handbook corporate social responisbility
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Theories of corporate social responsibility
space
Pure Marketplace Ethics Libertarian Marketplace
(Shareholder Theory)
Social Marketplace
(Shareholder Theory)
Shared Value Ethics Stakeholder Theory - Soft Progressive Corporate Social Responsibility Triple Bottom Line / Sustainability Stakeholder Theory - Hard
 
Theories of corporate social responsibility distributed across tensions
space
Profit
versus
social and
environmental engagement
Freedom versus happiness Individualism versus collectivism Independence versus belonging Dignity
versus compassion
Opportunity
versus
equality
Shareholder
versus
stakeholder
 
 
Stakeholder Theory - Soft
stakeholder soft
  Overview Businesses are fundamentally obligated to respect the rights and welfare of all those affected by its operations. In the soft version, obligations to shareholders may be systematically elevated over others.  
  Values

The welfare of all those individuals and organizations affected by the business. (Cardinal stakeholders typically include: shareholders, workers, customers, suppliers and community taken to incorporate broader humanistic and environmental concerns).

 
  Responsibilities

Stakeholders’ interests are acknowledged and respected when making decisions: the interests are weighed alongside obligations traditionally associated with shareholder (profit) interests.

 
  Key concepts

Stakeholder: an individual or organization affected by a company’s actions.

All stakeholders hold autonomous value, independent of a business's economic existence.

As opposed to the idea that a business is first an economic entity that operates in society and so acquires broader responsibilities, the idea here is that a business is fundamentally a social and ethical operation, and economic activity is only one facet of it's existence.

Shareholder value is different in kind from other stakeholder value: shareholder interests are valued differently and are also superior to the interests of other stakeholders

The collective bottom line: the summed affect of a company’s actions on all stakeholders.

The reversal of marketplace ethics: instead of starting with a business and looking out into the world to see what obligations exist, stakeholder theory starts in the world. It recognizes those individuals and groups who will be affected by - or affect - the company’s actions and asks: what are their legitimate claims on the business? What rights do they have with respect to the company’s actions? What kind of responsibilities and obligations can they justifiably impose on the business?

Proponents of marketplace ethics recognize no extra-economic ethical responsibilities (all ethical responsibilities include consideration of bottom-line affects). Proponents of stakeholder theory and other social business ethics do recognize extra-economic responsibilities: they begin with that recognition: a company is part of society before it's part of economics.

In actual practice, stakeholder theory in its soft form may be indistinguishable from marketplace theories, especially if economic success is judged as the best way for a business to contribute to broad social welfare.

 
  Hard questions

In practical terms, who counts as a stakeholder?

How should the interests of stakeholders who are not owners be measured?

How heavily should the interests of stakeholders who are not owners be weighed against the interests of stakeholders who are owners?

In soft form, stakeholder theory only requires taking account of stakeholder interests in some vague sense: is this too wishy-washy to actually change anything?

 
  Examples

In its soft form, Stakeholder theory is easy to implement, and is implemented at least informally by most businesses. Example: the construction crew that avoids making loud noise in the street before 8 am even though local regulations allow loud noise after 7:30 am. (This particular example will ring with individuals who live in Manhattan and notice that road construction workers seem to intentionally do the loudest work at exactly 07:30:01 am every weekday morning.)

The Chick-fil-A restaurant chain closes on Sundays; the In-N-Out burger pays a premium to promote John 3:16 on its cups:

In every case, it’s important to distinguish gestures responding to claims made by stakeholders, from responses owed to economic motivations (immediate profit, brand value, and similar).

 
  Prime philosophical theory compatibilities Rights theory, Duty theory, Utilitarianism, Culturalism  
  Human values

Human dignity derived from compassion (as opposed to dignity as foundational and compassion deriving from dignity)

Harmony and fitting into society valued above individual freedom and independence

Collective welfare as the source of individual opportunity and happiness (successful individuals arise from good communities as opposed to good communities being an effect of successful individuals)

 
  Associated notable figures R. Edward Freeman, Thomas Donaldson + Lee Preston  
  Branding connect

BP cleanup for stakeholders

 
  Branding misconnect

Pushback: BP cleanup for stakeholders

 
 
 
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