R. Edward Freeman

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R. Edward Freeman
Born (1951-12-18) December 18, 1951 (age 71)
Alma mater Duke University
Washington University in St. Louis
Scientific career
FieldsPhilosophy, business administration
Institutions University of Minnesota
University of Pennsylvania
University of Virginia

Robert Edward Freeman (born December 18, 1951) is an American philosopher and professor of business administration at the Darden School of the University of Virginia, particularly known for his work on stakeholder theory (1984) and on business ethics.

Contents

Biography

Born in Columbus, Georgia, Freeman received a B.A. in mathematics and philosophy from Duke University in 1973 and a Ph.D. in philosophy from Washington University in St. Louis in 1978.

He taught at the University of Minnesota and the Wharton School, and is now Elis and Signe Olsson Professor of Business Administration at the Darden School of the University of Virginia. He is also academic director of the Business Roundtable Institute for Corporate Ethics, and director of the Darden's Olsson Center for Applied Ethics. [1] [2] In 1994 Freeman served as president of the Society for Business Ethics. He is one of the executive editors of the journal Philosophy of Management , and he serves as the editor for the Ruffin Series in business ethics from Oxford University Press.

In 2001 Freeman was awarded the Pioneer Award for Lifetime Achievement by the World Resources Institute and by the Aspen Institute, and in 2005 the Virginia State Council on Higher Education honored him with the Outstanding Faculty Award.

Work

Freeman is particularly known for his work on stakeholder theory originally published in his 1984 book Strategic Management: A Stakeholder Approach. He has (co)authored other books on corporate strategy and business ethics. Also recently he co-edited standard business textbooks such as The Portable MBA and the Blackwell's Handbook of Strategic Management. His latest book, Managing for Stakeholders, was published 2007.

Stakeholder theory

Stakeholder theory is a theory of organizational management and business ethics that addresses morals and values in managing an organization. It was originally detailed by Freeman in the book Strategic Management: a Stakeholder Approach, and identifies and models the groups which are stakeholders of a corporation, and both describes and recommends methods by which management can give due regard to the interests of those groups. In short, it attempts to address the "Principle of Who or What Really Counts." [3]

In the traditional view of the firm, the shareholder view, the shareholders or stockholders are the owners of the company, and the firm has a binding fiduciary duty to put their needs first, to increase value for them. However, stakeholder theory argues that there are other parties involved, including governmental bodies, political groups, trade associations, trade unions, communities, financiers, suppliers, employees, and customers. Sometimes even competitors are counted as stakeholders – their status being derived from their capacity to affect the firm and its other morally legitimate stakeholders. The nature of what is a stakeholder is highly contested (Miles, 2012), [4] with several definitions existing in the academic literature (Miles, 2011). [5]

Corporate social responsibility

Corporate social responsibility (CSR) [6] is a form of corporate self-regulation integrated into a business model. CSR policy functions as a built-in, self-regulating mechanism whereby a business monitors and ensures its active compliance within the spirit of the law, ethical standards, and international norms. CSR is a process with the aim to embrace responsibility for the company's actions and encourage a positive impact through its activities on the environment, consumers, employees, communities, stakeholders and all other members of the public sphere who may also be considered as stakeholders.

The term "corporate social responsibility" came into common use in the late 1960s and early 1970s after many multinational corporations formed the term stakeholder, meaning those on whom an organization's activities have an impact. It was used to describe corporate owners beyond shareholders as a result of an influential book by Freeman, Strategic management: a stakeholder approach in 1984. [3] Proponents argue that corporations make more long term profits by operating with a perspective, while critics argue that CSR distracts from the economic role of businesses. Others argue CSR is merely window-dressing, or an attempt to pre-empt the role of governments as a watchdog over powerful multinational corporations. Anticipation of such concepts appear in a publication that appeared in 1968 [7] by Italian economist Giancarlo Pallavicini, creator of the "Method of the decomposition of the parameters" for the calculation of the results does not directly cost of business, regarding ethical issues, moral, social, cultural and environmental. [8]

Selected publications

Books

Articles

Related Research Articles

Corporate governance are mechanisms, processes and relations by which corporations are controlled and operated ("governed").

