Abstract
Through compensation arrangements, corporate managers are typically bonded to the interests of shareholders. As a result, managers have a conflict-of-interest in paternalistically deciding the compensations to and opportunities for other non-owner stakeholders (employees, suppliers and some others). An appropriate normative stakeholder-theory should therefore center on notions of fair negotiations with these stakeholders where management openly acts as agents of the shareholders. These related management agreements should be viewed as resulting from fair bargaining. Consequently, an applicable set of Kantian derived rules for fair negotiations are posed here. Their appropriateness to both indirect market-based negotiation and to direct negotiation with stakeholders is examined.
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Notes
- 1.
See the Clarkson Principles at Clarkson (1995), and at www.stakeholdersmao.com/principles-stakeholder-management.html.
- 2.
- 3.
See Freeman (2002, p. 39).
- 4.
See the Clarkson Principles cited in footnote 1.
- 5.
Even if these compensation arrangements do not particularly bond management to shareholder primacy, they still create conflicts-of-interest for applying paternalism towards stakeholders.
- 6.
See the Clarkson Principles cited in footnote 1.
- 7.
Phillips, et al. (2003, p. 487) specifies these conditions for the stakeholder theory.
- 8.
An example would be some sort of tie-in agreement such as demanding illegal kickback payments, or other illegal actions.
- 9.
Coercion or deception are clear violations of the second formula of respect for the dignity of persons. See the next section.
- 10.
Rawls 1951.
- 11.
- 12.
- 13.
See Rawls (1951).
- 14.
The Scottish philosopher David Hume (1711–1776) emphasized the effects of emotion (sympathy for the suffering of others) on ethical behavior. This is not a Kantian position where only reason should prevail, not emotion as a manipulator of reason. See Broaskes (1995, pp. 377–381).
- 15.
See the Edgeworth Box utility-maximization analysis in Henderson and Quandt (1958, p. 204), Ferguson (1972, pp. 467–473), and Maurice and Owen 1982, pp. 548–555). See also www.policonomics.com/edgworth-box/ and also www.digitaleconomist.org/ex_4010.html
- 16.
This is illustrated by the Edgeworth analysis referred to in footnote 15.
- 17.
See Chapter 3: “The Categorical Imperative Process and Moral Duties”.
- 18.
This can be considered a violation of rule #2, but it is important to fully consider the consequences of this problem in terms of the transactions costs involved as in rule #7.
- 19.
See Robinson et al. (1991).
- 20.
See Henderson and Quandt (1958, p. 219) and www.policonomics.com/compensation-criteria/
- 21.
See Mitchell, et al. (1997).
- 22.
See Van Buren III (2001).
- 23.
- 24.
See Van Buren III (2008, pp. 634–635).
- 25.
- 26.
Van Buren III (2008, pp. 635–639).
- 27.
Ibid (pp. 639–642), and Phillips (2003)
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Advanced Reading in “Fair Negotiations”
Fainaru-Wada and Fainaru (2013) provides an in-depth case analysis of the National Football Leagues’ (NFL’s) negotiations with its players’ union concerning their players’ brain injuries and their lasting effects. The problems of deception are well documented. The material of this chapter, and also Chapter “Due Diligence and the Profit Motive: Perfect or Imperfect Duty?”, can be used for reviewing this case history.
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Robinson, R.M. (2022). Chapter 10: Fair Stakeholder Negotiations. In: Business Ethics: Kant, Virtue, and the Nexus of Duty. Springer Texts in Business and Economics. Springer, Cham. https://doi.org/10.1007/978-3-030-85997-8_10
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