Robert Edward Freeman

Distinguishing “business” concerns from “ethical” values is not only an unfruitful and meaningless task, it is also an impossible endeavor. Nevertheless, fruitless attempts to separate facts from values produce detrimental second-order effects, both for theory and practice, and should therefore be abandoned. We highlight examples of exemplary research that integrate economic and moral considerations, and point the way to a business ethics discipline that breaks new ground by putting ideas and narratives about business together with ideas and narratives about ethics.

The purpose of this paper is to suggest that the current conversation about the relationship between capitalism and the poor assumes a story about business that is shopworn and outmoded. There are assumptions about business, human behavior, and language that are no longer useful in the twenty first century. Business needs to be understood as how we cooperate together to create value and trade. It is fundamentally about creating value for stakeholders. Human beings are not solely self-interested, but driven by meaning, purpose, and the ability to cooperate. And, language is best understood as a tool, rather than a source of representation. Business and capitalism with these new assumptions can be realized by large and small businesses as not just about money and profits but as the creation of meaning within a prophetic framework.

Business ethics, as a discipline, appears to be at a crossroads. Down one avenue lies more of the same: mostly philosophers taking what they know of ethics and ethical theory and applying it to business. There is a long tradition of scholars working in the area known as “business and society” or “social issues in management.” Most of these scholars are trained as social scientists and teach in business schools. Their raison d’etre has been admirable: trying to get executives and students of business to understand the social impacts of business and to see business in broad, societal terms.

This chapter argues that business schools yield 3 problems: the problem of research, the normative problem, and the problem of the use of knowledge. The authors cite the heart of the issue as the “separation fallacy”, most powerfully seen as the exclusion of ethics from business judgments, but generalizable as a duality between the worlds of management and the humanities. Freeman and Newkirk lay out five main modes of research and make recommendations for how each can escape the “separation fallacy.” Lastly, the chapter suggests how to redefine and rediscover the disciplines of business by thinking about more thick moral conceptions.

This essay argues that the first step in making successful companies a reality is for leaders to actively incorporate values and ethics into all of their business decisions and to encourage others to follow their lead. Freeman presents four actions that directors can take to move in the direction of restoring public trust along with credible research that emphasizes the importance of ethics in business strategies and practices. The chapter closes by elaborating upon the necessity of putting business and ethics together, and suggests that this concept can help bring a new vision of good governance closer to reality.

This chapter starts with presenting a reconception of the work of Norman Bowie on managerial ethics. Freeman provides a friendly criticism to the work of Bowie and points to difficulties that result from a non-critical acceptance of the corporate responsibility model as well as issues with an egoistic paradigm. The author argues that Bowie’s Kantian perspective can easily accommodate a pragmatist view of business ethics. The chapter leaves the readers with six key main principles that would link Kantian and pragmatism traditions in ethical theory: the principle of complexity, the principle of respect for persons, the principle of respect for communities, the principle of stakeholder cooperation, the principle of stakeholder engagement, and the principle of stakeholder responsibility.

In the contemporary flurry of hostile corporate takeover activity, the ethics of the practice of greenmail have been called into question. The authors provide an account of greenmail in parallel with Daniel Ellsberg’s conception of blackmail, as consisting of two conditions: a threat condition and a compliance condition.The analysis then proceeds to consider two questions: Is all greenmail morally wrong? Are all hostile takeovers morally wrong? The authors conclude that there is no basis for answering either question in the affirmative. While there is no cause for moral concern per se, the practices of both greenmail and hostile takeovers yield deeper and more interesting questions for the theory of corporate governance.

The essay begins by discussing the background and evolution of stakeholder capitalism and the effects of the business ethics movement. In an attempt to juxtapose the rhetoric of the right with the rhetoric of the left, Freeman states that a false choice between stockholders and stakeholders has been given to executives. The author highlights the idea that competition is important in stakeholder capitalism but is not its primary force, along with the fact that there is much work to be done to articulate stakeholder capitalism in a way that allows businesses to occupy the moral high ground.

