Business Cases for Sustainability – A Stakeholder Theory Perspective

[We’re pleased to welcome authors Stefan Schaltegger and Jacob Hörisch of Leuphana University, Luneburg and Edward Freeman of Darden Business School.  Schaltegger, Hörisch and Freeman recently published an article in Organization & Environment entitled “Business Cases for Sustainability: A Stakeholder Theory Perspective,” which is currently free to read for a limited time. Below, the three authors reflect on the inspiration for conducting this research:]

33048305825_efac4c4770_oWhat motivated you to pursue this research?

More and more private companies are voluntarily releasing statistics concerning how often they receive requests for their subscribers’ information, on what grounds the requests are made, and how many subscribers’ data has been disclosed. These statistics are bundled in transparency reports and their release has generally been seen as shedding light on otherwise secretive government activity, be it surveillance practices undertaken by intelligence agencies, by security intelligence agencies, or by law enforcement agencies. I wanted to understand a few things in my course of research: would companies that were not facing intense socio-economic pressures produce voluntary transparency reports that robustly revealed government surveillance practices? How effective are voluntarily produced transparency reports, generally, in shedding light on corporate and government activity? And what might be the impacts of standardizing these sorts of voluntary reports, and how might such standardization come about?

Were there any specific external events—political, social, or economic—that influenced your decision to pursue this research?

Countries around the world are grappling with the issue of government access to telecommunications data. The issue has become particularly poignant given revelations of international spying undertaken by Western countries, as well as a range of existing and proposed laws in Europe and North America that would facilitate police and security services’ access to communications information. However, governments have tended to be deeply secretive in how they use existing powers or how they would actually use proposed powers. Private companies’ voluntarily produced transparency reports, which provide statistics and narrative accounts of how often and on what grounds governments request access to companies’ data, act as a novel way of shining a light upon government practice. I was motivated to understand just how much these reports genuinely shed light on government practice and how much they cast shadows over the politics and policies of communications surveillance.

In what ways is your research innovative, and how do you think it will impact the field?
There is an extensive literature on corporate social responsibility documents and the extent to which those documents make private firms transparent, as well as a literature discussing the importance of rendering government surveillance transparent to the public. What is novel about my research is it explores how private firms’ reports are produced in contravention of state desires or interests and, thus, how transparency reporting can happen outside of situations where the market or government are clamoring for revelations of firm behavior. Core to my findings is that voluntarily produced reports could potentially be standardized to enhance comparability across firms and the reports’ revelatory nature, but that any such standardization may conceal as much about firm behavior as it reveals. Ultimately, this research advances the scholarly and public policy debate over how (in)effective private firms’ reports’ are in advancing the state of knowledge of government surveillance activities versus concealing some aspects of such activities.


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Sustainabilty in Family Businesses

hope-1-1005737-mHow have family businesses responded to the call for sustainable practices? Authors Magali A. Delmas and Olivier Gergaud recently tested their hypothesis that family businesses tend to emphasize a more socially responsible attitude for themselves and their kin by studying family owned and operated wineries in California in their article “Sustainable Certification for Future Generations: The Case of Family Business” from Family Business Review.

The abstract:

Business sustainability has been defined as meeting current needs while providing the ability of future generations to meet their own needs. However, few firms invest in practices geared at sustainability. In thisFBR_C1_revised authors color.indd article, we investigate how family ties to future generations via the intention of transgenerational succession can be associated with the adoption of sustainable practices. Using data from 281 wineries in the United States collected through a survey questionnaire, we show that ties to future generations, measured as the intention of the winery owner to pass down the winery to their children, are associated with the adoption of sustainable certification.

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Stakeholder Democracy Over the Status Quo

Jeffrey Moriarty of Bentley University published “The Connection Between Stakeholder Theory and Stakeholder Democracy: An Excavation and Defense” on April 1, 2012 in Business & Society. To view other OnlineFirst articles, please click here. Professor Moriarty kindly provided the following responses to the article.

Who is the target audience for this article?

The target audience is those interested in stakeholder theory, especially in its history and implications. Some of the earliest statements of the theory, especially by Evan and Freeman (1988, 1990) included a fairly radical governance component, what I call “stakeholder democracy.” The view seems to have been that corporations should be democratically controlled by their stakeholders. Stakeholder theorists eventually came to disavow this view. My paper argues that this is a mistake.

What Inspired You To Be Interested In This Topic?

I am interested in corporate governance, especially arguments for “democratizing” corporate governance. I was surprised to see that early stakeholder theorists expressed support for stakeholder democracy, and I was interested whether they gave good arguments for it. I concluded that they did not. But I argued in my paper that a good argument can be constructed for why stakeholder theorists, given how they think firms should be run, should support stakeholder democracy.