<span class="mw-page-title-main">Corporate social responsibility</span> Form of corporate self-regulation aimed at contributing to social or charitable goals

Corporate social responsibility (CSR) or corporate social impact is a form of international private business self-regulation which aims to contribute to societal goals of a philanthropic, activist, or charitable nature by engaging in, with, or supporting professional service volunteering through pro bono programs, community development, administering monetary grants to non-profit organizations for the public benefit, or to conduct ethically oriented business and investment practices. While once it was possible to describe CSR as an internal organizational policy or a corporate ethic strategy similar to what is now known today as Environmental, Social, Governance (ESG); that time has passed as various companies have pledged to go beyond that or have been mandated or incentivized by governments to have a better impact on the surrounding community. In addition national and international standards, laws, and business models have been developed to facilitate and incentivize this phenomenon. Various organizations have used their authority to push it beyond individual or even industry-wide initiatives. In contrast, it has been considered a form of corporate self-regulation for some time, over the last decade or so it has moved considerably from voluntary decisions at the level of individual organizations to mandatory schemes at regional, national, and international levels. Moreover, scholars and firms are using the term "creating shared value", an extension of corporate social responsibility, to explain ways of doing business in a socially responsible way while making profits.

In a corporation, a stakeholder is a member of "groups without whose support the organization would cease to exist", as defined in the first usage of the word in a 1963 internal memorandum at the Stanford Research Institute. The theory was later developed and championed by R. Edward Freeman in the 1980s. Since then it has gained wide acceptance in business practice and in theorizing relating to strategic management, corporate governance, business purpose and corporate social responsibility (CSR). The definition of corporate responsibilities through a classification of stakeholders to consider has been criticized as creating a false dichotomy between the "shareholder model" and the "stakeholders model" or a false analogy of the obligations towards shareholders and other interested parties.

<span class="mw-page-title-main">Social responsibility</span> Ethical framework

Social responsibility is an ethical framework in which a person works and cooperates with other people and organizations for the benefit of the community.

Shareholder value is a business term, sometimes phrased as shareholder value maximization. It became prominent during the 1980s and 1990s along with the management principle value-based management or "managing for value".

Double bottom line seeks to extend the conventional bottom line, which measures fiscal performance—financial profit or loss—by adding a second bottom line to measure a for-profit business's performance in terms of positive social impact. There is controversy about how to measure the double bottom line, especially since the use of the term "bottom line" implies some form of quantification. A 2004 report by the Center for Responsible Business noted that while there are "generally accepted principles of accounting" for financial returns, "A comparable standard for social impact accounting does not yet exist." Social return on investment has been suggested as a way to quantify the second bottom line, though defining and measuring social impact can prove elusive.

<span class="mw-page-title-main">Stakeholder theory</span> Management and ethical theory that considers multiple constituencies

The stakeholder theory is a theory of organizational management and business ethics that accounts for multiple constituencies impacted by business entities like employees, suppliers, local communities, creditors, and others. It addresses morals and values in managing an organization, such as those related to corporate social responsibility, market economy, and social contract theory.

Corporate behaviour is the actions of a company or group who are acting as a single body. It defines the company's ethical strategies and describes the image of the company. Studies on corporate behaviour show the link between corporate communication and the formation of its identity.

Sustainability reporting refers to the disclosure, whether voluntary, solicited, or required, of non-financial performance information to outsiders of the organization. Generally speaking, sustainability reporting deals with information concerning environmental, social, economic and governance issues in the broadest sense. These are the criteria gathered under the acronym ESG.

The chief sustainability officer, sometimes known by other titles, is the corporate title of an executive position within a corporation that is in charge of the corporation's "environmental" programs. Several companies have created such environmental manager positions in the 21st century to formalize their commitment to the environment. The rise of the investor ESG movement and stakeholder capitalism, has increased the need for corporations to address sustainability and social issues across their value chain, and address growing needs of external stakeholders. Normally these responsibilities rest with the facility manager, who has provided cost effective resource and environmental control as part of the basic services necessary for the company to function. However, as sustainability initiatives have expanded beyond the facility — so has the importance of the position to what is now a C-level executive role. The position of CSO has not been standardized across industries and individual companies which leads it to take on differing roles depending on the organization. The position has also been challenged as symbolic, in that it does not actually have the effect of increasing sustainable practices.

<span class="mw-page-title-main">Corporate sustainability</span> Business strategy that focuses on sustainability as a core aspect of the business

Corporate sustainability is an approach aiming to create long-term stakeholder value through the implementation of a business strategy that focuses on the ethical, social, environmental, cultural, and economic dimensions of doing business. The strategies created are intended to foster longevity, transparency, and proper employee development within business organizations. Firms will often express their commitment to corporate sustainability through a statement of Corporate Sustainability Standards (CSS), which are usually policies and measures that aim to meet, or exceed, minimum regulatory requirements.

Stakeholder management is a critical component in the successful delivery of any project, programme or activity. A stakeholder is any individual, group or organization that can affect, be affected by, or perceive itself to be affected by a programme.

