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ABSTRACT. In order to ensure that corporations act in socially responsible ways. R. Freeman says that firms should be legally required to act in accordance with the directives of a moral theory which he developed especially for business - a theory which has come to be called "normative stakeholder theory" (NST). I argue that NST fails as a moral theory and that this failure indicates: (1) that we should abandon the quest to develop a special moral theory for use in business, and (2) that we should not attempt to impose the use of any moral theory upon business, but rather should allow corporations to determine their moral responsibilities in any way they see fit.
Introduction In 1970 Milton Friedman proposed that corporate executives act in a morally responsible way when they seek to maximize profits while obeying the law and following the accepted rules of competition and ethical custom.' This theory, which came to be known as "restricted egoism" or "stockholder theory," was repeatedly and severely criticized,2 and in 1988 R. Edward Freeman argued that the problems inherent in Friedman's theory were so severe that firms should be legally required to act in accordance with the directives of a different moral theory - a theory which he called "normative stakeholder theory," or "normative stakeholder analysis."3 In what follows I argue against Freeman's theory and in support of an alternative view. My method is as follows: In sections I and II I briefly outline, and then critically evaluate, normative stakeholder theory. Here my argument is that normative stakeholder analysis is as deficient a moral theory as restricted egoism and that it should be rejected by any corporate executive who wants to direct her/his firm in socially responsible ways. In section III I offer support for two theses. First, I argue that the attempt to develop a "special" moral theory for use by business is impractical and should be abandoned. Second, I argue that we should not attempt to enact laws imposing the standards of any moral theory upon business, but rather should view the relationship between moral decision-making and business as being of exactly the same sort as that which we ordinarily take to exist between moral decision-making and individual persons.
I. Normative stakeholder...