Were There Findings That Were Surprising To You?

Stakeholder theory is a protean creature. This presents a difficulty for researchers working on the topic. Ultimately one wants to say something about a view. But with stakeholder theory one is always wondering whether one has got the view right in the first place.

How Do You See This Study Influencing Future Research And/Or Practice?

I say in my paper that it would be good to see more articles by stakeholder theorists specifying what sort of opportunity to participate in firm governance they think stakeholders should have. They are clear that their theory does not require that stakeholders have an opportunity to participate in governance by voting in formal, binding elections. But then what sort of participation is sufficient? And why is that sort sufficient?

How Does This Study Fit Into Your Body Of Work/Line Of Research?

As mentioned, I am interested in corporate governance and, in particular, normative arguments for ‘democratizing’ the firm. In the field of business ethics, stakeholder theory is influential. So I wanted to explore the connections between stakeholder theory and democratic corporate governance.

How Did Your Paper Change During The Review Process?

I received an extremely detailed and challenging set of comments from the referees and Associate Editor at BAS. They helped me to strengthen my argument in a number of ways, especially by pointing me to articles I had not considered. Doing quality interdisciplinary work in business ethics requires being familiar with a variety of literatures, but there are only so many one can have at one’s fingertips. My reference list expanded by 1/3 during the revising process. The new information I gleaned helped me to buttress and refine some of the empirical claims upon which my argument relies.

What, If Anything, Would You Do Differently If You Could Go Back And Do This Study Again?

I haven’t changed my mind about anything yet!

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We Are All Stakeholders of Gaia

Sandra Waddock, Boston College, published “We Are All Stakeholders of Gaia: A Normative Perspective on Stakeholder Thinking” in the June 2011 issue of Organization & Environment.

The abstract:

This essay takes the normative perspective that we, including humans, institutions and enterprises, other living beings, and ecological systems, are all stakeholders of a core focal entity—the Earth conceived as the living system Gaia. The argument is that for the purposes of considering the long-term health and well-being of humanity, Gaia rightly should be conceived as the ultimate focal entity with a huge variety of other living beings, systems, and future generations, whose well-being is also at stake in the relationship. This perspective highlights the ways in which Gaia affects and is affected by her various stakeholders. It incorporates a rationale for such thinking that relies on recognizing the normative elements of stakeholder theory, particularly those that derive from interactions of stakeholders and planetary elements. It presents a framework of mutual influence and interdependence, with implications for the ways in which humanity needs to act with respect to Gaia.

In a recent podcast, Judith Clair, Boston College, interviewed Sandra Waddock about this article.

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Corporate Social Responsibility

“Corporate Social Responsibility: Evolution of a Definitional Construct” from the September 1999 issue of Business & Society, currently appears in the most read articles list based on full-text and pdf views.

Professor Archie B. Carroll has graciously provided additional information regarding his process in writing the article.

Tell the story behind the article. What prompted you to do this research and write this article?

I wrote this article because the topic of corporate social responsibility (CSR) was central to my thinking, teaching and research and I realized there had not been a history of the concept written before. When I got into the research I was amazed at how many different, varied, but similar, definitional constructs had appeared in the literature. I went back to the 1950s because I concluded that was the beginning of the modern period for CSR.

Why do you think this research is important? Why are people reading it and who else should be exposed to it?

Every year there are a growing number of new scholars coming into the Business and Society field. It is vital for them to know and appreciate what scholars before them had already contributed to the literature. This is so they would not be beginning at ground zero and have to do this research themselves. This article is fairly exhaustive of the literature from the fifties to the nineties. People are reading it because they want to have an appreciation of how this concept has developed over the decades. Scholars around the world have discovered CSR and this article is a quick way to get caught up on the past half decade.

Give us a specific review of the impact of this article. What additional research has this article led to (either your own or other’s)?

Since the article’s publication in 1999 (over a decade ago!) the field has grown significantly. I have gotten many requests for the article from all over the world. This article played a role in my being selected to write an entire book on the History of Corporate Responsibility that is being co-authored by myself, Ken Lipartito, James Post and Patricia Werhane. Kenneth Goodpaster and David Rodbourne of the University of St. Thomas are the editors. The book, which you can learn more about at our website, will be published by Cambridge University Press in 2012. Our book covers the U. S. perspective and a later volume will cover the history of the concept outside the U. S. I sense that scholars are getting more interested in the history and other articles and books are now coming out.

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