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Philosophy of Management

Volume 8, Issue 3, 2009
Management and Stakeholders - 25 Years On

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1. Philosophy of Management: Volume > 8 > Issue: 3
Wim Vandekerckhove Guest Editor Introduction: Management and Stakeholders - 25 Years On
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2. Philosophy of Management: Volume > 8 > Issue: 3
Domènec Melé The View and Purpose of the Firm in Freeman’s Stakeholder Theory
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Stakeholder Theory (ST), presented by R. Edward Freeman, is a managerial theory which sees the firm as ‘connected networks of stakeholder interests’. The purpose of the firm in Freeman’s theory is ‘value creation and trade’ and ‘creation of value for each appropriate stakeholder’. This article argues that although ST presents important insights, its view of the firm is incomplete and its vision of the purpose of the business in society needs to be refined.
3. Philosophy of Management: Volume > 8 > Issue: 3
Harry J. Van Buren III, Michelle Greenwood Stakeholder Voice: A Problem, a Solution and a Challenge for Managers and Academics
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The 25th anniversary of R. Edward Freeman’s Strategic Management: A Stakeholder Approach provides an opportunity to consider where stakeholder theory has been, where it is going, and how it might influence the behavior of academics conducting stakeholder-oriented research. We propose that Freeman’s early work on the stakeholder concept supports the normative claim that a stakeholder’s contribution to value creation implies a right to stakeholder voice with regard to how a corporation makes decisions. Failure to account for stakeholder voice (especially for non-shareholder stakeholders) works to the detriment of stakeholders. We further propose that business ethicists and stakeholder scholars have a role to play with regard to supporting the interests - including a right to voice - ofnon-shareholder stakeholders through advocacy, teaching, and scholarship. We use the example of industrial relations teaching and scholarship as a model for future business ethics teaching and scholarship.
4. Philosophy of Management: Volume > 8 > Issue: 3
Wim Vandekerckhove What Managers Do: Comparing Rhenman and Freeman
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Since the 1990s, stakeholder theory has become a central framework within the field of business ethics, as much for academics as for practitioners. The definition of what a stakeholder is, is always attributed to Freeman in his book Stakeholder Management from 1984. It is also common to contrast Freeman’s definition to the 1963 definition from the Stanford Research Institute. However, a largely forgotten work is that by Rhenman from 1964.This paper compares the respective stakeholder conceptualisations of Rhenman and Freeman. A semantic analysis of their work reveals the differences in assumptions and implications underlying Freeman’s and Rhenman’s definitions with regard to the ontological status of a corporation, the nature of the stake and the role of management. Some explanations are formulated as to why Freeman has apparently eclipsed Rhenman.
5. Philosophy of Management: Volume > 8 > Issue: 3
Magnus Frostenson Stakeholder Theory and the ‘Black Box Problem’: Internal Clarity or Confusion?
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Portraying the firm as a ‘black box’, as traditional conceptions of the firm tend to do, has been strongly criticised by stakeholder theorists. This article claims, however, that the ‘black box problem’ has not been satisfactorily resolved by stakeholder theory itself. The failure to bring clarity to the internal realities of the firm has led to unacceptable conceptions of the firm from a moral agency point of view. For example, stakeholder theory tends to portray the firm as an exchange system with an input-output thought model as a basis. Such a conception does not provide a credible account of moral agency and results in problematic consequences for stakeholder theory, for example when it comes to motivating the existence of corporate moral purposes and ethically acceptable foundations ofstakeholder interests.
6. Philosophy of Management: Volume > 8 > Issue: 3
Tom Hench, Davide Secchi Organisational Niche-Construction and Stakeholder Analysis: Concepts and Implications
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A countless variety of stakeholder approaches are referenced by management scholars and practitioners, with theories on stakeholders divided into normative and descriptive categories and managerial and instrumental theories. This paper addresses the normative stakeholder approach and evaluates its strengths and weaknesses in the context of a new framework. We argue that stakeholder theory arose from a philosophical and scientific tradition where the object of scientific analysis was divided into constituent parts that made them easier to understand and to analyse. Although this process of ‘reduction to the minimum’ is powerful and has worked very well in the past, we argue that the excessive emphasis on elemental parts, while ignoring the whole, runs the risk of overlooking the actual nature of organisation:environment relationships. Moreover, this traditional stakeholder approach can overlook change as a fundamental variable in management processes. The specific contribution of this paper is integrating stakeholder theories with an organisation:environment approach grounded in niche-construction and specie preservation. Doing so allows stakeholder theory not only to embrace human agency as part of a broadened evolutionary dynamic but also to incorporate within this view an improved understanding of the co-evolutionary processes of organisation:environment relationships and the nature of change. In this proposed niche-construction framework, stakeholders are explicitly identified as integral actors in, and co-creators of, organisational-environmental change.
