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Taking a Risk: Max Clarkson's Impact on Stakeholder Theory
DEBORAH VIDAVER-COHEN
Florida International University
At the 1995 Society for Business Ethics meeting in Vancouver, British Columbia, Max Clarkson took a stand on stakeholder theory. I recall taking eager notes as Max described to a relatively skeptical audience his lucid, common-sense definition of organizational stakeholders. The term stakeholder, Max argued, should refer only to parties that "bear risk as a result of a firm's activities," not-as was commonly accepted in the literature at the time-every conceivable animate or inanimate object that crosses a manager's path. Defining risk as "a hazard, a danger, or the possibility of suffering harm or loss," Max argued that "risk is at the root of all stakes, since without risk there is no stake nor can a stake be made" (Clarkson, 1995, p. 2). He observed, "Responsible management will take cognizance of other groups or individuals that pose threats or create opportunities for the corporation but that is no reason to include them all as stakeholders" (1995, p. 9). "Finally!" I thought with relief, "someone has gotten this right!"
Like Max and a number of other scholars, I was frustrated by the normative weaknesses of stakeholder theory. By clinging to the notion of stakeholders as "any group or individual who can affect or is affected by the achievement of the firm's objectives" (Freeman, 1984, p. 24), theorists seemed to be sidestepping the critical moral decision-making problems at hand: How to (a) determine which groups are legitimate stakeholders, (b) prioritize the interests of these stakeholder groups, (c) assess the moral worth of their respective claims on the firm's resources, and (d) resolve competing claims. Unless these normative concerns could be systematically addressed, Max argued, stakeholder theory could provide no real managerial guidance.
His risk-based model set the stage for solving these problems by differentiating individuals or groups who can affect the organization from those who are affected by organizational activities. Although he clearly recognized that managers must be concerned with both, he maintained that these two different classes of organizational constituents call for different moral responsibilities from organizational decision makers. He observed,
At each stage of development, the firm provides...