Capitalism, Corporations and the Social Contract: A Critique of Stakeholder Theory

    Research output: Book/ReportBook

    Abstract

    In whose interests should a corporation be run? Over the last twenty-five years a distinctive answer to this question has emerged in a body of ideas known as ‘stakeholder theory’. In response to corporate scandals of recent years (including accounting scandals, the exploitation of the environment and ‘sweatshop’ labour, tax avoidance, CEO pay, etc) various writers have argued that an ethical corporation should abandon the traditional objective of maximising shareholder wealth. Stakeholder theorists are among many who have made this claim. However, stakeholder theory makes the distinctive point that a corporation can be run in the interests of a range of stakeholders – such as employees, customers, suppliers, the local community, etc – without contradicting the basic ethical principles on which a market economy stands. It is said that all the benefits of a capitalist economy can be enjoyed without any of the negative consequences attributed to the pursuit of shareholder value. This idea is significant in holding the possibility of reconciling sharply opposed political perspectives on the role of business in society. The aim of this book is to offer a critical analysis of the theory’s central claims.
    After an introductory chapter setting out the method, structure and central question of the book, Chapters 2-3 elaborate the normative arguments of stakeholder theory and the philosophical premises on which they are based. Through an analysis of the concept of trade, Chapter 4 attempts to deduce the ethical principles necessary for a market economy to function. The arguments of stakeholder theory are then examined in the light of these principles in Chapters 4 and 5. After concluding that the shareholder approach is in fact more consistent with a market economy than any version of stakeholder theory, Chapter 6 considers the limitations of this objective and asks if they can be mitigated by some recent developments in UK company law.
    Original languageEnglish
    Place of PublicationCambridge
    PublisherCambridge University Press
    Number of pages185
    ISBN (Print)978-1-107-01552-4
    Publication statusPublished - 2013

    Publication series

    NameBusiness, Value Creation and Society
    PublisherCambridge University Press

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