, but it will not speak to the purpose of business. Similarly, deep insights into the human condition and how we make joint meaning gives much insight into how business works, but again, it is not the whole story. In fact, by applying to another the methods and thinking of one mode we can sometimes generate useful ideas.

By being explicit about the underlying narratives in the empirical mode, we can generate new narratives and, perhaps, new testable propositions.

No theory is without impact, and no powerful idea leaves the observed phenomenon unchanged. And we suggest that these open questions begin to be explicitly acknowledged and answered.

We want to build on the ideas of Michael Gonin , and suggest that the following set of questions become routine ones: 1 Does this work answer the question s it proposes?

It is problematic that such a critical line of inquiry does not exist in many business disciplines. Rather than starting with a clear and predetermined sense of why they exist, stakeholder theory echoes the idea that people need jointly to seek and create meaning within organizations.

Fourth, the pragmatist mindset suggests that stakeholder theorists need to bring a large portion of humility to their craft. Part II Stakeholder theory and the traditional disciplines of business 4 Stakeholder theory and strategic management Stakeholder theory has much to say about strategic management.

The stakeholder perspective offers an alternative that can enhance the economic perspectives of modern strategic management. Within these perspectives, he mentioned dozens of individual topics such as agency theory, corporate governance, mergers and acquisitions, international strategy, and the resource-based view.

Not once did he mention the stakeholder perspective, although he did refer to the closely related concept of network strategies Dyer and Singh ; Gulati and Singh ; Ireland, Hitt, and Vaidyanath In the zeal to be as rigorous as economics, which has a similar zeal to be as rigorous as physics, it is often forgotten that the human sciences may be developed along multiple lines.

See Chapter 3. We begin with a brief history of the emergence of the strategic management concept up to , to augment what we have said about the history of the stakeholder idea in Chapter 2. We shall examine the key themes in the strategic management literature as they relate to stakeholder theory, including how practitioners have made use of the stakeholder concept.

The rise of modern strategic management Surprisingly, strategic management as an academic discipline has its roots in a business school course. Also, the Academy of Management formed a Business Policy and Planning Division to support academic pursuits in this area. The business policy approach The business policy course, as it was usually taught, focused on developing policies that would solve business problems through an integrated, multifunctional approach. As the quotation from Gordon and Howell suggests, there were no widely accepted models for developing these policies.

Rather, the course gave students experience, through business cases, in dealing with business issues from a number of perspectives simultaneously. This treatment of the strategy concept was well ahead of its time, in that it foreshadowed the importance of a resource-based perspective Barney , acknowledged external obligations beyond those owed to stockholders, and suggested the importance of values and purpose.

Political strategy formulation, organizational learning, and resource dependence Also important to the early strategy literature was recognition that strategy formulation contains both rational-deductive and political processes Thompson, ; MacMillan , ; Katz and Kahn, MacMillan drew from this literature to create a practical set of tools that managers could use to devise a political strategy.

His perspective, like stakeholder theory, viewed organizations as systems that are dependent on external stakeholders for survival Ackoff ; Barnard ; March and Simon He acknowledged that his political strategies could be used for unethical or ethical purposes. Stakeholder theory, in contrast, joins ethics and economics in a deliberate fashion.

On the other hand, stakeholder theory is intended to be the central organizing paradigm for strategic management and not a supplemental theory. He challenged the assumption that strategies are always the result of deliberate plans conceived in advance of particular organizational decisions. Instead, he advanced the perspective that organizations learn what works through a process of trial and error.

For example, he discovered that CEOs serve as liaisons with external stakeholders in an effort to bring favors to the organization and spokespersons that transmit company information to outsiders. In addition, they collect and evaluate information from the external environment. The other roles focused on managing internal stakeholders and resources.

If managers take actions that are in their own best interests rather than the shareholders, an agency problem is said to exist. In the strictest interpretation of this theory, managers are considered irresponsible if they take any substantive action that is in the best interests of anyone other than the shareholders.

Several years later, Jensen would admit that satisfying multiple stakeholders is essential to maximizing the objective function of wealth maximization for shareholders Jensen An important meeting of these scholars occurred in May at the University of Pittsburgh. Experts in fourteen topic areas associated with strategic management gathered to share their work and discuss ideas. According to the conference organizers, there simply was not space on the program Schendel and Hofer viii.

Surely Freeman and Gilbert made this clear, as did Wicks, Gilbert, and Freeman , as did many of the other developers of stakeholder theory. Mintzberg is simply laboring under a misapprehension here. The activities included organizational goal formulation, environmental analysis, strategy formulation, strategy evaluation, strategy implementation and strategic control.

Newman Schendel and C. Hofer, Strategic Management: A New View of Business Policy and Planning. Boston: Little, Brown. Andrews ; Christensen, Andrews, and Bower ; Schendel and Hofer Studies were conducted to determine how high economic performance was achieved. The only way to convince many strategy scholars of the importance of stakeholder theory is to demonstrate a strong positive link between following its precepts and economic performance, measured in traditional terms.

As we shall demonstrate in the discussion that follows, supporters of the stakeholder approach have spent much of their intellectual time trying to establish that link in theory and in empirical tests.

If the corporation is to successfully meet the challenges posed by this environment, it must begin to adapt integrative strategic management processes which focus the attention of management externally as a matter of routine. Simultaneously, a literature was growing that included stakeholder concepts directly.

It offered a viable approach to the strategic management process that was very different from the economics-based approaches popular at the time.

