In Defence of Stakeholder Pragmatism.pdf

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In Defence of Stakeholder Pragmatism

Tommy Jensen

Johan Sandstrom

Received: 20 September 2011 / Accepted: 30 April 2012

Springer Science+Business Media B.V. 2012

Abstract This article seeks to defend and develop a

stakeholder pragmatism advanced in some of the work byEdward Freeman and colleagues. By positioning stake-

holder pragmatism more in line with the democratic and

ethical base in American pragmatism (as developed by

William James, John Dewey and Richard Rorty), the article

sets forth a fallibilistic stakeholder pragmatism that seeks

to be more useful to companies by expanding the ways in

which value is and can be created in a contingent world. A

dialogue between a defence company and peace and arbi-

tration society is used to illustrate the main plot of this

article.

Keywords Defence industry

Ethics

Separation thesis

Stakeholder theory Pragmatism

Introduction

Edward Freeman and colleagues represent a critical voice

within stakeholder theory (Jensen and Sandstrom 2011). We

should not, they argue, keep ethics out of business, but rather

acknowledge that business always is moral in nature

(Freeman 1994, p. 412). Since the early1990s, this argument

has frequently been referred to as rejecting the Separation

Thesis (Freeman 1994, 1999; Wicks 1996; Wicks and

Freeman1998; Harris and Freeman2008):

Much of business ethics has proceeded under the

influence of the Separation Thesis. Philosophers have

been hesitant to get their hands dirty by understand-

ing the day to day life of value-creation activity.

Business theorists have been loath to enter what they

see as the intellectual morass of moral theory. Hap-

pily this scenario is changing as there is more dia-

logue among philosophers, business academics and

managers. Yet the shadow of the Separation Thesis

looms large. Unless we can reinvent business from

the ground up, we remain open to the charge ofreserving a special place for business ethicists ready

to make it up as we go along. Thus, our task is to

take metaphors like the stakeholder concept and

embed it in a story about how human beings create

and exchange value (Freeman1994, p. 418).

Freeman in particular has been targeting the Separation

Thesis from a pragmatist perspective. Rejecting the Sepa-

ration Thesis then is not a matter of developing a revised

stakeholder theory, but of contributing to what Freeman

sees as a genre of stories about how we could live

(Freeman 1994, p. 413; 2001, pp. 499500), providing

arguments or further narrative which include business and

moral terms to fill in the blanks (2001, pp. 499500). He

sees the future of this genre as one trying to escape fixed

language games by developing a stakeholder pragmatism

that is rich in conversations and in which divergent views

emerge. This will improve the genres usefulness in

showing us better ways to live our lives (Freeman 1999,

especially pp. 235236).

For Freeman and colleagues, the issue at stake is,

therefore, not if stakeholder theory has a moral content or

T. Jensen

Business Administration, Stockholm University, Stockholm,

Sweden

e-mail: [email protected]

J. Sandstrom (&)

Environmental Management, Lulea University of Technology,

Lulea, Sweden

e-mail: [email protected]

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J Bus Ethics

DOI 10.1007/s10551-012-1338-y


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not; the issue at stake is the theorys (as a divergent genre)

capability of capturing ethical dilemmas in business and of

coming up with ideas of how to practically solve them

(Freeman 1994). Maintaining the Separation Thesis then

does not only neglect an important part of a theory but is

also at risk of producing detrimental second order effects

(Harris and Freeman 2008, p. 541) by making up sup-

posedly moral neutral theories [] which can be used tojustify a great deal of harm (Freeman1994, p. 412).

This article builds on Freemans stakeholder pragma-

tism; a perspective that needs to be defended and devel-

oped, and that has received its fair share of critique.

Sandberg (2008), for example, concludes that the Separa-

tion Thesis seems to mean a lot of things to Freeman and

colleagues. They have quite different versions in mind in

different contextsranging from semantic, empirical and

reformative to some which are straightforwardly norma-

tive (Sandberg2008, p. 213). Sandbergs analysis reveals

that their previous attempts are carried out within many

different conceptual regimes and without clear justifica-tions about the kind of moral content the theory has.

Sandbergs (2008) analysis, however, fails to grasp

Freemans pragmatism, which to Sandbergs defence is not

always clearly articulated by Freeman. While Sandberg

searches for accuracy and certainty, Freeman, as a prag-

matist, does not rely on such scientific criteria (Harris and

Freeman2008). They are simply not relevant for pragma-

tists, which are better categorized as fuzzyists (Rorty

1991). Pragmatists try to obscure taken for granted

boundaries and dualisms: real/semantic; theoretical/

empirical; neutral/reformative; objective/normative (Rorty

1979/2009). This means that a theory or a theorist does not

have to be consistent or remain truthful to a single uniform

moral content; suggesting that morality has some kind of

inner essence (Rorty1991). A moral account can come in

many different disguises, or stated more pragmatically,

with different styles of narration, plots and purposes

(Czarniawska1999; Rorty1999).

