Goodpaster

BUSINESS ETHICS AND STAKEHOLDER ANALYSIS

Kenneth E. Goodpaster

Abstract: Mueh has been written about stakeholder analysis as a

proeess by whieh to introduce ethieal values into management deeision-making. This paper takes a critieal look at the assumptions behind this idea, in an effort to understand better the meaning of ethieal management deeisions. A distinction is made between stakeholder analysis and stakeholder synthesis. The two most natural kinds of stakeholder synthesis are then defined and diseussed: strategie and multi-fidueiary. Paradoxieally, the former appears to yield business without ethies and the latter appears to yield ethics without business. The paper eoncludes by suggesting that a third approach to stakeholder thinking needs to be developed, one that avoids the paradox just mentioned and that clarifies for managers (and direetors) the legitimate role of ethieal eonsiderations in deeision-making.

So we must think through what management should be accountable for; and how anti through whom its accountability can be discharged. The stockholders ' interest, both short- and long-term, is one ofthe areas. But it is only one.

Peter Drucker, 1988 Harvard Business Review

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is ethically responsible management? How can a corporation, given its economic mission, be managed with appropriate attention to ethical concerns? These are central questions in the field of business ethics. One approach to answering such questions that has become popular during the last two decades is loosely referred to as ··stakeholder analysis.·· Ethically responsible management, it is often suggested, is management that includes careful attention not only to stockholders but to stakeholders generally in the decision-making process. This suggestion about the ethical importance of stakeholder analysis contains an important kernel of truth, but it can also be misleading. Comparing the ethical relationship between managers and stockholders

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