In the same year Carroll and Hoy developed a model that integrated corporate social policy into the strategic management process. According to Carroll and Hoy, social policy should be established simultaneously with other corporate policies. Their work addressed the prevailing practice in strategic management at the time in which separate social policies were established Hofer, Murray, Charan, and Pitts , possibly a continuation of the idea that social objectives should act only as constraints on economic objectives Ansoff, Astley further elaborated on the concept of collective strategy as a tool for managing organization—environment relations.

Collective strategies are an important aspect of the stakeholder-based approach to strategic management. Finally, MacMillan and Jones , citing a statistic that 90 percent of American corporations had been unsuccessful in formulating and implementing strategies Kiechel , attributed the very high failure rate to implementation problems.

Their solution involved a series of questions that organizations should ask when designing a competitive strategy. Stakeholders played a key role in their process. Several things seem to have caused this void. This seemed to have a double effect on strategy scholars. Of course, the social responsibility literature tends to focus on the environment, special interest groups, social causes, community, and employee interests.

Consequently, the concerns of strategic management scholars were based on faulty assumptions, yet these concerns continue to persist in the minds of many scholars today. As the Chakravarthy article suggests, the stockholders vs. One other development during this period is worthy of discussion.

While Freeman has often suggested that his role in the development of stakeholder theory has been to show how the concept was developed by others, and to take it seriously as a management principle, the evolution of the modern idea is often traced to his book. We believe that it is therefore instructive to look at how that book came to be written.

This is especially important given the diffuse nature of the development of ideas like stakeholder theory. This note is due to Slinger. This fascinating story is told in Chapter 1 of Slinger We are grateful to Dr. Harish Srivatsava for helpful conversations on this issue and for pointing out to us the work of Professor N. Hence we tell the following personal and idiosyncratic story. Emshoff, a former student under Ackoff.

Ackoff had written about the idea, extensively in Redesigning the Future Lynn Oppenheim, a psychologist. What no one knew was that Ackoff was in a period of reasonable hostility towards academic philoso phers. But none of this mattered since he was out of the country when Freeman interviewed, and left these hiring decisions to others. However, the use of the idea at that time was mainly as a way of organizing thinking about the external environment, or in thinking about system design.

At around the same time Ian Mitroff was visiting at the Busch Center, and he and Emshoff and Richard Mason were working on strategic assumptions analysis, a project in which the stakeholder idea was used to organize the assumptions that executives made about their external environment. Freeman was a very junior person, without even a faculty appointment at the lowest level.

He listened intently to these senior people discussing how they interpreted the stakeholder idea. There seemed to him to be a common thread in the seminar, and that was the reluctance of any of these management thinkers to talk about issues of values, ethics, or justice.

The design involved a number of real stakeholders in the training and, over time, the team created a very successful experience. But they did develop a useful way of thinking about stakeholder behavior in terms of thinking through actual behavior, cooperative potential, and competitive threat for each stakeholder group.

For a modern version of these techniques see Freeman, Harrison, and Wicks , Chapter 5, and Harrison and St. John The questions which Freeman had during this time were pretty straightforward: i Could one develop a method for executives to strategically manage stakeholder relationships as a routine ongoing part of their day-to-day activities?

He began to read widely in strategy, organization theory, management history, systems theory, and a burgeoning literature on corporate social responsibility. In serendipity again entered the equation. He chose the academic route and was fortunate to be offered a position as assistant professor in the Management Department at Wharton.

Freeman set himself the rather clear tasks of working out the stakeholder approach to strategy in a book, and of writing as many scholarly articles as he could to develop the ideas. It was really at this point that Freeman entered the academic world of management theory.

See Chapter 3 for an outline of a different view based on philosophical pragmatism. And he knew that he was getting the clinical experience through consulting projects with real executives dealing with this real problem, what we have earlier called the problem of managerial mindsets. When a company expert guaranteed that he knew what a particular stakeholder group wanted from the company, and it turned out to be wrong, Freeman began to question the idea that structuring a team of stakeholder experts was necessarily the best way to run a strategic planning process.

The clinical lessons were countless. Jim Post of Boston University invited him to give a talk to the Social Issues in Management Division in in Detroit. During this time Freeman began to work with Professor William Evan, a distinguished sociologist at Penn. Evan saw collaborating with Freeman on stakeholder theory as a way to democratize the large corporation. They planned a book that would deal with the normative implications of re-conceptualizing the corporate governance debate in stakeholder terms.

Freeman claims that Evan gave him the courage to tackle the normative dimension in an intellectual atmosphere — the modern, twentieth-century business school — that disdained such analysis. Freeman credits Evan for the inspiration necessary to tackle what we have called the problem of the ethics of capitalism. In the summer of he sat down at his home in Princeton Junction, New Jersey, and drafted the initial manuscript of Strategic Management: A Stakeholder Approach.

In addition, Freeman tried to track down the origins of the stakeholder idea and give credit to its originators and the people whose work he had found so useful.

Edwin Epstein, of the University of California, Berkeley, was the editor of a new series, and had encouraged Freeman to work on these ideas.

The book was published in with a copyright. During late and early , Freeman made extensive revisions based on notes and conversations with Gordon Sollars, now a professor at Fairleigh Dickenson University, and Edwin Hartman, now a professor at New York University, as well as Roberts and Epstein. The original and only print run of the book was only 2, A recent check of Google Scholar suggests roughly 4, citations.

Walsh Walsh wonders how the stakeholder idea became a rallying point for issues such as corporate social responsibility when Freeman explicitly rejects them. Walsh 41 42 It is worth noting that Freeman thought that this book was an important sequel to Freeman However, it was not very widely read; Google Scholar lists only citations. And, it was fundamentally about business — about solving what we have called here the problem of value creation and trade.

