Stakeholder Responsibility

According to the article “Corporate and Stakeholder Responsibility: Making Business Ethics a Two-Way Conversation” by Jerry D. Goodstein and Andrew C. Wicks, while it is imperative that an emphasis remains on corporate responsibility, it is just as important that stakeholders take responsibility for the roles they play in both the successes and the failures of a company.

Jerry D. Goodstein and Andrew C. Wicks

Jerry D. Goodstein and Andrew C. Wicks

“Corporations have become the most powerful institutions on the planet, the engines of human welfare and progress, so it only makes sense that we talk about the responsibility that they (or their agents) have to other stakeholders. But, as important as it is, this has become a one-way conversation, one that makes business ethics focus primarily on corporate responsibility. It is time we make business ethics a two-way conversation and start putting greater emphasis on stakeholder responsibility and the role stakeholders such as employees play within the firm, and the role customers, investors, supplier, and public and nongovernmental organizations play, along with corporations, in fostering ethical business practices and business excellence.”

Furthermore, “the definition of responsibility that [they] are emphasizing in relation to stakeholder-firm and stakeholder-stakeholder relationships encompasses three different but complementary conceptions of stakeholder responsibility: fulfilling responsibilities as a function of reciprocity, fulfilling responsibilities as a function of interdependence, and fulfilling responsibilities as a function of accountability.” The responsibility as a function of reciprocity is described, “… to the extent that firms are responsible for fulfilling duties to stakeholders, stakeholders in turn are responsible for fulfilling duties to firms”, while responsibility as a function of interdependence “emphasizes the idea of people and organizations sharing a common fate and choosing to pledge things to each other so as to foster cooperation and enhance the welfare of society.” “Through making morally acceptable decisions and being held accountable for actions and impacts’” stakeholders fulfill the act of being responsible as a function of accountability.

In the article, Goodstein and Wicks “present five major arguments for why stakeholder responsibility matters and the possibilities illuminated by shining the business ethics spotlight on both firms and stakeholders.”

First, “in the same way that discussions of corporate responsibility have brought together the practices of business and ethics, stakeholder responsibility can give us another conceptual vehicle to connect business and ethics. With dual focus on corporate and stakeholder responsibility, ethics gets built into the very fabric of relationships between stakeholders and firms, and both firms and stakeholders are held accountable for their actions.”

“In terms of the second area [they] want to highlight, [Goodstein and Wicks] think stakeholder responsibility can help us think more critically and comprehensively about why organizational failure happens – especially business ethics disasters of the WorldCom, Enron, Parmalat, and Arthur Anderson variety. A focus on stakeholder responsibility reminds us that in thinking about why those breakdowns occur, we need to start by looking at the interactions among key stakeholders if we want to really understand what happened and why.” Goodstein and Wicks go on to call the “system of shared norms, understandings an practices, ‘regimes of responsibility’ – formal and informal ways that networks of individuals work together (both within and across organizations) to get things done and avoid ethical breakdowns.” “Taking the perspective of stakeholder responsibility pushes us to look at organizational failure as a chance to scrutinize stakeholders and regimes of responsibility that were in place at the time of moral failure, so that we can see where breakdowns occurred and how the irresponsibility of stakeholders contributed to the larger mess that was made.”

The third area builds on the idea that, “stakeholder responsibility can help us in our thinking about how to create organizations where ethical disasters and failures are rare.” “We need to better understand what factors help determine whether stakeholders act responsibly or not, and use that knowledge to come up with better approaches to designing, managing, and sustaining organizations.”

The fourth area is that both Goodstein and Wicks “think that stakeholder responsibility is already an implicit part of how many companies think about and create outstanding performance.” “They have to get stakeholders to become passionate about the organization and its practices if they want to keep their best employees, generate quality products, maintain customer loyalty, and get suppliers to help control costs and introduce innovation.”

“The fifth and final area where [they] see great potential for leveraging stakeholder responsibility is in tackling business challenges in ways that rely increasingly on corporations and stakeholders taking joint responsibility.”

In its entirety, the article analyzes “how stakeholder responsibility can become a platform for creating engagement, sharing responsibilities, generating novel forms of cooperation cross a wide array of stakeholders, and finding mutually beneficial solutions to issues that matter to all.” “While it is important to ‘think’ and ‘talk’ the language of stakeholder responsibility, as [their examples] suggest, it is through the practice of stakeholder responsibility and ‘walking the talk,’ that firms and stakeholders truly create an ethical business context. This is ultimately a responsibility that firms and stakeholders share.”

Excerpted from the article, “Corporate and Stakeholder Responsibility: Making Business Ethics a Two-Way Conversation” by Jerry D. Goodstein and Andrew C. Wicks, Business Ethics Quarterly, Vol. 17, No. 3, 2007, pages 375-398.

This entry was posted in Uncategorized and tagged , , , , , , , , , , , , . Bookmark the permalink.