Abstract
Several powerful arguments have been advanced for a shift from a shareholder approach to a stakeholder approach towards corporate governance. These include the pioneering work by R. Edward Freeman,2 the important analysis based on contract theory by Thomas Donaldson and Thomas Dunfee,3 as well as Max Clarkson,4 the insights of Margaret Blair,5 and most recently an essay by Robert A. Phillips.6 Other fine writings include those by Steven Waliman and others in the Stetson Law Review.7 For an extensive review of the literature and numerous other references, see Donaldson and Preston.8 It should also be noted that Tony Blair stated his support for the stakeholder model.9 Reference here is limited to the literature that focuses on the nonnative issues raised by the stakeholder approach; there is a larger body of writing that deals with pragmatic merits and effects of taking into account the needs and values of various non-shareholder constituencies out of utilitarian consequentalist considerations. Nell Minow makes the distinction clear in legal terms when she points to the difference between allowing corporate executives to take into account the needs of constituents other than the shareholders (e.g. giving money to charity) and legally entitling groups other than the shareholders to have a voice in the management of the corporation.10 This pragmatic literature is not discussed here, as my interest is limited to adding a note to the existing literature that justifies the chartering of stakeholders.
I am indebted to Michael Bocian for research assistance and to Margaret Blair for comments on a previous draft.
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References
R. Edward Freeman: Strategic Management: A Stakeholder Approach,Boston (Pittman) 1984; R. EdwardFreeman: “The Politics of Stakeholder Theory: Some Future Directions,” Business Ethics Quarterly 4,4.
Thomas Donaldson and T.W. Dunfee: “Towards a Unified Conception of Business Ethics: Integrative Social Contracts Theory,” Academy of Management Review 19,(1994), pp. 252–284.
Max B.E. Clarkson: “A Stakeholder Framework for Analysing and Evaluating Corporate Social Performance,” Academy of Management Review 20,(1995), pp. 92–117.
Margaret M. Blair: Ownership and Control: Rethinking Corporate Governance for the Twenty-First Century,Washington, DC (Brookings) 1995.
Robert A. Phillips: “Stakeholder Theory and a Principle of Fairness,” Business Ethics Quarterly 7, 1 (1997), pp. 51–66.
Steven M.H. Wallman: “The Proper Interpretation of Corporate Constituency S!tatutes and Formulation of Director Duties,” Stetson Law Review 21,1 (Fall 1991), pp. 163–196.
Thomas Donaldson and L.E. Preston: “The Stakeholder Theory of the Corporation: Concepts, Evidence, and Implications,” Academy of Management Review 20,(1995), pp. 65–91.
Irww M. Stelzer “The Stakeholder Cometh,” Weekly Standard,(February 5, 1996), pp. 16–17.
Nell Minow: “Shareholders, Stakeholders, and Boards of Directors,” Stetson Law Review 21, 1,(Fall 1991), pp. 197–243.
Amitai Etzioni: The New Golden Rule: Community and Morality in a Democratic Society,New York (BasicBooks) 1996.
Edward S. Mason: “Corporation,” in: David L. Sills (Ed.), International Encyclopedia of Social Sciences,New York (Macmillan) 1968, p. 397.
Adolfe A. Berle and Gardiner C. Means: The Modern Corporation and Private Property,New York (Macmillan), 1932.
William Chambliss and Robert Seidman: Law, Order, and Power,Reading, Mass (Addison-Wesley) 1982, pp. 88–92.
Ronald E. Voogt: “Taking’: Real Estate Owners, Rights and Responsibilities,” The Responsive Community 2,2, pp. 7–10.
For example American property law changed during the 19th century from a “natural use” conception of property which favored agrarian uses to a “reasonable use” conception which favored industrial uses. William Chambliss and Robert Seidman: Law, Order, and Power,Reading, Mass (Addison-Wesley), 1982, p. 89–90.
E. Mer.Rick Doon: “The Evolution of Limited Liability in American Industry: Massachusetts,” Harvard Law Review,61:8 (September, 1948), p. 1361.
Marleen A. O’connor: “Restructuring the Corporation’s Nexus of Contracts: Rec- ognizing a Fiduciary Duty,” North Carolina Law Review 60,(June, 1991).
Edward S. Mason: “Corporation,” International Encyclopedia of the Social Sciences,New York (Macmillan) 1968, p. 396.
R. Edward Freeman uses well a different concept of fairness, based on Rawls, but reaches a parallel conclusion. See R. Edward Freeman: “The Politics of Stakeholder Theory: Some Future Directions,” Business Ethics Quarterly 4, 4, pp. 40921.
See Rick Moiz: “Employee Job Rights: Foundation Considerations,” Journal of Business Ethics 6,(1987), pp. 449–458.
John Locke: The Second Treatise of Government,Thomas P. Peardon, ed., New York (Bobbs-Merrill), 1952, p. 17.
For example, see Clear v. American Airlines, Inc. (1980), Pugh v. See ‘s Candies (1981), and Monge v. Beebe Rubber Co. (1974).
Cf.: Ronald Dore: Japanese Capitalism, Anglo-Saxon Capitalism; How Will the Darwinian Contest Turn Out?, London (Centre for Economic Performance), 1992, P. 7.
Steven M.H. Wallman: “The Proper Interpretation of Corporate Constituency Statutes and Formulation of Director Duties,” Stetson Law Review XXI,1 (Fall 1991), p. 163.
Marleen A. O’connor: “A Socio-Economic Approach to the Japanese Corporate Governance Structure,” Washington Lee Law Review 1529,(Fall 1993); Francis Fukuyama, Trust: The Social Virtues and the Creation of Prosperity (New York, Free Press, 1995).
For a discussion of stakeholder economies or the European social model, see Tony Wright, Why Vote Labour? (London: Penguin, 1997); and John Kay, Community Values and the Market Economy, London (Social Market Foundation), 1997.
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Etzioni, A. (1999). A Communitarian Note on Stakeholder Theory. In: Essays in Socio-Economics. Studies in Economic Ethics and Philosophy. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-662-03900-7_2
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