Robert Edward Freeman

This chapter begins with a brief, stylized history of the business academy, primarily in the United States, where it finds its most dominant form and, historically, its largest audience. The authors juxtapose this history with the tremendous changes that have occurred in business over the last 40–50 years, and suggest that the time is ripe for change. Next, Freeman and Newkirk demonstrate that recent critiques rest on a faulty and outmoded view of business. Using stakeholder theory, the authors argue that we need a new approach, most easily characterized as “business as a human activity.” The chapter suggests two central questions and four problems business education must place front and center. The authors then discuss how we might draw on all of the disciplines of the academy for a more robust and useful view of business, and more powerful research and educational tools.

This paper outlines the history of debates about corporate purpose, calls out some myths that persist in the way that people think about corporate purpose, and introduces a view of business called “managing for stakeholders” that has become increasingly beneficial. Furthermore, the authors argue that to manage sustainable businesses, leaders need to pay careful attention to how stakeholder relationships are managed and how value gets created. This way, managers can ensure that all core stakeholders are receiving value for their efforts and choose to continue to support the firm.

In the midst of greed, corruption, the economic crash and the general disillusionment of business, current conceptions of leadership, organizational values, and authenticity are being questioned. In this article, we fill a prior research gap by directly exploring the intersection of these three concepts. We begin by delving into the relationship between individual values and organizational values. This analysis reveals that the “value fit” approach to creating authenticity is limited, and also indicates that a deeper exploration of the nature of values and the role of leadership is necessary. More specifically, we propose that organizational values should be viewed as an opportunity for ongoing conversations about who we are and how we connect. Through this type of dialogue which we define as “value through conversation”, we can create what we call poetic organizations. A typology of four interconnected values each of which forms a foundation for the critical questioning and inquiry that might be found in poetic organizations is developed. We suggest that this conceptualization offers a new and dynamic approach for thinking about the relationships between leadership, values, and authenticity and has important implications for both research and practice.

Lack of specificity around stakeholder identity remains a serious obstacle to the further development of stakeholder theory and its adoption in actual practice by business managers. Nowhere is this shortcoming more evident than in stakeholder theory’s treatment of the constituency known as “community.”In this paper we attempt to set forth what we call “the Problem of Community” as indicative of the definitional problems of stakeholder theory. We then begin the process of gaining greater specificity around our notions of community and the role of community in stakeholder theory and management. In doing so, we identify the emergence of two fairly new forms of community that we believe are particularly relevant to the stakeholder theorist and practicing manager. These two new variants of community—the virtual advocacy group and the community of practice—extend the notion of community in new directions, which have strikingly different implications for stakeholder theory and practice.

This paper suggests an approach to the management of the external environment, and attempts to provide a description of a concrete managerial process for the implementation of “stakeholder thinking.” The process described will not help managers manipulate and control external groups. Rather, the process is based on philosophical principles of cooperation and negotiation, and on the belief that stakeholder positions can be mutually supportive of corporate objectives. The analysis is divided into three major sections: a description of the stakeholder concept and framework, an application through a case study of the stakeholder management process, and an analysis of the underlying philosophy of stakeholder management.

The purpose of this paper is to suggest that at least one strain of what has come to be called “stakeholder theory” has roots that are deeply libertarian. We begin by explicating both “stakeholder theory” and “libertarian arguments”. We show how there are libertarian arguments for both instrumental and normative stakeholder theory, and we construct a version of capitalism, called “stakeholder capitalism,” that builds on these libertarian ideas. We argue throughout that strong notions of “freedom” and “voluntary action” are the best possible underpinnings for stakeholder theory, and in doing so, seek to return “stakeholder theory” to its managerial and libertarian roots found in Freeman (Strategic management: a stakeholder approach. Pitman Publishing Inc., Boston, 1984).

The purpose of this paper is to describe a way of teaching business ethics using the creative arts, especially literature and theater. By drawing on these disciplines for both method and texts, we can more easily make the connection to business as a fully human activity, concerned with how meaning is created. Students are encouraged to understand story-telling and narrative and how these tools lend insight into the daily life of businesspeople. The paper describes two main courses, Business Ethics Through Literature and Leadership, Ethics and Theater, and the rationale for each. We begin by suggesting three main leverage points that the courses engender. We then rely on the words of students who have taken the courses for insights into what they learned. We then critically assess some of the principles that have informed course design over time. We conclude by suggesting that paying attention to the creative arts gives rise to a rather different approach to business ethics, one grounded in the pragmatist tradition in philosophy.

