BUSINESS ETHICS WITHOUT STAKEHOLDERS
Abstract: One of the most influential ideas in the field of business ethics has been the suggestion that ethical conduct in a business context should be analyzed in terms of a set of fiduciary obligations toward various "stakeholder" groups. Moral problems, according to this view, involve reconciling such obligations in cases where stakeholder groups have conflicting interests. The question posed in this paper is whether the stakeholder paradigm represents the most fruitful way of articulating the moral problems that arise in business. By way of contrast, I outline two other possible approaches to business ethics: one, a more minimal conception, anchored in the notion of a fiduciary obligation toward shareholders; and the other, a broader conception, focused on the concept of market failure. I then argue that the latter offers a more satisfactory framework for the articulation of the social responsibilities of business.
ver the past two decades, the "stakeholder paradigm" has served as the basis for one of the most powerful currents of thinking in the field of business ethics. Of course, stakeholder vocabulary is used even more widely in areas where it is not necessarily intended to have any moral implications (e.g., in strategic management).' In business ethics, however, the stakeholder approach is associated with a very characteristic style of normative analysis, viz. one that interprets ethical conduct in a business context in terms of a set of moral obligations toward stakeholder groups (or one that helps "to broaden management's vision of its roles and responsibilities to include interests and claims of non-stockholding groups"^). Seen in this light, the primary moral dilemmas that arise in a business context involve reconciling these obligations in cases where stakeholder interests conflict. Thus ethicists who are impressed by the stakeholder paradigm have become highly adept at translating any moral problem that arises in the workplace into the language of conflicting stakeholder claims.-*
The question that I would like to pose in this paper is whether the stakeholder paradigm represents the most fruitful approach to the study of business ethics. The vocabulary of stakeholder obligations has become so ubiquitous that in many contexts it is simply taken for granted. Yet the stakeholder approach is one that comes freighted with very substantive—and controversial—normative assumptions.
© 2006. Business Ethics Quarterly, Volume 16, Issue 4. ISSN 1052-150X.
BUSINESS ETHICS QUARTERLY
Naturally, there are many who have criticized the stakeholder paradigm as part of a broader skeptical critique of business ethics in general, one which denies that firms have any "social responsibilities" beyond the maximization of profit." This is not my intention here. I will argue that firms do have important social responsibilities, ones that extend far beyond mere conformity to the law. The question is whether the stakeholder paradigm represents the best framework for articulating the logic and structure of these obligations.
In order to serve as a point of contrast, I would like to provide an outline of two other possible approaches to the study of business ethics: one, a more minimal conception, anchored in the notion offiduciaryobligations toward shareholders, and the other, a broader conception, focused on the regulatory environment in which firms operate.^ I will then attempt to show that the latter, which I refer to as a "market failures" approach, offers a more satisfactory framework for articulating the concerns that underlie traditional appeals for increased corporate social responsibility. Business Ethics as Professional Ethics
There is one point that all three of the approaches that I will be presenting here have in common. All three conceive of business ethics as a species of professional ethics.* In the same way that medical...
Cited: 25. Arthur Isak Applbaum, Ethics for Adversaries (Princeton, N.J.: Princeton University
Philosophical Reader (New York: Macmillan Publishing, 1993).
David Gauthier, Morals by Agreement (Oxford: Clarendon Press, 1986).
30. John Kay, The Truth About Markets (London: Penguin, 2003), writes "it is not true
that profit is the purpose of the market economy, and the production of goods and services the
31. See Nicholas Barr, The Economics ofthe Welfare State, 3rd ed. (Stanford, Calif.: Stanford University Press, 1998), 70-85.
32. Kenneth Goodpaster, "Business Ethics and Stakeholder Analysis," Business Ethics
Quarterly 1:1 (1991): 5 3-73, at 60.
33. R. Edward Freeman, "A Stakeholder Theory of the Modem Corporation," in The Corporation and its Stakeholders, ed. Max B. E. Clarkson (Toronto: University of Toronto Press,
38. Joseph Heath and Wayne Norman, "Stakeholder Theory, Corporate Govemance and
Public Management," Joumal of Business Ethics 53 (2004): 2 4 7 ^ 5 .
42. See Bruce Langtry, "Stakeholders and the Moral Responsibility of Business," Business
Ethics Quarterly 4 (1994): 431-43, at 432.
Framework for Stakeholder Theory," Joumal of Business Ethics 58 (2005): 137^8.
49. Kelly, "Why all the Fuss about Stockholders?" Also Max Clarkson 's introduction to
The Corporation and its Stakeholders (Toronto: University of Toronto Press, 1998)
50. Clarkson, The Corporation and its Stakeholders, 1. For a clear antidote to these sorts
of views, see Henry Hansmann, The Ownership of Enterprise (Cambridge, Mass.: Harvard University Press, 1992).
52. See, for example, E. W. Orts, "Beyond Shareholders: Interpreting Corporate Constituency Statutes," George Washington Law Review 61 (1992): 14—135; also Donaldson and Preston,
"The Stakeholder Theory of the Corporation," 75-76.
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