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Upping the Stakes: A Response to John Hasnas on the Normative Viability of the Stockholder and Stakeholder Theories

Published online by Cambridge University Press:  23 January 2015

Daniel E. Palmer
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Abstract:

This essay responds to Hasnas’s recent article “The Normative Theories of Business Ethics: A Guide for the Perplexed” in Business Ethics Quarterly. Hasnas claims that the stockholder theory is more plausible than commonly supposed and that the stakeholder theory is prone to significant difficulties. I argue that Hasnas’s reasons for favoring the stockholder over the stakeholder theory are not as strong as he suggests. Following Hasnas, I examine both theories in light of two sets of normative considerations: utilitarian and deontological. First, I show that utilitarian considerations clearly favor the stakeholder theory. I then argue that though Hasnas rightly accents the basic deontological constraint at the core of the stockholder theory, he is wrong to think that acknowledging such a constraint necessarily counts against the stakeholder theory. Here, I develop Ross’s notion of prima facie obligations to show how a viable stakeholder theory might be developed within a deontological framework.

Type
Response Articles
Information
Business Ethics Quarterly , Volume 9 , Issue 4 , October 1999 , pp. 699 - 706
Copyright
Copyright © Society for Business Ethics 1999

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References

Notes

1 John Hasnas, “The Normative Theories of Business Ethics: A Guide for the Perplexed,” Business Ethics Quarterly 8 (1998): 19–42.

2 Ibid., p. 20.

3 Ibid., p. 22.

4 Like Hasnas, I will limit my discussion in this response to the decisions of business managers in for-profit corporations, assuming that the conclusions generated could be expanded to apply to persons involved at all levels and in all forms of businesses.

5 Hasnas, p. 23.

6 Ibid., p. 26.

7 Ibid.

8 Ibid., p. 28.

9 Ibid., p. 20.

10 For Ross’s discussion of prima facie obligations see W. D. Ross, The Right and The Good (Oxford: Oxford University Press, 1930), particularly Chapter 2.

11 Of course, I do not mean to imply that this sort of caricature correctly represents the Kantian viewpoint, only that it does bring to the fore a problem with any sort of view that takes too stringent a view of the nature of our individual deontological obligations.

12 Notice that this sort of theory would not entail, as Hasnas thinks stakeholder theories do, that anyone who can have a stake in the decision of a manager should get equal consideration in their decision. The kind of consideration the manager should give any party is dependent upon the kind of relation they have to that party and the kind of prima facie obligations that are relevant to that kind of relationship. For instance, the kind of obligation that a parent has toward his or her own children is stronger than the kind of obligation he or she has toward other people’s children, though they still have some obligations toward those children, i.e., an obligation not to harm them or to deceive them.

13 Again, the stakeholder theory defended here will not be exactly the same as that which Hasnas’s discussion presupposes. Its basis in the notion of prima facie duties requires a manager to consider only the various types of obligations that may be relevant to her decisions. As some of these prima facie obligations may not coincide with her actual obligation, it does not necessarily require that she always act to fulfill the interests of anyone who has a stake in her decision. Likewise the theory is perfectly compatible with Hasnas’s claim on p. 36 that “individuals do not become burdened with unagreed upon obligations by going into or joining a business,” as the prima facie obligations in question are just general obligations that persons always have. The theory merely requires the manager to consider which of her prima facie obligations are relevant to her business engagements and to consider all of them in determining what her actual obligation is.