Twenty years ago an economist writing under this title would have been expected to deal chiefly or solely with the responsibility of the individual for his own economic destiny: his responsibility for paying his debts and keeping out of the poor-house. Economic responsibility meant self-reliance and self-dependence.¹ Today any treatment of the subject from such a limited standpoint would be an anachronism. The ideas of obligation which embody the actual relations of man to man in the twentieth century, and answer the needs of the twentieth century, are radically different from the ideas which dominated the nineteenth.

Some have failed...

An individual who carries on business for himself necessarily enters into business relations with a large number of persons who become either his customers or his creditors. Under a legal system based on private ownership and freedom of contract, he has no duty to conduct his business to any extent for the benefit of such persons; he conducts it solely for his own private gain and owes to those with whom he deals only the duty of carrying out such bargains as he may make with them.

If the owner employs an agent or agents to assist him in carrying...

The finance and market myopia views of the central problem of corporate governance start from an assumption that the appropriate social purpose of corporations is to maximize shareholder return. They differ only over how best to achieve this goal. Finance model advocates believe that shareholder interests are best served by policies and actions that maximize share price in the short run because they accept the central maxim of finance theory: that the price of a share of stock today fully reflects the market’s best estimate of the value of all future profits and growth that will accrue to that company....

The stakeholder concept, or stakeholder thinking, has become the most recent theory over the past decade to facilitate the undergirding of business ethics. Though the stakeholder concept found its roots in the works of Rhenman and Stymne (1965) in Sweden, the SRI Institute of Stanford University, and Ansoff (1965) in the United States, the concept entered its “popular era” over a decade ago with publication of Ed Freeman’sStrategic Management: A Stakeholder Approach(1984).

Since that time the popularity of stakeholder thinking has grown exponentially as fields such as business ethics, business and society, corporate social performance and strategic management...

How valuable is the market mechanism for practical morality? What is its moral standing? We can scarcely doubt that as individuals we do value tremendously the opportunity of using markets. Indeed, without access to markets most of us would perish, since we don’t typically produce the things that we need to survive. If we could somehow survive without using markets it all, our quality of life would be rather abysmal. It is natural to feel that in institution that is so crucial to our well-beingmust bevaluable. And since moral evaluation can hardly be indifferent to our interests and...

What is ethically responsible management? How can a corporation, given its economic mission, be managed with appropriate attention to ethical concerns? These are central questions in the field of business ethics. One approach to answering such questions that has become popular during the last two decades is loosely referred to as “stakeholder analysis.” Ethically responsible management, it is often suggested, is management that includes careful attention not only tostockholders but to stakeholders generallyin the decision-making process.

This suggestion about the ethical importance of stakeholder analysis contains an important kernel of truth, but it can also be misleading. Comparing...

Despite these prophetic words of Berle and Means (1932), scholars and managers alike continue to hold sacred the view that managers bear a special relationship to the stockholders in the firm. Since stockholders own shares in the firm, they have certain rights and privileges, which must be granted to them by management, as well as by others. Sanctions, in the form of “the law of corporations,” and other protective mechanisms in the form of social custom, accepted management practice, myth, and ritual, are thought to reinforce the assumption of the primacy of the stockholder.

The purpose of this paper is...

The general theme of stakeholder thinking is an appropriate and effective way of articulating a whole host of concerns which surround the stakeholder concept or the stakeholder theory of the firm. More than anything else, it seems, the stakeholder concept envisions a way of thinking about organizations and managers’ actions within and about organizations. More particularly, stakeholder thinking provides a concept for articulating, expressing, analysing and understanding managers in their relationships with individuals and groups “out there in the environment” known as stakeholders. At a broader level, stakeholder thinking helps us understand the business and society relationship.

Prior writings on...

The idea that corporations havestakeholdershas now become commonplace in the management literature, both academic and professional. Since the publication of Freeman’s landmark book,Strategic Management: A Stakeholder Approach(1984), about a dozen books and more than 100 articles with primary emphasis on the stakeholder concept have appeared. (Significant recent examples include books by Alkhafaji, 1989; Anderson, 1989; and Brummer, 1991; and articles by Brenner & Cochran, 1991; Clarkson, 1991; Goodpaster, 1991; Hill & Jones, 1992; and Wood, 1991a,b; plus numerous papers by Freeman and various collaborators, individually cited.)Stakeholder managementis the central theme of at least one...

Even before Preston (1975) issued an intellectual call-to-arms, scholars in the field of inquiry calledbusiness and societysought a paradigm or an integrating framework for topics thought to be central to the discipline. Various models—corporate social performance, social control of business, and stakeholder—have been advanced as part of this search. This article attempts to advance the case for using the stakeholder model as an integrating theme for the field by proposing a formalinstrumental theoryof stakeholder management. The theory represents asynthesisof the stakeholder concept, economic theory, insights from behavioral science, and ethics. The argument begins with...

A fundamental problem in the field of business and society has been that there are no definitions of corporate social performance (CSP), corporate social responsibility (CSR₁), or corporate social responsiveness (CSR₂) that provide a framework or model for the systematic collection, organization, and analysis of corporate data relating to these important concepts. No theory has yet been developed that can provide such a framework or model, nor is there any general agreement about the meaning of these terms from an operational or a managerial viewpoint. Wood’s (1991) concern that the “definition of corporate social performance (CSP) is not entirely satisfactory”...

Stakeholder theory has been a popular heuristic for describing the management environment for years, but it has not attained full theoretical status. This paper builds toward a theory of stakeholder identification and salience based on stakeholder possession of one or more of three relationship attributes: power, legitimacy, and urgency. Combinations of these attributes result in a typology of stakeholders, propositions concerning their salience to managers of the firm, and research and management implications.

Since publication of Freeman’s (1984) landmark book, the concept of “stakeholders” has become embedded in management scholarship and managers’ thinking. Yet, as popular as the term has...

This paper uses a stakeholder framework to review the empirical literature on corporate social performance (CSP), focusing particularly on studies attempting to correlate social with financial performance. Results show first that most studies correlate measures of business performance that as yet have no theoretical relationship (for example, the level of corporate charitable giving with return on investment). To make sense of this body of research, CSP studies must be integrated with stakeholder theory. Multiple stakeholders (a) set expectations for corporate performance, (b) experience the effects of corporate behavior, and (c) evaluate the outcomes of corporate behaviors. However, we find that...