The point of the book was clear to us — in what way could executives and academics think about strategy or strategic management if they took the stakeholder concept seriously, or as the basic unit of analysis of whatever framework they applied? Freeman took this to be a matter of common sense and practicality, rather than some deep academic insight. Executives found thinking about stakeholder relationships very helpful for dealing with the kinds of change that were confronting their corporations.

It seemed to bring some clarity to what we have called the problem of value creation and trade. Again I was trained as a philosopher, so what was important to me was the overall logic of the argument. Surely the insights of thinkers like Freud or Harry Levinson in management, or Graham Allison in politics, did not become questionable because of their methods, but because of their logic.

I confess to paying no attention to methods. However, I thought that all of this stuff was just silly window dressing. I thought I was doing all three and that any good theory or narrative ought to do all three.

No matter what you stand for, no matter what your ultimate purpose may be, you must take into account the effects of your actions on others, as well as their potential effects on you. Doing so means that you have to understand stakeholder behaviors, values, and backgrounds or contexts, including the societal context.

We can apply these ideas to think through new structures, processes, and business functions, and we can especially rethink how the strategic planning process works to take stakeholders into account. Stakeholder interests need to be balanced over time. This argument has a number of implications. Groups and individuals behave, not issues. We are indebted to Professor John Kay for the phrasing of the issue at a conference of the European Association of Business in Society, held in Ghent in Second, the book was overly analytical.

One can get the view that if we draw the stakeholder maps accurately enough — model and predict their behavior — then we can cast out uncertainty from the strategic thinking process. Obviously there are limits to our ability to analyze, and just as obviously we can use analysis to hide behind, rather than going out and actively creating capabilities for dealing with, stakeholders.

Again, part of this weakness came from relying on the strategic planning literature of the time. This tension served neither audience very well. At Wharton Freeman taught primarily business policy and principles of management. At Minnesota he had the opportunity to immerse himself in the business ethics literature, and to try and contribute to it.

Once again serendipity played a large part in the decision. They were commuting three hours a day when everything worked , and the chance for both to have jobs in Minneapolis meant that they could actually spend a lot of time together.

In the family, now including their nine month old son, decided to move to Virginia and the Darden School. Again the role of serendipity emerged. While he was at Minnesota, Dan Gilbert was a doctoral student. While some of the insights about corporate governance may be interesting, the chapters on recasting the functions of business along stakeholder lines were misguided.

The underlying issue is the separation of business and ethics in the foundational disciplines of business, not the practical organization and working of these disciplines. This book is an attempt to correct some of these inadequacies and resulting misinterpretations in stakeholder theory as it has developed. Like any useful idea, the development of stakeholder theory has been haphazard.

There is a tendency to attribute too much intentionality to its developers. It is time for us to be clearer about our underlying approach and method. There are many classes Freeman could have picked to sit in on, and many other topics were covered by the class.

Indeed, traditional philosophers who teach business ethics and read the Journal of Business Ethics and Business Ethics Quarterly may also not recognize the kind of arguments that we use here. While we respect, reference, and quote the bodies of literature that are contained in these and many other management and philosophy journals in the succeeding chapters, our approach is somewhat different.

In this short chapter we shall try to say what our view is about this pragmatism and why we believe that it can serve as a set of unifying ideas around a body of literature that has begun to change the underlying narrative about business. As philosophical pragmatists we do not have much to say about these debates.

Think of stakeholder theory as a genre of management theory. There is enough commonality across these uses to see them as part of the same genre, but enough diversity to allow them to function in an array of settings and serve different purposes. In the following brief sections we shall try to clarify our pragmatist approach. We begin with an analysis of several recent critiques of business schools in general to set the context for what we hope to offer as an alternative approach.

We then describe the pragmatist alternative, focusing on the recent work of philosopher Richard Rorty. A number of recent critiques have begun the process of selfexamination with regard to this assumption. Pfeffer and Fong have suggested that the whole idea of the MBA is suspect. In a recent book, management theorist Henry Mintzberg has delivered a blistering critique of business education.

Mintzberg sees management differently from Pfeffer and Fong, as a craft rather than a science. Consequently, MBAs have become exploiters rather than explorers and innovators. They enact the dominant narrative. Ghoshal writes: In courses on corporate governance grounded in agency theory, we have taught our students that managers cannot be trusted to do their jobs — which, of course, is to maximize shareholder value … In courses on organization design, grounded in transaction cost economics, we have preached the need for tight monitoring and 2 A useful set of distinctions around knowledge can be found in William Dray I am not really a man of science, not an experimenter, and not a thinker.

I am nothing but by temperament a conquistador — an adventurer, if you want to translate the term — with the curiosity, the boldness, and the tenacity that belong to that type of being. Bailey and Ford In short, Ghoshal suggests that we get theory wrong, management wrong, and social science wrong and we should not be surprised at the resulting moral decline of business.

We should not be surprised by what we have called the problem of managerial mindsets. The upshot of these critiques can be diagnosed into the three interconnected problems we suggested in Chapter 1. In fact business is a deeply human institution and to see it as anything less misses the mark. We continue that line of thought here as we try and diagnose a further level of detail in these three problems. The result is that a kind of early twentieth-century positivism has overtaken business schools.

This became clear to us after many years of writing letters for promotion and tenure for colleagues at many business schools around the world, and serving on the tenure and promotion committees at the various institutions where we have worked.

