Teaching Stakeholder Theory: It's for Strategy, Not Business Ethics (original) (raw)

1998, Journal of Legal Studies Education

Other professoriala phrases that silence a mom indude tabula rasa, wid abhitio, ex ante, and ZeK have a pop quiz." I believe "Let's have a pop quiz" is the Englieh translation of tabula m a. ' Clearly not a profeesional term but one fitting rather into that category of terminology that includes. "Hey, doggies," 'Shazam," and "Show me the money." ' The author has actually exaggerated here CShazam!"). Stakeholder theory is a hifhlutin (see note 2 supm) term that emerged from the water in the form of a mythical professor and PETA advocate who surfaced while holding up a sign on problems with capitalism (legend has it that the sign read 'Capitalism ie a tool of the deviL3 Actually, stakeholder theory of the eighties ie tied to (no pun intended) a play on the word 'shareholder." The seminal work in the 1980's stakeholder field is attributed to FL Edward Freeman in his book, STRATEGIC MANAG= A S I m O L D E R APPROACH (1984). Freeman has continued the stakeholder quest with hie latest piece, A Ferninkt Reinterpretation ofthe Stakeholder Concept, appearing in 4 BUS. ETHICS Q. 475 (1994). More to come on feminists, see note 36 infrrr. No one seems to see the irony in the name origin of stakeholdex it's an interest in a company for free, man. Freeman ia not the originator of the tenn 'stakeholder" in the management literature, but he attributes its first appearanee to an internal memorandum at the Stanford 204 1 Vol. 16 1 The J o u m l of Legal Studies Education theory has been embraced by those who find that using it makes teaching business ethics really easy while enhancing cooperative Iearning.' When analyzing a case, all a professor needs to say is, "Now, who are all the stakeholders?" And the students respond, "Employees, suppliers, customers, our good fiends in Mister Rogers' Neighborhood, and aIl the fowls in the air and creatures of the sea and critters in our w~odlands."~ The activity of listing stakeholders affords us the quality Research Institute in 1963 which defined stakeholders as 'those groups without whose support the organization would cease to &t." Freeman, at 31. John Donaldson attributes its origins to Robert K. Merton in the 1950s. JOHN DONALDSON, BUSINESS However. the earlier origins of stakeholders in the legal literature is largely ignored and rarely credited. And not crediting lawyers for their work is dangerous ex ants. It was in the 1930s that law Professors Adolf Berle and Marrick Dodd went at each other on their disagreement about social responsibility. Berle and Dodd debated that great legal question: should those who hand over their dough, risk-wise, be required to listedsuccumb to those who have not invested any dough but are advocates for various causes? Berle maintained that nonshareholder interests (i.e., stakeholders) are an appropriate concern only if the shareholders say they are. Dodd, on the other. hand, described stakeholders as 'absentee ownera whose interests can be subjugated to those of other corporate constituencies and those of society at large." See, Adolf Berle,