Economic and Social Stakeholders - Corporate Governance and Business Ethics

Depending on their relationship to the business, two types of stakeholders can be distinguished: economic and social stakeholders. Economic stakeholders are all those who invest in the economic traffic with the business and who bear part of the risk. Groups that come to mind then are: managers, employees, shareholders, consumers, suppliers, partners in a joint venture, and competitors. What characterizes the relationship with economic stakeholders is that there is an economic exchange: labor against wages, capital against dividends, raw materials, supplier services, and consumer products against current prices. It might be surprising that competitors are seen as business stakeholders as well, but businesses do have moral obligations towards competitors. For example, justified competitor interests are at stake when a number of businesses in an industry forms a cartel and thereby puts other competitors at a disadvantage or when a business harms the reputation of the entire industry by behaving irresponsibly.

Corporate moral responsibility does not stop at the circle of economic stakeholders. A business is also responsible for parties in society which may not have any business involvement in the business, but do in some way have an interest in what that business does. Society expects an organization, business, or industry to recognized obligations with regard to interests, whether they are private or public, that are clearly outside the domain of mutual transactions, but which nevertheless merit being put on the agenda of the board. For example: interests of future generations, the environment, and the underprivileged in society. The list can be made considerably longer and more concrete, so it includes the obligation to be cautious about engaging in genetic experiments or about supplying particular forms of detrainment; the obligation to put political pressure on repressive regimes with which a business, directly or indirectly, has established business relationships; the obligation to make fighting unemployment a separate policy issue, not subject to the business’s competitive and financial position; and the obligation to engage in serious dialogue with groups claiming to represent a public interest, but which do not participate in any economic transaction with the firm (van Luijk and Schilder 1997). As a result of the increased scale and complexity of businesses, the circle of social stakeholders has expanded considerably. Businesses managing a nuclear power plant are responsible for millions of stakeholders. Companies manufacturing substances that damage the ozone layer can even count humanity as a whole among its stakeholders.

Based on how the scope of a company’s ethical responsibilities is defined, a plethora of stakeholders can be considered, and the list of legitimate social stakeholders can be extended indefinitely, it seems. Just consider how far into the future a company’s responsibility for future generations should be extended (Jeurissen and Keijzers 2004). I will not go into the details of the question of stakeholder identification here (Mitchell et al. 1997). I will only try to deal with the question of how the influence of social stakeholders should be organized, assuming that such influence is ethically plausible in at least some cases.

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