Corporate community: a theory of the firm uniting profitability and responsibility

Corporate community: a theory of the firm uniting profitability and responsibility The general concept of stakeholder management seems to be widely accepted, but its central tenet of “balancing” interests was prominently abandoned during the 1990s, as corporations favored financial interests rather than the balanced treatment proposed by stakeholder theory. The prevailing logic of business provides little incentive to do otherwise. Managers and scholars generally think about stakeholders in terms of morality, ethics, and social responsibility rather than economic value and competitive advantage. This article presents an economic theory of the firm and supporting evidence that reconcile the conflict between profitability and responsibility. Rather than passive recipients of responsible treatment, modern stakeholders work with managers to improve their own benefits while also enhancing corporate profitability. Thus, the wealth‐creating role of business arises directly out of integrating stakeholders into a productive whole – a “corporate community.” http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Strategy & Leadership Emerald Publishing

Corporate community: a theory of the firm uniting profitability and responsibility

Strategy & Leadership, Volume 28 (2): 7 – Apr 1, 2000

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Publisher
Emerald Publishing
Copyright
Copyright © 2000 MCB UP Ltd. All rights reserved.
ISSN
1087-8572
DOI
10.1108/10878570010341582
Publisher site
See Article on Publisher Site

Abstract

The general concept of stakeholder management seems to be widely accepted, but its central tenet of “balancing” interests was prominently abandoned during the 1990s, as corporations favored financial interests rather than the balanced treatment proposed by stakeholder theory. The prevailing logic of business provides little incentive to do otherwise. Managers and scholars generally think about stakeholders in terms of morality, ethics, and social responsibility rather than economic value and competitive advantage. This article presents an economic theory of the firm and supporting evidence that reconcile the conflict between profitability and responsibility. Rather than passive recipients of responsible treatment, modern stakeholders work with managers to improve their own benefits while also enhancing corporate profitability. Thus, the wealth‐creating role of business arises directly out of integrating stakeholders into a productive whole – a “corporate community.”

Journal

Strategy & LeadershipEmerald Publishing

Published: Apr 1, 2000

Keywords: Stakeholders; Corporate culture; Social responsibility

References

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