Humanizing Stakeholders by Rethinking Business

Abstract

Can business humanize its stakeholders? And if so, how does this relate to moral consideration for stakeholders? In this paper we compare two business orientations that are relevant for current business theory and practice: a stakeholder orientation and a profit orientation. We empirically investigate the causal relationships between business orientation, humanization, and moral consideration. We report the results of six experiments, making use of different operationalizations of a stakeholder and profit orientation, different stakeholders (employees, suppliers, labor unions), and different participant samples. Our findings support the prediction that individual stakeholders observing a stakeholder-oriented firm see the firm’s other stakeholders as more human than individual stakeholders observing a profit-oriented firm. This humanization, in turn, increases individual stakeholders’ moral consideration for the firm’s other stakeholders. Our findings underscore the importance of humanization for stakeholders’ moral consideration for each other. This paper contributes to a deeper understanding of the firm as a moral community of stakeholders. Specifically, we move away from a focus on managers, and how they can make business more moral. Instead we direct attention to (other) stakeholders, and how business can make these stakeholders more moral.

Stakeholder-Oriented Firms Have Feelings and Moral Standing Too

“…Stakeholder scholars argue, and find, that there is a positive relationship between a stakeholder orientation, and seeing stakeholders as human beings who have mind and moral standing ( Donaldson and Preston, 1995 ; McVea and Freeman, 2005 ; Harris and Freeman, 2008 ; Newkirk and Freeman, 2008 ; Purnell and Freeman, 2012 ; Quintelier et al, 2021 ). For instance, stakeholder scholars develop a stakeholder theory of the firm, which describes business as an activity consisting of human beings, whose interests are morally legitimate ( Freeman, 1994 ; McVea and Freeman, 2005 ; Newkirk and Freeman, 2008 ; Freeman et al, 2010 ).…”

“…Psychologists speak of mind attributions when individuals attribute human-like mental characteristics to an entity ( Epley et al, 2007 ; Waytz et al, 2010 ; Gray et al, 2012 ). Previous work in organizational theory and organizational psychology has focused on mind attributions to organizations ( Ashforth et al, 2020 ), or to their stakeholders ( Quintelier et al, 2021 ). However, mind consists of two dimensions—experience and agency.…”

“…The vignettes described an organization by systematically combining stakeholder or profit elements. The experimental paradigms for experiments 1–4 were used in a previous study ( Quintelier et al, 2021 ). Experiment 5 was designed to increase ecological validity and to expand the effects to a different operationalization of a business orientation.…”

“…In this paper I empirically investigate the effect of a business orientation—a set of firm-level prescriptions about how a firm (a for-profit corporation) should balance stakeholders’ interests and profit (cf. Jones et al, 2007 ; Phillips, 2011 ; Freeman et al, 2020 ; Quintelier et al, 2021 )—on mind and moral standing attributions to the firm. I compare stakeholder- and profit-oriented firms, as they are of growing importance for current theory ( Freeman, 1984 ; Freeman et al, 2010 , 2020 ; Parmar et al, 2010 ) and practice ( Harrison et al, 2020 ).…”

“…If firms increasingly present themselves as more stakeholder-oriented ( Harrison et al, 2020 ), this might gradually shift public opinion or court decisions on firms’ moral standing. This raises questions about how individuals will reason about the rights of the firm vs. the interests of its stakeholders ( Quintelier et al, 2021 ). In sum, future work in business ethics and stakeholder theory can benefit from integrating additional insights from the psychology of humanization.…”