The purpose of this work is to give several reasons why we should give up the idea of corporate social responsibility. Freeman and Liedtka draw on their extensive experience in helping managers think about these ideas, as well as their reading of the management literature on this and other subjects. The authors have to confess that after years of trying to make sense of this idea they have come full circle to agree with Milton Friedman that the concept of corporate social responsibility is a dangerous idea. However, Freeman and Liedtka have slightly different reasons for their conclusions.

The main focus of this work is to explicate the stakeholder management framework and philosophy in general terms. The author emphasizes how the three levels of analysis - rational, process, and transactional - must be consistent if the stakeholder concept is to make a difference in the way that organizations are managed. Moreover, this chapter offers a brief sketch of the principles of voluntarism which goes hand in hand with the application of the stakeholder concept to strategic management processes.

We begin this chapter by outlining the problems that stakeholder theory was originally conceptualized to solve and the “basic mechanics” that we believe underlie the development of the theory during the last 30 years. We turn in the next sections to the arguments of Milton Friedman, Michael Jensen, Michael Porter, and Oliver Williamson, often cited as opponents of stakeholder theory, and suggest that all are compatible with the main ideas of stakeholder theory. We highlight what we also take to be key differences between stakeholder theory and these largely economic approaches to business. We suggest that while these approaches are compatible with stakeholder theory, it makes more sense to return to the very roots of capitalism, the theory of entrepreneurship. We suggest how stakeholder theory needs to be seen as a theory about how business actually does and can work. We make an explicit tie to the theory of entrepreneurship and outline the basics of the stakeholder mindset.

This chapter suggests that there are at least five main challenges to the development of stakeholder theory as it currently stands. We need more research on understanding what counts as the total performance of a business; accounting for stakeholders rather than accounting only for investors; explaining real stakeholder behavior; formulating smart public policy given stakeholder theory; and rethinking the basics of ethical theory. Freeman explains the issues involved in each challenge and suggests ways to meet the challenge. It is a preliminary report of research in progress as well as a blueprint for how others may join the conversation to develop a more useful stakeholder theory.

This work centers on “community stakeholders” and explains the sources and limits of organizational obligations to communities whilst describing a typology of potential relationships that organizations may have with communities. The goal of the paper is to discuss firm-community relationships as one potential lever in beginning a more complicated endeavor of reconciling and distinguishing corporate citizenship and stakeholder theory. The authors also describe challenges involved with the unreflective use of stakeholder terminology in discussions of corporate citizenship.

Scandinavia is routinely cited as a global leader in corporate social responsibility (CSR) and sustainability. In this article, we explore the foundation for this claim while also exploring potential contributing factors. We consider the deep-seated traditions of stakeholder engagement across Scandinavia including the claim that the recent concept of “creating shared value” has Scandinavian origins, institutional and cultural factors that encourage strong CSR and sustainability performances, and the recent phenomenon of movement from implicit to explicit CSR in a Scandinavian context and what this may entail. In sum, we depict the state of the art in CSR and sustainability in Scandinavia. We intend for this to serve as a basis to help establish a globally recognized research paradigm dedicated to considering CSR and sustainability in a Scandinavian context.

We analyze two exceptional episodes of two multinational breweries who, independently from each other, decided to close a small niche brewery in a small town, namely Pedavena in Italy (part of the Heineken group) and Hoegaarden in Belgium (part of the InBev group). In both cases, the initial decision of plant closing was ultimately reversed through actions supported by an alliance of stakeholders. We develop and apply three different conceptual lenses to analyze the cases—described as Amoral Managerial (Model 0); Applied Business Ethics (Model I) and Bounded Business Ethics (Model II), respectively—showing how with the integration of stakeholder theory in business ethics research (Model II) we can enrich our understanding of the implications of stakeholder engagement in the value creation process that can be otherwise denied (Model 0) or overlooked (Model I). Our two cases also show that when managers are missing opportunities for value creation, or destroying elements of the value creation process, stakeholder alliances can repair such a stakeholder equilibration failure.

