Intrinsic Stakeholder Commitment
The Normative Approach

Knowledge Center



Summary, forum, best practices, expert tips and information sources.


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 relationships.


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.

intrinsic stakeholder commitment normative approachOne 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 this perspective:

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. (1988)

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 outcomes.


Special Interest Group

Intrinsic Stakeholder Commitment | Normative Approach Special Interest Group.



Special Interest Group (11 members)

Forum  

Forum about Intrinsic Stakeholder Commitment | Normative Approach.


Building Trust in your Firm
One clear advantage of deploying an intrinsic stakeholder commitment philosophy is that it it is very strong in building (...)
11
 
8 reactions
 
Business Ethics and Stakeholder Management
Stakeholders' Intrinsic Value Perspective implies that as a manager you should never harm stakeholders in a non-ethical (...)
7
 
0 reactions
 
🔥 NEW Stakeholders in Mine Project Development
Indigenous community owners of surface lands are no longer passive participants of the mining businesses. At the contrar (...)
4
 
2 reactions
 
Best Practices

The top-rated discussion topics about Intrinsic Stakeholder Commitment | Normative Approach. Here you will find the most valuable ideas and practical suggestions.


🥇 Reasons for Adopting a Code of Ethics by a Company
What are the motivations for adopting the code of ethics using the normative form and using the instrumental form of sta (...)
6
 
1 reactions

 
🥈 What is Normative Management?
What does normative management mean? (...)
3
 
1 reactions

 
Expert Tips

Advanced insights about Intrinsic Stakeholder Commitment | Normative Approach. Here you will find professional advices by experts.


Stakeholder Capitalism (Freeman)

Stakeholder Management (...)
   
 
 
 

4 Levers to Pursue a Dual Corporate Purpose

CSR, Impact on Society, Balancing Financial and Social Goals, Dual Purpose (...)
   
 
 
 

CEOs Time Spent per Stakeholder / Constituency

CEO Coaching, CEO Time Management, Stakeholder Management (...)
   
 
 
 

How to Effectively Conduct a Stakeholders Meeting?

Stakeholder Meetings, Best Practices (...)
   
 
 
 

The Maturity Stages of Corporate Responsibility

Organizational Development, Corporate Responsibility Maturity (...)
   
 
 
 

Putting Purpose at the Core of Strategy Works

Strategy, CSR, Stakeholder Management (...)
   
 
 
 
Information Sources

Various sources of information regarding Intrinsic Stakeholder Commitment | Normative Approach. Here you will find powerpoints, videos, news, etc. to use in your own lectures and workshops.


The Purpose of Business: Stockholder versus Stakeholder Theories

Stakeholder Analysis; Stakeholder Commitment (...)
 
 
 
 

Change of Governance in Historic Perspective: The German Experience

German Experience (...)
 
 
 
 

Exceptional Speech by then 13 year-old Severn Suzuki at the UN, 2008 on Environmental and Social Responsibility

Environmental Responsibility, Social Responsibility (...)
 
 
 
 

Stakeholder versus Shareholder Satisfaction in Corporate Risk Management

Corporate Risk Management (...)
 
 
 
 

The Dawn of Conscious Capitalism

Conscious Capitalism, Value-driven Consumer, Socially Responsible Investing, Corporate Responsibility (...)
 
 
 
 

CSR Implementation and Communication Model (Schmeltz)

CSR Communication, CSR Implementation, CSR Strategy, Corporate Identity, Corporate Values, CSR Stages, (...)
 
 
 
 

Fundamentals of Business Ethics

Business Ethics, Corporate Ethics, Ethical Behavior, Corporate Responsibility, Stakeholder Management (...)
 
 
 
 

Stakeholder Theory and Corporate Governance: The Role of Intangible Assets

Stakeholder Theory, Governance (...)
 
 
 
 

Stephen Covey on the Speed of Trust

Corporate Strategy, Global Economy, Banking System, Leadership Development, Stakeholder Management (...)
 
 
 
 

Introduction to Stakeholder Management

Introduction to Stakeholder Management (...)
 
 
 
 

Intrinsic Stakeholder Commitment Diagram

Stakeholder Management (...)
 
 
 
 

Compare with Intrinsic Stakeholder Commitment: Strategic Stakeholder Management  |  Seven Signs Of Ethical Collapse  |  Moral Purpose  |  Value Based Management  |  Clarkson Principles  |  Strategic Intent  |  Shareholder Value Perspective  |  Stakeholder Value Perspective  |  Stakeholder Analysis  |  Stakeholder Mapping


Return to Management Hub: Ethics & Responsibility  |  Human Resources  |   Leadership  |  Strategy


More Management Methods, Models and Theory

Special Interest Group Leader

Are you an expert in Intrinsic Stakeholder Commitment | Normative Approach? Sign up for free

Link to this knowledge center

Copy this code to your web site:

 


About 12manage | Advertising | Link to us / Cite us | Privacy | Suggestions | Terms of Service
© 2020 12manage - The Executive Fast Track. V15.6 - Last updated: 24-11-2020. All names ™ of their owners.