Theory is important only to the extent that it leads to testable propositions and measurable hypotheses. While in the physical sciences it is generally assumed, probably with good reason, that any important factor which determines the observed events will itself be directly observable and measurable, in the study of such complex phenomena as the market, which depend on the actions of many individuals, all the circumstances which will determine the outcome of a process, for reasons which I shall explain later, will hardly ever be fully known or measurable.

And while in the physical sciences the investigator will be able to measure what, on the basis of a prima facie theory, he thinks important, in the social sciences often that is treated as important which happens to be accessible to measurement. This is sometimes carried to the point where it is demanded that our theories must be formulated in such terms that they refer only to measurable magnitudes.

Hayek, 3 The three problems are the problem of value creation and trade, the problem of the ethics of capitalism, and the problem of managerial mindsets. See Chapter 1. And we are not arguing that empirical investigations into business phenomena do not yield interesting insights. James and Dewey, Putnam and Rawls, Rorty and Goodman have all put forward similar arguments.

Putnam then analyzes 4 This section draws heavily on Jared Harris and R. Edward Freeman Has the corporation provided economic value, or moral value? How can such things be disentangled? Friedman ; Jensen is also both descriptive and value laden. This is precisely the point of the critiques of business schools, that a false sense of knowledge pervades them. We teach and act as if we have created complete, or near-complete, causal theories about business.

Ferraro, Pfeffer, and Sutton ; Frank, Gilovich, and Regan , in showing that we enact the very theories of social science that we propose — and therefore demonstrating that the moral consequences are indistinguishable from the theories themselves — highlight the danger of attempting to separate business from ethics.

If we treat the world of business as discovered, not created, we absolve managers of their responsibility for its structure.

That business decisions have moral content is inescapable; pretending that the two are divisible at best obscures important considerations and at worst paradoxically encourages a particular set of ethical norms that may be unintended.

He argued that the idea of representation made no sense, that it was based on taking vision as a foundational sense, and 6 See Rosenthal and Buchholz ; Gutting ; Westbrook ; and Rorty for a complete history.

Rather, language is a tool, not a representation. There simply is no other way to deal with the world other than through language. In short, Rorty turns us back to Socrates, focused on how we should live. Or, can we do better? Can our future be made better than our present? Pragmatists like Rorty believe that there are only two interesting projects for us to engage.

See Freeman Rorty 9 Rorty claims that rather than trendy postmodern theorizing, we need to reread Nietzsche and Emerson on how we can undertake the project of selfcreation. Equally, we need to read Whitman and Dewey, who emphasize that we must have solidarity with others for the individual to be able to accomplish any of her projects, implying that we are constantly trying to remake our communication.

This positivist view of management theory, decried by at least Ghoshal and Mintzberg, simply eschews individual difference. Management theorists should be in the thick of this re-description, not at its periphery. That is a long story, but one that needs telling, and the current volume is offered in this spirit. In their critique of positivism, Wicks and Freeman isolate a range of problematic assumptions related to the core belief that science is the only method of generating knowledge.

Science becomes, on this view, a fully moral endeavor, as Rudner laid out many years ago. Ethics and science are grounded in the world, in the human institutions we have created. Ethics and other nonscience disciplines are not categorically below or above science as a method of inquiry to help generate knowledge of the world.

Science is especially helpful in testing existing beliefs and allowing us to discern reasons to come up with better explanations. However, it is not a privileged form of discourse; it is part of our efforts to make sense of the world like other nonscience disciplines , and it cannot address the important questions for us i. It throws out the intersubjective agreement that is so important to any form of inquiry, especially science, for the sake of human purpose.

Instead, the pragmatist would push us to address front and center the larger purposes of inquiry and the importance of values to the study of organizations. In thinking about usefulness, the pragmatism of Wicks and Freeman encompasses two dimensions simultaneously: the epistemological is it useful in terms of providing credible, reliable information on the subjects at issue?

It is the criterion of usefulness that allows the pragmatist to make judgments about inquiry where the positivist and anti-positivist could not. In thinking about pragmatism and how it might move the conversation forward in a different direction, Wicks and Freeman highlight some of its core features. Especially in a pluralistic society there will be widespread disagreement about such matters.

A third notion is enactment. For Weick, reality is enacted rather than discovered. People make choices and impose meaning on their experiences rather than having meaning determined for them by nonhuman forces. This puts emphasis on human choice, language, and agency within the larger context of a community, culture, and patterns of discourse — all things that are central to pragmatism.

Rather, sense-making occurs within existing social structures and practices, such that any new efforts need to be understood and evaluated in terms of what already is. It is only on that basis that the community can determine whether the new meanings are an improvement or a regression. At bottom, all these innovations put an emphasis on narrative, on particular human beings and human communities, and on the choices individuals make — factors that highlight the centrality of ethics.

In looking at the broader domain of organization studies and how they can be reshaped, pragmatism provides guidance as well. Strengthen the theory—practice link Pragmatism does not take sides in debates between theory and practice, seeing instead that both are important touchstones in sorting out how we live better.

Multiple methods and forms of evidence Rather than focusing strictly either on particular methods as privileged or on claiming that all methods are as good as each other, pragmatism puts an emphasis on asking good questions and allowing the mode of inquiry to emerge from that, recognizing that there is room for both qualitative and quantitative methods.

Direct linkage of ethics and mainstream management literature The pragmatic criterion of value provides the impetus to bring together both the ethics and management literatures. Management scholars cannot escape the fundamentally moral quality of their work, both in terms of their assumptions and the implications. Pragmatism creates a context for thinking about how organization studies might move forward in a way that makes ethics, science, and other disciplines central and essential players.

