Making the Debate Over Corporate-Stakeholder

Responsibility A Two-Way Conversation

Andrew C. Wicks (and Jerry Goodstein)Associate Professor

Co-Director, The Olsson Center

Academic Advisor, BRICE

Andrew C. Wicks

Introduction

• Core Idea: To come to terms with what we mean by “business ethics” and to be able to foster ethics within business, we need to discuss the responsibilities of both Corporations AND Stakeholders.

• Meaning of Responsibility: - Things that we should attend to;- Things that arise out of obligations we take on.

• Three Specific Meanings of Responsibility (following Bowie)- SR-R (Reciprocity)- SR-I (Interdependence)- SR-A (Accountability)

Andrew C. Wicks

Background• Current Focus of Literature:

- Responsibility of Corporations (with Stakeholder Theory and Corporate Social Responsibility)

• Understandable Given Import/Power/Size of MNC’s

• Our Goal:- Not to Drop the focus on CR

- Not to argue that Corporations need a break or that more responsibility should shift to Stakeholders

- Focus on Both CR and SR; Both matter and both Deserve Attention (also Bowie and Raden)

• CR is Incomplete without attention to SR

Andrew C. Wicks

Why Does Stakeholder Responsibility Matter?

• For (At Least) 5 Reasons:

- A New Way to Characterize Business Ethics

- Explaining Moral Failures

- Making Organizational Moral Failure Rare

- Creating Organizational Excellence and Outstanding Performance

- Conceptualizing and Working Through Novel Business Challenges

Andrew C. Wicks

Why Does Stakeholder Responsibility Matter?• Reason #1: A New Way to Characterize Business Ethics

- Goal: Connect Business and Ethics in a “Natural”/Organic Way;

• SR as Promising Alternative

- Language of Responsibility: Integral to Business

- Distinctive Framing on Stakeholders:

• Extends Focus Beyond Firms; • Gets into Day-to-Day Life of Firms

- Overlaps with Other Theories (e.g. OCB; ST; CSR; Ethics);

• Opportunities for New Theory Development

- Rhetorical Device: Allows Managers to Engage Stakes

- Provides a Normative Benchmark: Gives Firms, Stakes and Critics a Way to Assess Performance

Andrew C. Wicks

• Reason #2: Explaining Moral Failures in Corporations- Provides Detailed and Comprehensive Lens To

Study Failures: Rich Perspective to Look at Enron, Worldcomm, Tyco, etc.

- SR Helps Frame Complexity of Breakdowns:

• Involves Many Stakeholders and Organizations• Need to Look at Parties involved and Their Interactions

- Regimes of Responsibility: Systems of Shared Norms, Understandings and Practices that Allow Things to Get Accomplished without Ethical Failures.

• Need to Understand and Unpack Regimes of Responsibility and Where/Why They Broke Down

Why Does Stakeholder Responsibility Matter?

Andrew C. Wicks

Why Does Stakeholder Responsibility Matter?• Reason #3: Making Organizational Moral Failure

Rare- How do we Change Organizations to Reduce Ethical

Failure?

• Media focus on Top Management and Boards;• Yes, But also Deeper Analysis including SR

- Focus on Regimes of Responsibility: Look for Patterns in Why Regimes of Responsibility Break Down

- Examine Studies on Individual and Group Stake Behavior: Use These to Design More Robust and Sustainable Regimes of Resp

- Look at Best Practices for Push Back and SR

• Example of eBay and Feedback Forum

Andrew C. Wicks

Why Does Stakeholder Responsibility Matter?

• Reason #4: Creating Organizational Excellence and Outstanding Performance

• Stakeholders and Mission: Great Companies Engage Stakeholders and Make Them Passionate about the Firm/Products/Mission

• SR and Excellence: To Deliver Excellence, Firms Need Stakeholders to Work Together to Fulfill Responsibilities Beyond Expectations- Needs to Drill Down into Idiosyncratic Routines and

Practices that Make Organizations Flourish

• SR and CA: Patterns of SR Can Become a Significant and Durable Source of Competitive Advantage (e.g. Starbucks, Southwest Airlines, and eBay)

Andrew C. Wicks

Why Does Stakeholder Responsibility Matter?

• Reason #5: Conceptualizing and Working Through Novel Organizational Challenges

• Novel Challenges Exist: Lots of Existing Challenges Facing Society (and Business) Involve Cooperation of Both Firms and Stakeholders

• Global Economy Fosters Novel Challenges: Interdependence and Shared Responsibility are Growing (across Firms and Stakeholders plus Society, Government and NGO’s)

• Power of Language: SR Provides Language to Conceptualize and Engage both Firms and Stakeholders- The Environment: HP and Office Depot on e-waste- Global Labor: Nike and the FLA/WRC

Andrew C. Wicks

A Research Agenda

• Business Ethics: - Discussion of Responsibilities (often Omitted) Along with Rights in

Business (e.g. Duties of Employees back to Firms)

- Normative Theories of “Responsibility” for Stakeholders and Firms

• Management Theory: - Empirical Work Focusing on Forces at Work Shaping Individual and

Group Behavior (e.g. Network Theory and Organizational Design)

- Theory and Empirical Studies on What Happens When Firms and Stakes Fulfill Mutual Responsibilities (e.g. does Commitment or Trust Increase?)

- Linkages to Trust and Supply Chain Literatures

• Leadership in Organizations: - As Agents for Creating Regimes of Responsibility that Avoid

Mishaps, Enable Success and Envision New Partnerships to Address Novel Challenges

Andrew C. Wicks

Current and Future Research Projects on SR

• Developing Theories of SR and its Import within Organizations- Conceptual Model Looking at SR as a Variable that

Impacts Specific Organizational Dynamics (e.g. like trust, commitment, capability) [Paper with Goodstein]

• Empirical Testing of SR- Use of Implicit Association Test and Expressed Values in

Stock Picking Exercise;

• Explores Link Between Normative Orientation and Stakeholder Decision-Making[Papers with Fairchild and Goodstein]

- Empirical Paper Testing Conceptual Model of SR [Future Paper with Goodstein]