The purpose of this article is to explore the idea of stakeholder capitalism. In particular, Freeman and Liedtka argue that a firm grounding of the idea on four principles, yields a view of business as creating value for stakeholders. To further elaborate stakeholder capitalism, it must be connected to the central themes in business strategy. In this article, the value chain is reinterpreted in stakeholder terms. The authors explain a method of analysis for key stakeholder relationships, and recommend general principles for conceptualizing the value chain in relational terms.

The paper considers two main cases of how the creative arts can inform a greater appreciation of human dignity. The first case explores a form of theater, Commedia dell’Arte, that has deep roots in Italian culture. The second recounts a set of theater exercises done with very minimal direction or self-direction in executive education and MBA courses at the Darden School, University of Virginia, in the United States. In both cases, we highlight how the creative arts can be important for promoting human dignity in organizations, and how they can lead to a more authentic conversation about values, ethics, and meaning.

This essay addresses the criticism concerning Freeman’s ideas of stakeholders and ethics and how they can only be applied in a long-term view. Instead, the author redefines the problem: the narrative of business being about making money for shareholders and that everyone involved in a business transaction is a short-term maximizer of their individual self-interest. Freeman argues that the only way to fix this issue is to change the underlying story, get rid of the short-term-vs-long-term dichotomy, and begin to build systems, like stake options, to revitalize capitalism.

The essay explains that viewing business as solely a means for competition presents danger in the market, specifically with the actions of the government attempting to fix this competitiveness. Freeman claims that business is about cooperation among customers, suppliers, employees, financiers, and communities rather than competitiveness. Moreover, the author concludes that we should change the self-image of managers and begin to view business as creating value for stakeholders, so that capitalism can thrive and survive.

This chapter focuses on investigating several methods to view corporations as institutions that simultaneously do the right thing, save the earth, and make money. First, Freeman and Reichart discuss a new version of an old argument by philosopher Blaise Pascal. Then, the authors dive deep into how current practices prevent us from seeing business as an institution that is hopeful. Finally, three strategies are suggested for incorporating environmental issues in alternative narratives of business. The chapter concludes by stating that we should see business as just one more part of the buzzing, blooming confusion that is the so-called “natural world”.

This essay provides an overview of the foundational history of business ethics, especially from an academic research standpoint. The authors also cover four popular misconceptions perpetuated by business schools and claim that ethics is often bolted onto a curriculum that does not encourage students to engage in moral reflection. Additionally, Freeman, Stewart, and Moriarty make a couple of recommendations for business schools: engaging with the broader university community and increasing their engagement with business. The chapter closes by citing success stories from U.S. colleges that implemented healthy approaches to business ethics.

The essay explains why society should view social responsibility as an obligation to create value for stakeholders instead of simply making a profit. Moreover, Freeman and Elms establish that there is no single formula for balancing or prioritizing stakeholders, and creating that balance is what management is all about. The authors also note that responsible capitalism can only be accomplished from responsible behavior exhibited by both businesses and their stakeholders, and that this system of social cooperation allows free people to cooperate and create value for each other in a way that no individual can do alone.

This paper aims to integrate insights from psychoanalytic theory into business ethics research on the sources of ethical failures within organizations. We particularly draw from the analysis of sources and outcomes of neurotic processes that are part of human development, as described by the psychoanalyst Karen Horney and more recently by Manfred Kets de Vries; we interpret their insights from a stakeholder theory perspective. Business ethics research seems to have overlooked how “neurotic management styles” could be the antecedents of unethical behavior within organizations. After showing the connection between five managerial neuroses and the corresponding potential ethical failures within organizations that have been already identified within business ethics research, we suggest three organizational strategies to counteract these failures. First, we argue that managers should pay greater attention at the complexity of human motivation, avoiding the simplistic view of compliance-based approaches. Second, we discuss the importance of developing a conversation around values within organizations, enabling healthy individual growth and limiting the emergence of neurotic processes. Finally, we discuss the role of the business ethicist in facilitating such a process, suggesting a parallel between the role of the business ethicist and that of the psychoanalytic therapist.