No one mode, and no single discipline, has a monopoly on insight. An analysis of markets tells us a lot about business, but it does not give us the whole story. An understanding of creativity and its sources may help us to develop leaders, but it will not speak to the purpose of business. Similarly, deep insights into the human condition and how we make joint meaning gives much insight into how business works, but again, it is not the whole story.

In fact, by applying to another the methods and thinking of one mode we can sometimes generate useful ideas. By being explicit about the underlying narratives in the empirical mode, we can generate new narratives and, perhaps, new testable propositions.

No theory is without impact, and no powerful idea leaves the observed phenomenon unchanged. And we suggest that these open questions begin to be explicitly acknowledged and answered. We want to build on the ideas of Michael Gonin , and suggest that the following set of questions become routine ones: 1 Does this work answer the question s it proposes?

It is problematic that such a critical line of inquiry does not exist in many business disciplines. Rather than starting with a clear and predetermined sense of why they exist, stakeholder theory echoes the idea that people need jointly to seek and create meaning within organizations.

Fourth, the pragmatist mindset suggests that stakeholder theorists need to bring a large portion of humility to their craft. Part II Stakeholder theory and the traditional disciplines of business 4 Stakeholder theory and strategic management Stakeholder theory has much to say about strategic management. The stakeholder perspective offers an alternative that can enhance the economic perspectives of modern strategic management.

Within these perspectives, he mentioned dozens of individual topics such as agency theory, corporate governance, mergers and acquisitions, international strategy, and the resource-based view.

Not once did he mention the stakeholder perspective, although he did refer to the closely related concept of network strategies Dyer and Singh ; Gulati and Singh ; Ireland, Hitt, and Vaidyanath In the zeal to be as rigorous as economics, which has a similar zeal to be as rigorous as physics, it is often forgotten that the human sciences may be developed along multiple lines.

See Chapter 3. We begin with a brief history of the emergence of the strategic management concept up to , to augment what we have said about the history of the stakeholder idea in Chapter 2. We shall examine the key themes in the strategic management literature as they relate to stakeholder theory, including how practitioners have made use of the stakeholder concept. The rise of modern strategic management Surprisingly, strategic management as an academic discipline has its roots in a business school course.

Also, the Academy of Management formed a Business Policy and Planning Division to support academic pursuits in this area. The business policy approach The business policy course, as it was usually taught, focused on developing policies that would solve business problems through an integrated, multifunctional approach.

As the quotation from Gordon and Howell suggests, there were no widely accepted models for developing these policies. Rather, the course gave students experience, through business cases, in dealing with business issues from a number of perspectives simultaneously.

This treatment of the strategy concept was well ahead of its time, in that it foreshadowed the importance of a resource-based perspective Barney , acknowledged external obligations beyond those owed to stockholders, and suggested the importance of values and purpose.

Political strategy formulation, organizational learning, and resource dependence Also important to the early strategy literature was recognition that strategy formulation contains both rational-deductive and political processes Thompson, ; MacMillan , ; Katz and Kahn, MacMillan drew from this literature to create a practical set of tools that managers could use to devise a political strategy.

His perspective, like stakeholder theory, viewed organizations as systems that are dependent on external stakeholders for survival Ackoff ; Barnard ; March and Simon He acknowledged that his political strategies could be used for unethical or ethical purposes.

Stakeholder theory, in contrast, joins ethics and economics in a deliberate fashion. On the other hand, stakeholder theory is intended to be the central organizing paradigm for strategic management and not a supplemental theory. He challenged the assumption that strategies are always the result of deliberate plans conceived in advance of particular organizational decisions. Instead, he advanced the perspective that organizations learn what works through a process of trial and error. For example, he discovered that CEOs serve as liaisons with external stakeholders in an effort to bring favors to the organization and spokespersons that transmit company information to outsiders.

In addition, they collect and evaluate information from the external environment. The other roles focused on managing internal stakeholders and resources. If managers take actions that are in their own best interests rather than the shareholders, an agency problem is said to exist. In the strictest interpretation of this theory, managers are considered irresponsible if they take any substantive action that is in the best interests of anyone other than the shareholders.

Several years later, Jensen would admit that satisfying multiple stakeholders is essential to maximizing the objective function of wealth maximization for shareholders Jensen An important meeting of these scholars occurred in May at the University of Pittsburgh. Experts in fourteen topic areas associated with strategic management gathered to share their work and discuss ideas.

According to the conference organizers, there simply was not space on the program Schendel and Hofer viii. Surely Freeman and Gilbert made this clear, as did Wicks, Gilbert, and Freeman , as did many of the other developers of stakeholder theory.

Mintzberg is simply laboring under a misapprehension here. The activities included organizational goal formulation, environmental analysis, strategy formulation, strategy evaluation, strategy implementation and strategic control. Newman Schendel and C. Hofer, Strategic Management: A New View of Business Policy and Planning. Boston: Little, Brown. Andrews ; Christensen, Andrews, and Bower ; Schendel and Hofer Studies were conducted to determine how high economic performance was achieved. The only way to convince many strategy scholars of the importance of stakeholder theory is to demonstrate a strong positive link between following its precepts and economic performance, measured in traditional terms.

As we shall demonstrate in the discussion that follows, supporters of the stakeholder approach have spent much of their intellectual time trying to establish that link in theory and in empirical tests. If the corporation is to successfully meet the challenges posed by this environment, it must begin to adapt integrative strategic management processes which focus the attention of management externally as a matter of routine. Simultaneously, a literature was growing that included stakeholder concepts directly.

