Business Ethics and Stakeholder Analysis

Abstract

JSTOR is a not-for-profit service that helps scholars, researchers, and students discover, use, and build upon a wide range of content in a trusted digital archive. We use information technology and tools to increase productivity and facilitate new forms of scholarship. For more information about JSTOR, please contact support@jstor.org. This content downloaded from 169.230.243.252 on Sun, 05 Apr 2015 23:40:20 UTC All use subject to JSTOR Terms and Conditions BUSINESS ETHICS AND STAKEHOLDER ANALYSIS Kenneth E. GoodpasterA6stract: Much has been written about stakeholder analysis as a process by which to introduce ethical values into management decision-making. This paper takes a critical look at the assumptions behind this idea, in an effort to understand better the meaning of ethical management decisions. A distinction is made between stakeholder analysis and stakeholder synthesis. The two most natural kinds of stakeholder synthesis are then defined and discussed: strategic and multi-fiduciary. Paradoxically, the former appears to yield business without ethics and the latter appears to yield ethics without business. The paper concludes by suggesting that a third approach to stakeholder thinking needs to be developed, one that avoids the paradox just mentioned and that clarifies for managers (and directors) the legitimate role of ethical considerations in decision-making. So we must think through what management should be accollntable for; and how and through whom its accountability can be discharged. The stockholders ' interest, both shortand long-term, is one of the areas. But it is only one. Peter Drucker, 1988Harvard Business Review 5 rHAT is ethically responsible management? How can a corporation, W given its economic mission, be managed with appropriate attention to ethical concerns? These are central questions in the field of business ethics. One approach to answering such questions that has become popular during the last two decades is loosely referred to as Zstakeholder analysis.' Ethically responsible management, it is often suggested, is management that includes careful attention not only to stockholders but to stakeholders generally in the decision-making process.This suggestion about the ethical importance of stakeholder analysis contains an important kernel of truth, but it can also be misleading. Comparing the ethical relationship between managers and stockholdersThis content downloaded from 169.230.243.252 on Sun, 05 Apr 2015 23:40:20 UTC All use subject to JSTOR Terms and Conditions 54 BIJSINESS ETHICS QUARTERLY with their relationship to other stakeholders is, I will argue, almost as problematic as ignoring stakeholders (ethically) altogether presenting us with something of a Zstakeholder paradox.' § DefinitionThe term Zstakeholder' appears to have been invented in the early §60s as a deliberate play on the word Xstockholder" to signify that there are other parties having a Zstake" in the decision-making of the modern, publicly-held corporation in addition to those holding equity positions.Profess...

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