Journal of Business Ethics

, Volume 117, Issue 3, pp 583–599 | Cite as

Shareholder Theory and Kant’s ‘Duty of Beneficence’

  • Samuel MansellEmail author


This article draws on the moral philosophy of Immanuel Kant to explore whether a corporate ‘duty of beneficence’ to non-shareholders is consistent with the orthodox ‘shareholder theory’ of the firm. It examines the ethical framework of Milton Friedman’s argument and asks whether it necessarily rules out the well-being of non-shareholders as a corporate objective. The article examines Kant’s distinction between ‘duties of right’ and ‘duties of virtue’ (the latter including the duty of beneficence) and investigates their consistency with the shareholder theory. The article concludes that it is possible within the ethical framework of shareholder theory for managers to pursue directly the happiness of non-shareholders. Furthermore, shareholders have a duty to hold management to account for the moral consequences of the firm’s activities on non-shareholding stakeholders.


Deontology Duty of beneficence Friedman Kant Imperfect duties Property rights Shareholder theory Stakeholder theory Shareholder activism 


  1. Blair, M. (1995). Ownership and control: Rethinking corporate governance for the twenty-first century. Washington, DC: The Brookings Institution.Google Scholar
  2. Bowie, N. (1999). A Kantian approach to business. In R. Frederick (Ed.), A companion to business ethics (pp. 3–16). Malden: Blackwell Publishing.CrossRefGoogle Scholar
  3. Buchanan, B., Netter, J., & Yang, T. (2010). Are shareholder proposals an important corporate governance device? Evidence from US and UK shareholder proposals. Retrieved April 5, 2012 from
  4. Chryssides, G., & Kaler, J. (1993). An introduction to business ethics. Hampshire: Cengage-Learning.Google Scholar
  5. Donaldson, T., & Dunfee, T. (1994). Toward a unified conception of business ethics: Integrative social contracts theory. The Academy of Management Review, 19(2), 252–284.Google Scholar
  6. Donaldson, T., & Dunfee, T. (1995). Integrative social contracts theory: A communitarian conception of economic ethics. Economics and Philosophy, 11(1), 85–112.CrossRefGoogle Scholar
  7. Donaldson, T., & Dunfee, T. (1999). Ties that bind: A social contracts approach to business ethics. Boston: Harvard Business School Press.Google Scholar
  8. Donaldson, T., & Preston, L. (1995). The stakeholder theory of the corporation: Concepts, evidence, and implications. The Academy of Management Review, 20(1), 65–91.Google Scholar
  9. Ertimur, Y., Ferri, F., & Muslu, V. (2011). Shareholder activism and CEO pay. The Review of Financial Studies, 24(2), 535–592.CrossRefGoogle Scholar
  10. Freeman, R. (1994). The politics of stakeholder theory: Some future directions. Business Ethics Quarterly, 4(4), 409–421.CrossRefGoogle Scholar
  11. Freeman, R., & Evan, W. (1990). Corporate governance: A stakeholder interpretation. Journal of Behavioural Economics, 19(4), 337–360.CrossRefGoogle Scholar
  12. Freeman, R., Harrison, J., Wicks, A., Parmar, B., & de Colle, S. (2010). Stakeholder theory: The state of the art. Cambridge: Cambridge University Press.CrossRefGoogle Scholar
  13. Friedman, M. (1962). Capitalism and freedom. Chicago: The University of Chicago Press.Google Scholar
  14. Friedman, M. (1970, September 13). The Social Responsibility of Business is to Increase Its Profits. New York Times Magazine. Retrieved April 5, 2012 from
  15. Goodpaster, K. (1991). Business ethics and stakeholder analysis. Business Ethics Quarterly, 1(1), 53–73.Google Scholar
  16. Gregor, M. (1996). Translator’s note on the text. In Kant, I. & Gregor, M. (Trans.), The metaphysics of morals (pp. xxxii–xvi). Cambridge: Cambridge University Press.Google Scholar
  17. Henderson, D. (2001). Misguided virtue: False notions of corporate social responsibility. London: The Institute of Economic Affairs.Google Scholar
  18. Jensen, M. (2002). Value maximisation, stakeholder theory, and the corporate objective function. Business Ethics Quarterly, 12(2), 235–256.CrossRefGoogle Scholar
  19. Jensen, M. (2008). ‘Non-rational Behaviour, Value Conflicts, Stakeholder Theory, and Firm Behaviour’, in Agle, B., T. Donaldson, R. Freeman, M. Jensen, R. Mitchell, and D. Wood, ‘Dialogue: Toward Superior Stakeholder Theory. Business Ethics Quarterly, 18(2), 153–190.CrossRefGoogle Scholar
  20. Kaler, J. (2003). Differentiating stakeholder theories. Journal of Business Ethics, 46(1), 71–83.CrossRefGoogle Scholar
  21. Kaler, J. (2006). Evaluating stakeholder theory. Journal of Business Ethics, 69(3), 249–268.CrossRefGoogle Scholar
  22. Kant, I. (1785/1998). Groundwork of the metaphysics of morals (M. Gregor, Trans.). Cambridge: Cambridge University Press.Google Scholar