It offered a viable approach to the strategic management process that was very different from the economics-based approaches popular at the time. In the same year Carroll and Hoy developed a model that integrated corporate social policy into the strategic management process.

According to Carroll and Hoy, social policy should be established simultaneously with other corporate policies. Their work addressed the prevailing practice in strategic management at the time in which separate social policies were established Hofer, Murray, Charan, and Pitts , possibly a continuation of the idea that social objectives should act only as constraints on economic objectives Ansoff, Astley further elaborated on the concept of collective strategy as a tool for managing organization—environment relations.

Collective strategies are an important aspect of the stakeholder-based approach to strategic management. Finally, MacMillan and Jones , citing a statistic that 90 percent of American corporations had been unsuccessful in formulating and implementing strategies Kiechel , attributed the very high failure rate to implementation problems.

Their solution involved a series of questions that organizations should ask when designing a competitive strategy. Stakeholders played a key role in their process. Several things seem to have caused this void. This seemed to have a double effect on strategy scholars. Of course, the social responsibility literature tends to focus on the environment, special interest groups, social causes, community, and employee interests. Consequently, the concerns of strategic management scholars were based on faulty assumptions, yet these concerns continue to persist in the minds of many scholars today.

As the Chakravarthy article suggests, the stockholders vs. One other development during this period is worthy of discussion. The resource-based view of strategic management During the mid- to late s the resource-based view was gaining a lot of attention in the strategic management literature Barney, ; Dierickx and Cool ; Wernerfelt Firm competitiveness requires effective management of both organizational resources and stakeholder relationships.

Consequently, resource dependence theory Pfeffer and Salancik provides a bridge between the two theories. However, the theoretical links between stakeholder theory and the resource-based view have not been adequately established in the minds of many strategic management scholars. As the resource-based view became a driving force in the strategic management literature, stakeholder theory was pushed to the side as a tangential theory associated with social responsibility and business ethics.

Nevertheless, a relatively smaller group of scholars continued to advance the stakeholder concept in the strategy literature. Key themes relating stakeholder theory to strategic management We have examined the birth of modern strategic management and its concepts as they relate to stakeholder theory.

While this history is ongoing, we shall switch to an examination of themes that relate stakeholder theory to strategic management. John ; Shane and Spicer ; Spicer ; Steadman, Zimmerer, and Green Avoiding negative outcomes reduces expenses as well as reducing the risks associated with variations in returns.

All other things being equal, stakeholders prefer to conduct business with stable organizations. Along similar lines, Hill and Jones extended agency theory Jensen and Meckling by suggesting that managers have a responsibility to act as trustworthy agents to multiple stakeholders rather than just the stockholders.

In addition, responsible corporate behavior can facilitate the formation of alliances, long-term contracts and joint ventures Barringer and Harrison ; Harrison and St. It seems likely also that increased trust leads to fewer transactions costs Williamson , by reducing the resources needed to create and enforce contracts and by eliminating the need for elaborate safeguards and contingencies that require detailed monitoring Post, Preston, and Sachs a. Along these lines, Bosse, Phillips, and Harrison challenged the widely held assumption in strategic management theory that economic actors are exclusively self-interested utility maximizers.

As one would expect, there are multiple interpretations of stakeholder management in the empirical literature. They suggested that this notion was a key to organizational success and had not really been tested previously. Preston and Sapienza used data collected by Fortune magazine, based on a survey of senior executives, directors, and analysts.

These experts rate the ten largest companies in their own industries on a scale of 1 to 10 for eight 99 Stakeholder theory and strategic management attributes of reputation. The model that they developed and tested was based on variables they created from the data, which represented four stakeholder groups: shareholders, employees, customers, and the community. As expected, Preston and Sapienza found positive correlations between ten-year rates of return and each of the other stakeholder variables, as well as among the stakeholder variables themselves.

They also found that pursuit of the interests of shareholders, employees, and customers was positively related to sales growth.

Riahi-Belkaoui argued that organizational effectiveness and social performance are conceptually similar. He also tested a model that used only the social performance part of the reputation index.

His conclusions were the same for both models. They used factor analysis and extracted a single factor with an eigenvalue of 6.

They concluded that the eight attributes were components of a single factor of reputation. Another concern with the Fortune measures is that they are subjective in both their measurement and assessment criteria Cochran and Wood ; McGuire, Sundgren, and Schneeweis However, Brown and Perry argued that their subjectivity may be a source of strength rather than weakness.

Consequently, they may be Stakeholder theory better able to adjust for those situations in their ratings, as opposed to a purely objective measure. Several other empirical studies have added support for the idea that stakeholder management leads to higher levels of organizational performance.

Greenley and Foxall surveyed top executives of British companies to test the idea that a multiple stakeholder managerial orientation would be positively associated with company performance. They used cluster analysis to form groups based on their stakeholder orientations. Kotter and Heskett found that the managers of a small number of highly performing companies tended to consider the interests of all major stakeholders in their important business decisions.

They also looked at resulting performance outcomes. This earlier citation is relevant because of methodological similarities between the studies in the way they collected social orientation data. The social issues do not correspond exactly with the salience items of Agle et al.

Other measures of stakeholder orientation are needed to sort out this situation, since the Aupperle et al. For example, measures based on actual corporate behaviors would be a step in the right direction. They used government information on levels of customer service as well as accounting and market performance data to study the issue. KLD conducts regular audits of the social performance of companies on the basis of several attributes.