The work of Donaldson and Dunfee (Ties That Bind: A Social Contracts Approach to Business Ethics,1999) offers an example of how normative and descriptive approaches to business ethics can be integrated. We suggest that to be truly integrative, however, the theory should explore the processes by which such integration happens. We, therefore, sketch some preliminary thoughts that extend Integrative Social Contracts Theory (ISCT) by beginning to consider the process by which microsocial contracts are connected to hypernorms.

In recent papers and presentations we have satirized what the field of business and society has become (R. Edward Freeman, “Let’s Disband the Academy of Management,” 1989 SIM Division Chair Address, and R. Edward Freeman and Daniel R. Gilbert, Jr., “Business, Ethics and Society: A Critical Approach,” presented to IABS Sundance conference). We made fun of the fact that business and society intellectuals have come to see themselves as scientists with white coats telling us the way the world, even if it is the social world, really is. In this paper, we want to offer a more constructive approach, and to give an alternative interpretation of why business and society intellectuals see the question of their own legitimacy as central. In short, it is time for us to put our money where our mouth has been. So, we’re going to suggest another project that makes most of what we have done so far, as business and society intellectuals, at best irrelevant.

This essay begins by describing the many reasons for the current surge of ethical issues, including the blending of cultures and the call for greater moral leadership. Freeman argues that we need to remoralize our conversations about what it means to lead a good life and create good communities. Moreover, the author elaborates on what it means to remoralize our dialogue, and notes that those who aren't willing to engage in this dialogue are part of the problem. Lastly, the author recommends ten questions to get readers’ ethical juices flowing.Copyright of IESE Insight is the property of Estudios y Ediciones IESE S.L. and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder’s express written permission. However, users may print, download, or email articles for individual use.

This chapter attempts to make ethics and business work together in the context of corporate strategy. The authors reveal that most, if not all, corporate strategies raise ethical issues, and managers and academics have not addressed these issues in ethical terms. Additionally, the chapter explicates several different issues with corporations and corporate strategy concerning ethics. Lastly, the authors discuss the importance of personal purpose to guide action, act as a bottom line for performance, and be shaped by bargaining.

Profit maximizers have reasons to agree with stakeholder theorists that managers may need to consider different values simultaneously in decision making. However, it remains unclear how maximizing a single value can be reconciled with simultaneously considering different values. A solution can neither be found in substantive normative philosophical theories, nor in postulating the maximization of profit. Managers make sense of the values in a situation by means of the many thick value concepts of ordinary language. Thick evaluation involves the simultaneous consideration of different values: making sense of a value always involves knowing how to engage with it given the other values in the situation. This also goes for profit: maximization is only one way of engaging with the value of profit, and grasping whether maximization is appropriate involves considering other values. We discuss some consequences of our approach for stakeholder theorists and profit maximizers.

This paper explores corporate responsibility and argues that if you take a ‘creating value for stakeholders’ approach to business, and if you acknowledge that ethics and values are as important in these relationships as they are in our other relationships with our fellow human beings, then the idea of “corporate social responsibility” is just superfluous. The authors propose to replace corporate social responsibility with an idea they call “company stakeholder responsibility.” Additionally, the discussion includes a list of 10 principles of the stakeholder mindset that a firm must follow for it to reach the highest level of stakeholder commitment.

This essay begins by providing examples of unethical customer service stories to exemplify the relevance of ethics in daily life. Freeman then argues that the current wave of interest in business ethics undoubtedly results in more grandiose corporate codes of conduct, statements of values, and government rules and regulations. The author also presents a checklist for managers of companies to reflect upon. The primary recommendation given by Freeman to improve ethical standards is encouraging participation and feedback.

The purpose of this essay is to suggest that one of the dominant modes of thought in our society is a profound mistrust and misunderstanding of the role of business. A dominant myth in society is that business occupies the moral low ground, separate from ethics or a moral point of view. This position is characterized as the “business sucks” story, and the essay shows how the enactment of this story underlies business thinking among managers and business theorists. The essay concludes with a suggestion to rethink and reinvent this story along more realistic and more empowering lines. Values based capitalism, or stakeholder capitalism, offers a better way to understand the complex role that business does and should play in modern society.