<span class="mw-page-title-main">Friedman doctrine</span> Theory that the only social responsibility of business is to increase its profits

The Friedman doctrine, also called shareholder theory, is a normative theory of business ethics advanced by economist Milton Friedman which holds that the social responsibility of business is to increase its profits. This shareholder primacy approach views shareholders as the economic engine of the organization and the only group to which the firm is socially responsible. As such, the goal of the firm is to increase its profits and maximize returns to shareholders. Friedman argues that the shareholders can then decide for themselves what social initiatives to take part in, rather than have an executive whom the shareholders appointed explicitly for business purposes decide such matters for them.

<i>Journal of Business Ethics</i> Academic journal

The Journal of Business Ethics is a peer-reviewed academic journal published by Springer Nature B.V. The Journal of Business Ethics is one of the journals used by the Financial Times for in compiling the Business Schools research rank.

A Corporate Social Entrepreneur (CSE) is someone who attempts to advance a social agenda in addition to a formal job role as part of a corporation. It is possible for CSEs to work in organizational contexts that are favourable to corporate social responsibility but this is not always the case. CSEs focus on developing both social capital and economic capital, and their formal job role may not always align with corporate social responsibility. Furthermore, a person in a non-executive or managerial position can still be considered a CSE.

Robert Phillips is the George R. Gardiner Professor in Business Ethics and Professor of Strategic Management and Public Policy at the Schulich School of Business; York University. In 2016–17, he was the Gourlay Visiting Professor of Ethics in Business. He has also taught at the University of Richmond, Cheung Kong Graduate School of Business, the University of San Diego, the Wharton School at the University of Pennsylvania, and the McDonough School of Business at Georgetown University.

<span class="mw-page-title-main">National Voluntary Guidelines on Social, Environmental and Economic Responsibilities of Business</span>

India's National Voluntary Guidelines on Social, Environmental and Economic Responsibilities of Business (NVGs) were released by the Ministry of Corporate Affairs (MCA) in July 2011 by Mr. Murli Deora, the former Honourable Minister for Corporate Affairs. The national framework on Business Responsibility is essentially a set of nine principles that offer businesses an Indian understanding and approach to inculcating responsible business conduct.

<span class="mw-page-title-main">Corporate environmental responsibility</span>

Corporate environmental responsibility (CER) refers to a company's duties to abstain from damaging natural environments. The term derives from corporate social responsibility (CSR).

Values-based innovation is a theoretical concept and managerial approach that “understands and applies individual, organisational, societal, and global values, and corresponding normative orientations as a basis for innovation”. It demonstrates the potential of values to integrate diverse stakeholders into innovation processes, to direct collaborative efforts, and to generate innovations with a positive impact on societal challenges. It elaborates upon the interrelations between innovation management, an established management practice and field of research, and values-based management, which is generally dealt with in business ethics and focuses on the ethical concerns related to corporate management.

Debbie Haski-Leventhal is an author and public speaker and professor of Management at Macquarie Business School, Macquarie University. She is a scholar of corporate social responsibility (CSR), responsible management education (RME) and volunteerism and is the editor-in-chief of Society and Business Review.

References

  1. Freeman's curriculum vitae. Accessed Feb 27, 2013. Archived March 20, 2013, at the Wayback Machine
  2. "R. Edward Freeman, University Professor; Elis and Signe Olsson Professor of Business Administration". University of Virginia website. Retrieved 25 January 2022.
  3. 1 2 Freeman, R. Edward (1984). Strategic Management: a stakeholder approach. Boston: Pitman. ISBN   978-0-273-01913-8.
  4. Miles, Samantha (2012). "Stakeholders: essentially contested or just confused?". Journal of Business Ethics. 108 (3): 285–298. doi:10.1007/s10551-011-1090-8. S2CID   89609310.
  5. Miles, Samantha (2011). "Stakeholder Definitions: Profusion and Confusion". EIASM 1st Interdisciplinary Conference on Stakeholder, Resources and Value Creation, IESE Business School, University of Navarra, Barcelona.
  6. D Wood, 'Corporate Social Performance Revisited' (1991) 16(4) The Academy of Management Review
  7. "Integrated structures in the Italian distribution system," Giuffre Editore, Milan, 1968, pp. VIII / 351
  8. "Universal Biographical Encyclopedia" Treccani, 2007 edition, Vol. 14, p. 617; "Treccani – Portal", Social sciences / economics / Biographies; Bancoper Annual Meeting, Bologna, 15.11.2008, Prefect Angelo Tranfaglia, "Profit and Social Responsibility", p. 12; "Finanza e Mercati", 3 February 2009, p. 11, Mara Consoli, "When ethics becomes a bargain"; News Chronicles, CNEL, Rome, 12.01.2009, Adelaide Mochi, "Socialis Awards and Corporate Social Responsibility"