  23. Kant, I. (1797/1996). The metaphysics of morals (M. Gregor, Trans.). Cambridge: Cambridge University Press.Google Scholar
  24. Kant, I. (1997). Lectures on ethics (P. Heath and J. Schneewind, Eds.; P. Heath, Trans.). Cambridge: Cambridge University Press.Google Scholar
  25. Laplume, A., Sonpar, K., & Litz, R. (2008). Stakeholder theory: Reviewing a theory that moves us. Journal of Management, 34(6), 1152–1189.CrossRefGoogle Scholar
  26. Lea, D. (2004). The imperfect nature of corporate responsibilities to stakeholders. Business Ethics Quarterly, 14(2), 201–217.CrossRefGoogle Scholar
  27. Mansell, S. (2013). Capitalism, corporations and the social contract: A critique of stakeholder theory. Cambridge: Cambridge University Press.Google Scholar
  28. Marcoux, A. (2003). A fiduciary argument against stakeholder theory. Business Ethics Quarterly, 13(1), 1–24.CrossRefGoogle Scholar
  29. McMahon, C. (1995). The political theory of organizations and business ethics. Philosophy & Public Affairs, 24(4), 292–313.CrossRefGoogle Scholar
  30. Mitchell, R., Agle, B., & Wood, D. (1997). Toward a theory of stakeholder identification and salience: Defining the principle of who and what really counts. The Academy of Management Review, 22(4), 853–886.Google Scholar
  31. Monks, R., Miller, A., & Cook, J. (2004). Shareholder activism on environmental issues: A study of proposals at large US corporations (2000–2003). Natural Resources Forum, 28, 317–330.CrossRefGoogle Scholar
  32. Nozick, R. (1974). Anarchy, state and utopia. Oxford: Blackwell.Google Scholar
  33. O’Neill, O. (1996). Towards justice and virtue: A constructive account of practical reasoning. Cambridge: Cambridge University Press.CrossRefGoogle Scholar
  34. O’Neill, O. (2001). Duty and Obligation. In L. Becker & C. Becker (Eds.), Encyclopaedia of ethics. New York: Routledge.Google Scholar
  35. Phillips, R. (1997). Stakeholder theory and a principle of fairness. Business Ethics Quarterly, 7(1), 51–66.CrossRefGoogle Scholar
  36. Phillips, R. (2003). Stakeholder theory and organizational ethics. San Francisco: Berret-Koehler Publishers, Inc.Google Scholar
  37. Principles for Responsible Investment. (n.d.). The principles for responsible investment. Retrieved April 5, 2012 from
  38. Rawls, J. (1999). A theory of justice (revised edition) Oxford: Oxford University Press.Google Scholar
  39. Sacconi, L. (2004). Corporate social responsibility (csr) as a model of “extended” corporate governance. An explanation based on the economic theories of social contract, reputation and reciprocal conformism, Liuc Papers n. 142, Serie Etica, Diritto ed Economica 10.Google Scholar
  40. Sacconi, L. (2006). A social contract account for CSR as an extended model of corporate governance (I): Rational bargaining and justification. Journal of Business Ethics, 68(3), 259–281.CrossRefGoogle Scholar
  41. Sternberg, E. (2000). Just business: Business ethics in action (2nd ed.). Oxford: Oxford University Press.Google Scholar
  42. Sternberg, E. (2004). Corporate governance: Accountability in the marketplace. London: Institute of Economic Affairs (IEA).Google Scholar
  43. Sullivan, R. (1996). Introduction. In Kant, I. & Gregor, M. (Trans.), The metaphysics of morals (pp. vii–xxvi). Cambridge: Cambridge University Press.Google Scholar
  44. Tax Justice Network. (2005a). What is the Tax Justice Network? Retrieved January 9, 2009 from
  45. Tax Justice Network. (2005). Tax us if you can: The true story of a global failure. London: Tax Justice Network.Google Scholar
  46. Thomas, R., & Cotter, J. (2007). Shareholder proposals in the new millennium: Shareholder support, board response and market reaction. Journal of Corporate Finance, 13, 368–391.CrossRefGoogle Scholar
  47. Timmermann, J. (2005). Good but not required? Assessing the demands of Kantian ethics. Journal of Moral Philosophy, 2(1), 9–27.CrossRefGoogle Scholar
  48. Timmermann, J. (2013). Kantian dilemmas? Moral conflict in Kant’s ethical theory. Archiv für Geschichte der Philosophie 95(1).Google Scholar
  49. United Nations Global Compact. (n.d.). The ten principles. Retrieved March 29, 2012 from
  50. Van Buren, I. I. I. H. (2001). If fairness is the problem, is consent the solution? Integrating ISCT and stakeholder theory. Business Ethics Quarterly, 11(3), 481–499.CrossRefGoogle Scholar
  51. Velamuri, S., & Venkataraman, S. (2005). Why stakeholder and stockholder theories are not necessarily contradictory: A Knightian insight. Journal of Business Ethics, 61(3), 249–262.CrossRefGoogle Scholar

Copyright information

© Springer Science+Business Media Dordrecht 2012

Authors and Affiliations

  1. 1.School of ManagementUniversity of St. AndrewsFifeUK

Personalised recommendations