Reading Assignment – Stakeholder Theory
Professor Juan Carlos Orejarena
Chapter 7 of the book “Stakeholder Theory: The State of the Art” discusses how stakeholder theory is employed in the realm of business ethics. The stakeholder theory has become an essential part of business ethics studies, and this chapter made a point to connect its normative pillars, to the main ideas behind business ethics. To serve as background, chapter 7 starts out by discussing business ethic’s beginnings, which is recent, and how it became popular due to many scandals involving big businesses, increasing the demand for its teachings. Another important part of this chapter was the shareholder versus stakeholder comparison, which many people make today. Freeman suggests the stakeholder view as a substitute approach to the shareholder one.
The normative core ideas in which drive stakeholder theory helps a business understand why, and how to, follow the theory. It starts out by exploring Kantian capitalism, in which has a main idea of balancing the stakeholder’s interest, as well as ensuring that the people related to the company, should not be seen “as a mere means”, but “as an end”. Following, Freeman talks about implementing personal projects within companies, which should allow stakeholders to work together, toward common objectives and individual rights. The feminist theory is another normative core idea, where stakeholders are part of the “web”, or network of the company. This would allow management to branch out care to the stakeholders by managing relationships and “getting people to work together to create value”.
This chapter also pointed out to some misunderstandings and misuse of stakeholder theory. A particular summary that caught my attention, was regarding the idea that stakeholder theory would require changes in legislation, as well as a...