We explore a new phenomenon of multi-stakeholder orientation and engagement in corporate communication: letters to stakeholders. By applying content, semantic, and quantitative analyses to standardized corporate communication among the 100 largest multinational companies worldwide, our study reveals that approximately one-third of the examined companies have begun to utilize what could be considered letters to stakeholders. We demonstrate that letters to stakeholders adopt a multi-stakeholder orientation, which describes the ability to speak a language that is widely comprehensible by a diverse audience. Letters to stakeholders are positively related to firm willingness to display multi-stakeholder engagement activities by embracing stakeholder recognition, support, and dialog. Our findings position letters to stakeholders as a promising tool for and approach to corporate communication that improves the legitimacy and moral consideration of stakeholders.

Ed Freeman’s influential ideas on stakeholder theory, business ethics, humanities, and capitalism became foundational in the management field and turned around the mainstream thinking about business. Stakeholder theory developed by Freeman and others posits that business is not as much about profits, but rather about creating value for its stakeholders, including employees, customers, communities, financiers, and suppliers. The relationship between a company and its stakeholders is the essence of business and should be of utmost attention to its managers. Managers should avoid resorting to trade-offs by prioritizing one stakeholder group (e.g., shareholders) over the others and strive to run their companies in the interests of all stakeholders. The idea of pursuing the interests of all stakeholders became revolutionary in management and went far beyond the management field, expanding to Law, Health Care, Education, Public Policy and Administration, and Environmental Policy. This book is a collection of Ed Freeman’s most influential and important works on stakeholder theory as well as business ethics, humanities, and capitalism.

This latest volume in the acclaimed Ruffin Series in Business Ethics brings together the contributions to the annual Ruffin Lecture series, in which some of the leading scholars in business ethics addressed the question: Can business, and business education, be considered one of the humanities, or is it in a class by itself? At a time when business is coming under attack for its apparent transgressions, this book iluminates the special values that inhere in the business world. Arguing all sides of the issue, the distinguished contributors include Richard DeGeorge, Ronald Green, Thomas Dunfee, Robert Solomon, Edwin Hartman, Peter French, Patricia Werhane, Clarence Walton, W. Michael Hoffman, David Fedo, Kenneth Andrews, Joanne Ciulla, Manuel Velasquez, and George Brenkert. The editors contribute an informative Introduction and an Epilogue to set the debate in its proper context.

Pragmatists believe that philosophical inquiry must engage closely with practice to be useful and that practice serves as a source of social norms. As a growing alternative to the analytic and continental philosophical traditions, pragmatism is well suited for research in business ethics, but its role remains underappreciated. This article focuses on Richard Rorty, a key figure in the pragmatist tradition. We read Rorty as a source of insight about the ethical and political nature of business practice in contemporary global markets, focusing specifically on his views about moral sentiments, agency, and democratic deliberation. Importantly for business ethicists, Rorty’s approach sets in stark relief our moral responsibility as useful, practical thinkers in addressing the societal challenges of our time. We use “modern slavery” as an empirical context to highlight the relevance of Rorty’s approach to business ethics.

We theorize that, in the current development of business ethics, there is a fruitful evolution that dissolves the dichotomy between the normative and behavioral research approaches developed, respectively, by philosophers and social scientists; this approach avoids many of the limitations originated by such distinction by reconnecting their two separate narratives. We call this emerging research model Humanistic Business Ethics (HBE) as it emphasizes the centrality of the human dimension of business and the importance of adopting a richer concept of humanity in business ethics research. We argue that this specific research model in business ethics emerges when scholars combine a pragmatist philosophical approach with some key ideas coming from stakeholder theory, which we summarize and connect. By leveraging collaboration across ethics, economics, psychology, and entrepreneurship, HBE can help business and society scholars undertake fruitful inquiries into the way business works (and should work) at its best.

In this article, we will outline the principles of stakeholder capitalism and describe how this view rejects problematic assumptions in the current narratives of capitalism. Traditional narratives of capitalism rely upon the assumptions of competition, limited resources, and a winner-take-all mentality as fundamental to business and economic activity. These approaches leave little room for ethical analysis, have a simplistic view of human beings, and focus on value-capture rather than value-creation. We argue these assumptions about capitalism are inadequate and leave four problems in their wake. We wish to reframe the narrative of capitalism around the reinforcing concepts of stakeholders coupled with value creation and trade. If we think about how a society can sustain a system of voluntary value creation and trade, then capitalism can once more become a useful concept.