Stakeholder Theory and A Principle of Fairness

TLDR

Stakeholder theory is a central topic in business ethics, yet it suffers from a lack of a coherent justificatory framework, unclear stakeholder adjudication, and ambiguous stakeholder identification. The essay aims to address gaps in stakeholder theory by proposing the principle of fairness as a source of stakeholder obligations, defending it, comparing it to other ethical models, and outlining future implications. The proposed mechanism is the principle of fairness, which holds that participants who voluntarily benefit from a cooperative arrangement that requires sacrifice must contribute proportionally to the benefits received to prevent free‑riding.

Abstract

Stakeholder theory has become a central issue in the literature on business ethics/business and society. There are, however, a number of problems with stakeholder theory as currently understood. Among these are: 1) the lack of a coherent justificatory framework, 2) the problem of adjudicating between stakeholders, and 3) the problem of stakeholder identification. In this essay, I propose that a possible source of obligations to stakeholders is the principle of fairness (or fair play) as discussed in the political philosophic literature of Rawls, Simmons, and Cullity among others. The principle of fairness states that, “Whenever persons or groups of persons voluntarily accept the benefits of a mutually beneficial scheme of co-operation requiring sacrifice or contribution on the parts of the participants and there exists the possibility of free-riding, there exist obligations of fairness on the part of these persons or groups to co-operate in proportion to the benefits accepted.” In this essay I discuss the gaps in the current stakeholder literature, elucidate and defend a principle of fairness that fills the gap, compare the fairness model to other similar models of business ethics, and draw some conclusions for the future of stakeholder theory.