7. Philosophy of Management: Volume > 8 > Issue: 3
Duane Windsor The Value Creation Proposition Suggests Two Requirements for Assessing Alternative Theories of Capitalism
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The recent global financial crisis and worst recession since the Great Depression underscore the theoretical and practical importance of defining requirements for assessing alternative theories of capitalism. The expressed goal of Freeman and his co-authors is to replace value-allocating ‘shareholder capitalism’ with value-creating ‘stakeholder capitalism.’ Each theory combines a different value proposition and principal-agent conception. So interpreted, the value creation proposition suggests two requirements for assessing alternative theories. A proposed better theory of capitalism should demonstrate first practicality of prescriptive guidance for managers and second superiority of its embedded value proposition for sustainable long-term performance. Shareholder and stakeholder conceptions are not the only approaches to developing a theory of capitalism embedding a different value proposition and agency model. Two other conceptions suggest organisational wealth and corporate social responsibility (CSR) theories of capitalism. All four alternatives meet the relatively minimal requirement of practicality. Freeman and his co-authors argue the value creation proposition will outperform the value allocation proposition. But organisational wealth and CSR theories may also outperform shareholder capitalism. Demonstrating that stakeholder capitalism will outperform organisational wealth and CSR theories depends on which principal and value proposition one judges most important in particular conditions.
8. Philosophy of Management: Volume > 8 > Issue: 3
Jon Griffith A Cautionary Note on Stakeholder Theory and Social Enterprise
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Much ink has been spilt over the last decade in discussion of the theories and practices of social enterprise - see especially Peattie and Morley for a comprehensive review of the field, including of other reviews.This brief paper is about a specific aspect of these theories and practices: the effort to establish social enterprises as distinctive from others in having at least a double bottom-line (or in some cases a triple bottom-line, or even some greater multiple of bottom-lines).The effort to establish this distinction does not fit comfortably with Freeman’s ideas about stakeholders, as exemplified in his suggestion that ‘all of those groups and individuals that can affect, or are affected by, the accomplishment of the business enterprise’ should be taken into account by its managers.The main feature of the multiple bottom-line is, on the contrary, that only some interests, not all, should be taken into account in decision making.I do not claim that the multiple bottom-line is the sole distinctive characteristic of organisations defined (by themselves or other) as social enterprises, but it is the only characteristic that concerns me in relation to stakeholder theory in this paper. I also do not claim that stakeholder theory consists only of a view about who should be taken into account by managers, but this is the only element of stakeholder theory that concerns me, in this paper, in relation to social enterprises; and all other aspects of social enterprise theory and practice, and all other aspects of stakeholder theory, will have to wait until another day.
9. Philosophy of Management: Volume > 8 > Issue: 3
Jos Leys, Wim Van Opstal A Puzzle in SRI: Stakeholders in the Mist
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‘Stakeholder’ and related notions have been coined to enhance managerial practice in mainstream corporations. Currently, these notions are abundantly present in all kinds of discourses, especially those on ‘socially responsible investing’. But what kind of stakeholder management are these socially responsible investors promoting and what might be reasonable expectations about outcomes? We find that they promote an approach that has shareholder value as motivation and legitimisation and that they nowhere promote sharing of governance with stakeholders other than shareholders. We explain why this might reasonably be expected. Besides mainstream investors and corporations, investing through co-operatively structured corporations differs regarding stakeholder positions with respect to the position of at least one stakeholder group, whether this be consumers, employees or producers. What are the implications thereof and are these investments then superior from a socially responsible perspective on investment? We find that co-operative investors meet their own set of difficulties in implementing stakeholder management. Our questions and findings enable us to formulate some critical remarks on the stakeholder-notion in both discourses and in general. We suggest that its use, if not halted altogether, should at least be restricted and substituted by the use of more specific notions.
10. Philosophy of Management: Volume > 8 > Issue: 3
R. Edward Freeman Stakeholder Theory: 25 Years Later
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