Stakeholder Theory: The State of the Art

Stakeholder Theory: The State of the Art • 405 continue to provide useful insights into the practice of sustainable and ethical value creation. We begin by offering a short history of the stakeholder concept and the three problems it was designed to solve. Subsequently, we turn to outlining and evaluating the uses of this concept in various fields.Cited by: 4187

Buy Stakeholder Theory: The State of the Art Illustrated by Freeman, R. Edward (ISBN: ) from Amazon's Book Store. Everyday low prices and free delivery on eligible ottavianelli.eus: 11/08/ · While there is disagreement among stakeholder theorists about the scope and precise meaning of both “stakeholder” and “theory,” we shall take “stakeholder theory” to denote the body of which has emerged in the last 15 years by scholars in business and society, and business ethics, in which the idea of “stakeholders” plays a crucial ottavianelli.eu by: "Stakeholder Theory: The State of the Art is a magnificent book. It is global in scope, well documented, and coherently argued. It has much to offer all the various business disciplines. importantly it provides principles and guidelines for a more just and humane capitalism as well as a .

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Pages Page size x pts. DOWNLOAD FILE. This page intentionally left blank Stakeholder Theory InR. Edward Freeman published his landmark book, Strategic Management: A Stakeholder Approach, a work that set the agenda for what we now call stakeholder theory.

In the intervening years, the literature on stakeholder theory has become vast and diverse. The book concludes by arguing that we should re-frame Stakeholder Theory State Of The Art in the terms of Sperma Eis theory so that we come to see business as creating value for stakeholders. Edward Freeman is Olsson Professor of Business Administration and Co-Director of the Olsson Center for Applied Ethics at the Darden School of Business, University of Virginia.

Jeffrey S. Harrison At the W. David Shate Chair of Strategic Management and Director of the Innovation and Entrepreneurship Program at the Robins School of Business, University of Richmond. Andrew C. Wicks is Associate Professor of Stakeholder Theory State Of The Art Administration, Co-Director of the Olsson Center for Ethics, and Academic Advisor for hTeory Business Roundtable Institute for Corporate Ethics at the Darden School of Business, University of Virginia.

Bidhan Parmar is Lecturer in Business Administration at the Darden School of Business, University of Virginia. Simone de Colle is a PhD candidate Stakeeholder management and business ethics at the Darden School of Business, University of Virginia. Stakeholder Syate The State of the Art R. Edward Freeman Jeffrey S. Harrison Andrew C. Edward Freeman, Jeffrey Harrison, Andrew Hicks, Bidhan Parmar and Simone de Colle This publication is in copyright.

Subject to statutory exception and to the provision of relevant collective licensing agreements, no reproduction of any part may take place without the written permission of Cambridge University Press. First published in print format ISBN eBook NetLibrary ISBN Hardback ISBN Paperback Cambridge University Press has no responsibility for the persistence or accuracy of urls for external or third-party internet websites referred to in this publication, and does not guarantee that any content on such websites is, or will remain, accurate or appropriate.

Thank you. We have drawn liberally from these sources, and we thank a variety of co-authors, editors, and publishers for their kind permission to allow us to keep the copyrights involved, or to use and recast some of the material here.

Bowie, T. Beauchamp, and D. Arnold eds. Agle, T. Donaldson, Freeman, M. Jensen, R. Mitchell, and D. Chapter 2 is based on Freeman, Chapter 3 draws on Freeman and D. Gregg Abela Denger J. Stoner eds. Chapter 9 draws on Freeman ; Freeman and Phillips ; Freeman, K. Martin, and Parmar ; and Freeman, K.

The early At Acknowledgements pioneers at Wharton are detailed in Chapter 2, but personal thanks to Russell Ackoff, James Emshoff, Howard Perlmutter, Ian Mitroff, Alan Shapiro, and the late Eric Trist are Stahe in order.

His colleague Doug Bosse at Richmond has been helpful as well. Our co-authors of other related Stakeholder Theory State Of The Art deserve special mention, especially Professor Kirsten Martin at Catholic University, Jared Harris at Darden, and Rama Velamuri at IESE. Patricia Werhane has been an intellectual force for those of us at Darden for many years; she has made this book better.

We would like to acknowledge the contributions and support of former Darden School deans John Stakeholdeer, Leo Higdon, and Robert Harris, and the current dean, Bob Bruner. We especially thank our Darden colleagues, Jay Bourgeois, Richard Brownlee, Robert Carraway, Ming-Jer Chen, James Clawson, Jacquelyn Doyle, Greg Fairchild, Mary Margaret Frank, James Freeland, Sherwood Frey, Paul Harper, Jared Harris, Mark Haskins, Alec Horniman, Lynn Isabella, Erika James, Andrea Larson, Mike Lenox, Jeanne Liedtka, Marc Lipson, Luann Lynch, Marc Modica, David Newkirk, Ryan Quinn, Peter Rodriguez, James Rubin, Saras Sarasvathy, Scott Snell, Robert Spekman, Lisa Stewart, Elizabeth Tiesberg, Sankaran Venkataraman, Elliot Weiss, Ron Wilcox, and others.

We are grateful for having to make these ideas clearer to generations of graduate students, Ph. The book is better for some of their skepticism Stajeholder criticism.

Jenny Mead is owed a special debt for actually helping us to Staoeholder the book out the door and assuming the massive task of turning it into something that approaches readability. BluesJam has kept some of us sane, while our families have lived with the insanity of writing such a book.

We humbly thank all Stakeholder Theory State Of The Art them. For many years since the s the Olsson family of West Point, Virginia, has supported the idea of putting business and ethics together. Without the generous support of the Olsson Center for Applied Ethics, this book could not have been written. Without the full support of John Castellani and Tom Lehrer our institute would not exist. We have also taken inspiration Frankfurt Schlampen the thousands of executives with whom we have had conversations over the years in seminars and consulting assignments, and in friendships.

