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Journal of Business Ethics (2009) 87:401414 Springer 2008 DOI 10.1007/s10551-008-9928-4
Assessing Freemans Stakeholder Theory James A. Stieb
ABSTRACT. At least since the publication of the monumental Strategic Management: A Stakeholder Approach (1984), the stakeholder theory originated by R. E. Freeman has engrossed much of the business ethics literature. Subsequently, some advocates have moved a bit too quickly and without proper denition or argument. They have exceeded Freemans intentions which are more libertarian and free-market than is often thought. This essay focuses on the versions of stakeholder theory directly authored or coauthored by Freeman in an effort to recover (1) Freemans intentions and (2) the argumentative justication of stakeholder theory. It then argues that Freemans appeal to legal, economic, and ethical constraints ultimately produce arguments that are invalid. One can thoroughly support legislation constraining corporations or seeking to prevent age discrimination, market monopolies, and externalities and regret the extent that capitalism is heir to such shortcomings without it following that (1) business beneciaries should be changed from stockholders to stakeholders and (2) the latter should be given serious decision-making power. Further, stakeholder theory neither denes nor battles any obvious opposition. Hence, it is difcult to see what it changes about business management. In short, stakeholder theory either changes too much about business, or nothing important at all (depending on ones interpretation). Efforts to supplant or improve the reigning theory of capitalism will have to do better.
KEY WORDS: R. E. Freeman, Milton Friedman, libertarianism, stakeholder theory, stakeholder management, stockholder theory
Introduction
The articles explaining, extolling, defending, and sometimes critiquing stakeholder theory are too numerous to list. The Rotman School of Management (Toronto) lists at least a couple hundred (Redening). This essay, on the other hand, highlights the versions given by R. E. Freeman and
his various coauthors. To my knowledge, a critique focusing simply on works authored or coauthored by Freeman has not been attempted. James Walshs wonderful book review essay (2005) critiques stakeholder theory in general but does not focus simply on Freemans contribution to stakeholder theory. Freeman only authors or coauthors one of the three books Walsh discusses. Heath (2006) provides some nice criticisms, but does not delve very deeply into Freemans writing. Moreover, since these publications, Freeman has offered new arguments or,...