Stakeholder
STAKEHOLDER THEORY: A LIBERTARIAN DEFENSE
R. Edward Freeman and Robert A. Phillips
Abstract: The purpose of this paper is to suggest that at least one strain of what has come to be called "stakeholder theory" has roots that are deeply libertarian We begin by explicating both "stakeholder theory" and "libertarian arguments " We show how there are libertarian arguments for both instrumental and normative stakeholder theory, and we construct a version of capitalism, called "stakeholder capitalism," that builds on these libertarian ideas We argue throughout that strong notions of "freedom" and "voluntary action" are the best possible underpinnings for stakeholder theory, and in doing so, seek to return "stakeholder theory" to its managerial and libertarian roots found in Freeman (1984).
/. Introduction ^"^uine (1960) once wrote that "sentences do not confront the tribunal of V^expe 'experience alone." And, he might have added, "nor do arguments and theories?' Sentences, as well as arguments and theories, always import their background conditions and related theories with them. Context plays a crucial role in social phenomena, and sometimes we need to resist the efforts of greedy reductionists (Dennett. 1995)' to set context aside and focus on the precision of hypotheses, the collection of data, and the rituals of method. Sometimes it is important to point out a feature of the everyday landscape which is often taken for granted, because in doing so, we can come to see new relationships and new features that previously were hidden (Wisdom, 1970),^ Such is the role of what has come to be called "stakeholder theory," and its relationship to our understanding of business activity. The interpretation of business activity can be approached in several ways. One way is to take for granted the usefulness (others might say "truth" or "moral legitimacy" here) of a way of understanding value creation and trade (or business activity), whereby individuals are presumed to be
R. Edward Freeman and Robert A. Phillips
Abstract: The purpose of this paper is to suggest that at least one strain of what has come to be called "stakeholder theory" has roots that are deeply libertarian We begin by explicating both "stakeholder theory" and "libertarian arguments " We show how there are libertarian arguments for both instrumental and normative stakeholder theory, and we construct a version of capitalism, called "stakeholder capitalism," that builds on these libertarian ideas We argue throughout that strong notions of "freedom" and "voluntary action" are the best possible underpinnings for stakeholder theory, and in doing so, seek to return "stakeholder theory" to its managerial and libertarian roots found in Freeman (1984).
/. Introduction ^"^uine (1960) once wrote that "sentences do not confront the tribunal of V^expe 'experience alone." And, he might have added, "nor do arguments and theories?' Sentences, as well as arguments and theories, always import their background conditions and related theories with them. Context plays a crucial role in social phenomena, and sometimes we need to resist the efforts of greedy reductionists (Dennett. 1995)' to set context aside and focus on the precision of hypotheses, the collection of data, and the rituals of method. Sometimes it is important to point out a feature of the everyday landscape which is often taken for granted, because in doing so, we can come to see new relationships and new features that previously were hidden (Wisdom, 1970),^ Such is the role of what has come to be called "stakeholder theory," and its relationship to our understanding of business activity. The interpretation of business activity can be approached in several ways. One way is to take for granted the usefulness (others might say "truth" or "moral legitimacy" here) of a way of understanding value creation and trade (or business activity), whereby individuals are presumed to be