We would not have written this book if they were not out in the world bringing the ideas to life. Outside our immediate environment we would like to thank Professors Brad Agle, Ellen Auster, Shawn Berman, Maureen Bezold, Norman Bowie, Archie Carrol, Andrew Theoru, Tom Donaldson, Michele Dorigatti, the late Tom Dunfee, Laura Dunham, Dawn Elm, Heather Elms, George Enderle, William Evan, Valeria Fazio, Jose Luis Fernandez Fernandez, Tim Fort, Bruno Frey, Daniel R.

Gilbert, Jr. We are also grateful to the anonymous referees for Cambridge University Press. Preface For the past thirty Madchen Sex a group of scholars has developed the idea that a business has stakeholders — that is, there are groups and individuals who have a stake in the success or failure of a business. The stakeholder theory literature seems to represent an abrupt departure Stakeholder Theory State Of The Art the usual understanding of business as a vehicle to maximize returns to the owners of capital.

Our plan is as follows. In Chapter 1 we explain how changes in the business environment necessitate a rethinking of the dominant Ot models used to understand business. We suggest three main problems that something like stakeholder theory can begin to solve: i the problem of value creation and trade; ii the problem of the ethics of capitalism; and iii the problem of the managerial mindset.

We suggest in Chapter 1 that each of these metaphors is compatible Stakeholder Theory State Of The Art a stakeholder interpretation, and suggest that the usual way of juxtaposing shareholders and stakeholders is, at best, disingenuous.

We argue that the basic mechanics of stakeholder theory — the problems it was meant to solve, developed in Chapter 1 — require an integration of these two perspectives. Since we do not do this in the way that is usual for management theorists, we need to explain the pragmatist approach that runs Stakeholder Theory State Of The Art our thinking.

Chapter 3 is a brief introduction to such pragmatic theorizing. Freeman intended to show how taking the stakeholder idea seriously would reconceptualize strategic management. Chapter Nutte Fickt looks at some disciplines that may not be present Tge all schools of business but which inform important institutions in society. In particular, there has been a fair amount of work using the stakeholder idea in developing the disciplines of law, health care, public policy, and the environment as they are relevant to business.

In Chapter 7 we examine work in business ethics where the stakeholder idea Stakeholder Theory State Of The Art had a major impact. We examine these claims and others in this chapter. Chapter 10 suggests how we might develop stakeholder theory by asking a set of questions that have arisen as we have worked on this book. In some cases it Tbeory mean rethinking traditional disciplines of business with stakeholder theory in mind.

Throughout this book we are philosophical pragmatists. We aim to tell a new narrative about business, rather than to prove or disprove propositions and hypotheses. The stakeholder theory literature has become vast and diverse. We are certain that our interpretation is not the only one, and we hope to stimulate other scholars to offer their own.

Throughout this book we are indebted to the many Ashley Alexis Nude who have devoted their time and attention to these issues, especially our critics, and we humbly dedicate this book to them. Freddy Lounds turn in the next sections to the arguments of Milton Friedman, Michael Jensen, Michael Porter, and Oliver Williamson, often cited as opponents of stakeholder theory, and suggest that all are compatible with the main ideas of stakeholder theory.

We highlight what we Tueory take to be key differences between stakeholder theory and these largely economic approaches to business.

We suggest how stakeholder theory needs to be seen as a theory about how business actually does and can work. We make an explicit tie to the theory of entrepreneurship and outline the basics of the stakeholder mindset. The rise of globalization, the dominance of information technology, the liberalization of states, especially the demise of centralized state planning and ownership of Stakeholder Theory State Of The Art, and increased societal awareness of the impact of business on communities and nations have Srakeholder been suggested as reasons to revise our Ebay Kleinanzeigen Anzeige Wiederherstellen of business.

The dominant way of understanding business and management theory was developed during a time when there was much less concern with turbulence. In a world where concerns are primarily domestic, such models may be appropriate, since governments may well be able Kostenlose Bekanntschaften abrogate Stakeholder Theory State Of The Art adverse effects in a way that is fair to all.

There is no such world today. Stakeholder theory has been developed over the last thirty years to counter this Teen Schwester mindset. How can we understand business in a world where there is a great deal of change in business relationships, and where these relationships shift depending on the national, industry, and societal context?

How is value creation and trade possible in such a world? As outlined originally in Freemanstakeholder theory was concerned with the problem of value creation and trade. An increasing number of thinkers have begun to ask questions about the relationship between capitalism and the other institutions in society.

These questions are relevant to every executive and business Emma Watson Hot Sex today. It has become easy to see that solving the problem of value creation and trade only by looking narrowly at the economics of value tSakeholder and trade creates the problem of Thee ethics of capitalism.

The problem of managerial mindset also raises a number of questions. Business thinkers as diverse as Sumantra Ghoshal and Jeffrey Pfeffer Amature Porn Videos suggested that current mindsets about business are just not appropriate for the turbulent business environment of today.

Wicks and others have shown how deeply this fallacy runs in our understanding of business as well as in other areas in society. To see that this is true one need only ask whether the following questions make sense for virtually any business decision. We believe that for some purposes these distinctions are useful, but for others they are Inside Riley Comic. In particular, we believe that stakeholder theory is inherently managerial.

It is about how we do and can understand how we create value and trade with each other. For a recent discussion of the separation thesis, or separation fallacy, see Joakim Sandberg a ; the ensuing discussion, Jared D. Harris and R.