The Intrinsic Stakeholder Commitment is described by Berman, Wicks, Kotha,
Jones (Academy of Management Journal; Oct99, Vol. 42 Issue 5). They use earlier
work of Edward Freeman about the Normative Approach.
What is Intrinsic Stakeholder Commitment? Definition
This model is called the intrinsic or normative stakeholder commitment
model because the interests of stakeholders have intrinsic value. These
interests enter a firm's decision making prior to strategic considerations,
and they form a moral foundation for corporate strategy itself.
Normative approaches towards stakeholder theory hold that:
Managers ought to pay attention to key stakeholder
According to this perspective, managerial relationships with stakeholders
are based on normative, moral commitments. Rather than on a desire to use
those stakeholders solely to maximize profits. In short, a firm establishes
certain fundamental moral principles. These guide how the company does business,
in particular with respect to how it treats stakeholders. And the corporation
uses those principles as a basis for decision-making.
genesis of this normative model is the fact that company decisions affect
stakeholder outcomes. Ethics, generally speaking, deals with obligations that
arise when an individual or corporate agent's decisions affect others; regardless
of precisely what constitutes an ethical decision, decisions made without
any consideration of their impact on others are usually thought to be unethical.
Donaldson and Preston (1995) captured the implications of this view for stakeholder
management well by stating that the stakeholder interests have intrinsic worth.
That is, certain claims of stakeholders are based on fundamental moral principles.
They are unrelated to the instrumental value of the stakeholders for a corporation.
A firm cannot ignore or cannot abridge these claims, simply because honoring
them does not serve its strategic interests, or is strategically inconvenient.
In a sense, these claims are independent of, and should be addressed prior
to, corporate strategic considerations. Stakeholder interests are thought
to form the foundation of Corporate Strategy itself. They represent what we
are as a company, and what we think is important.
Given such a stakeholder orientation, a firm shapes its strategy around certain
moral obligations to its stakeholders. In this vein, a Kantian posture
(Bowie, 1994; Evan & Freeman, 1983), a feminist perspective (Wicks,
Gilbert, & Freeman, 1994), and a fair contracts approach (Freeman,
1994; Phillips, 1997) are examples of moral principles that can form the normative
foundation for stakeholder-oriented management. Freeman and Gilbert explicated
We cannot connect ethics and strategy. Unless there is a point of intersection
between the values and ethics we hold, and the business practices that exemplify
these values and ethics. To build strategy on ethics and to avoid a process
that looks much like post hoc rationalization of what we actually did, we
need to ask :"what do we stand for?" in conjunction with our strategic decisions.
The second genesis of a normative stakeholder orientation based on moral principles
is the argument that making a strategic commitment to morality is not only
conceptually flawed but is also ineffective. To strategically apply ethical
principles means that a firm only acts according to moral principles when
this is to its advantage. However this is by definition not following ethical
principles at all. In addition, Quinn and Jones (1995) argued that if the
purpose of acting ethically is to acquire a good reputation that, in turn,
will provide a firm with economic benefits, why not pursue the good reputation
directly without the intellectual excursion into moral philosophy? In some
cases, of course, the behavior called for will coincide with that dictated
by ethics, but in others it may not. What difference does ethics make if one
can act instrumentally without reference to ethics?
From a practical perspective, Jones (1995) argued that the instrumental benefits
of stakeholder management paradoxically result only from a genuine commitment
to ethical principles. He argued that firms which create, and sustain, stakeholder
relationships based on mutual trust and cooperation will have a competitive
advantage over other firms that do not act in this way (cf. Barney & Hansen,
1994). If a firm's commitment to trust and cooperation is strategic rather
than intrinsic, it will be difficult for the firm to maintain the sincere
manner and reputation (Frank, 1988) required for its differential desirability
as an economic partner. In other words, trustworthiness, honesty, and integrity
are difficult to fake. Thus, to reap the instrumental benefits of stakeholder
management, a firm must be committed to ethical relationships with stakeholders.
Regardless of the expected benefits. Strategically applied moral commitments
are not really moral. And, paradoxically, they cannot cause the desired strategic
Intrinsic Stakeholder Commitment | Normative Approach Special Interest Group
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One clear advantage of deploying an intrinsic stakeholder commitment philosophy is that it it is very strong in building trust between the business an...
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