Having different versions of the Separation Thesis in

mind in different contexts is merely a starting point for a

pragmatist seeking to provide useful accounts in a contin-

gent world (Rorty1989). It is not a problem per se that the

Separation Thesis means a lot of things to Freeman and

colleagues, whether semantic, empirical, reformative or

normative, as long as they instill doubts in managers or

researchers own self-images, and about the society to

which they belong (Rorty1999, p. 127); as long as they

provide useful alternatives to the world managers

and researchers have constructed for themselves

(Czarniawska1999, p. 9). Defending stakeholder pragma-

tism is not a matter of crafting a more accurate and certain

response to such criticism put forward by Sandberg. That

would be to surrender to the language of essentialism

(Putnam1981/1997). A more relevant evaluation criterion

is rather: Is this story or metaphoruseful?

Following American pragmatists, such as William

James (1907/2009), John Dewey (1922/1930) and Richard

Rorty (1989, 1991, 1999), the term useful has an ethical

base. Companies are not only seen as acting in society by

being necessarily social (Dewey 1888/1997, p. 203),

exercising democracy in thought and action, acting as awarrant for the existence and endurance of democratic

institutions (Dewey1888/1997, p. 266) but also as acting

forsociety by extending responsibility to people whom we

have previously thought of as they (Rorty1989, p. 192),

regardless if they are nearby or far away. Useful accounts

are those working in the direction of increasing responsi-

bility towards those who are worse off (Rorty1991,1999)

and have an outward direction to include more and more

people.

It is also in the relation to this take on pragmatism that

this article sets out to develop Freeman and colleagues

stakeholder pragmatism. The main weakness in theirattempts that needs to be addressed is the incommensura-

bility between advocating stakeholder capitalism and

stakeholder pragmatism, as it severely complicates the

rejection of the Separation Thesis (see Deetz1995; Stieb

2009; Walsh2005; Wheeler et al.2002).

The main purpose of this article is, therefore, todevelop

a stakeholder pragmatism better capable of crafting more

useful (in a pragmatist sense) stories about corporate

responsibility. In this article, we illustrate our conceptually

driven development of Freeman and colleagues stake-

holder pragmatism by empirically grounding it in a stake-

holder dialogue between a defence company and a peace

association. For the purpose of this article, using this dia-

logue has at least three advantages. First, it allows practise

to provide arguments to why the Separation Thesis ought to

be rejected. Second, by analysing the dialogue, we allow

practitioners to illustrate the constraints introduced through

Freeman and colleagues stakeholder capitalism. Third, the

practitioners involved in the dialogue show ways in which

it is possible to build further on the ethical base in Amer-

ican pragmatism. In other words, they bring us useful

stories, divergent views and undetected possibilities, as

well as additional reasons to reject the Separation Thesis.

Based on this, we suggest a developed form of stakeholder

pragmatism that we refer to as fallibilistic stakeholder

pragmatism. Next, we set the stage for the dialogue.

A Dialogue Between Guns and Doves

Our story is based on a dialogue between a senior manager

from a Swedish subsidiary to the worlds second largest

defence company, BAE Systems Ltd.; two representatives

T. Jensen, J. Sandstrom

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from the Swedish Peace and Arbitration Society (SPAS),

the oldest peace and arbitration society in the world; an

actor invited by SPAS, who at the time was preparing a

theatrical play about the defence industry; and two

researchers (including one of the authors of this article).

The lead-up to the dialogue with SPAS stretches back to

2003, when we initiated our first study of the BAE sub-

sidiarys work with its code of ethics (the senior managerof BAE in the dialogue being our point of contact since

2003). We have since then returned to the subsidiary to

study the implementation of new or revamped codes. The

dialogue reported on in this article is part of a project on

codes and globalization, in which we followed members of

the subsidiary to different countries around the world to

study how the code was used outside the local, Swedish

context. We met SPAS for the first time in 2010 on our

third trip with the subsidiary, the one to New Delhi, India.

The context is a defence fair in New Delhi and the dia-

logue takes place in a hotel conference room. The main

theme of the conversation is the ethics of arms trade in lightof corporate responsibility, politics, human rights and

democracy. The conversation also focuses on the sub-

sidiarys current affairs in India and, predominantly because

of our research interests, on BAEs code of ethics. It also

came to target SPAS work with influencing people in power

(predominantly politicians) to ease tensions, speed up dis-

armament, promote the transfer of military resources to

development and support democratic movements. The dia-

logue lasted for about 3 h. It was taped and later transcribed.

We retell the dialogue chronologically, following the

main conversational turns, but also by using an authors

prerogative to highlight those parts of the dialogue that fit

the purpose of the article (Czarniawska 1999). The main

turns are the following: (1) Meeting the other: mapping the

territory; (2) Negotiating boundary conditions: the role and

responsibilities of companies; (3) Negotiating boundary

conditions: organisational roles and personal ethics; (4)

Weaving into each others experiences; (5) A valuable

exercise: new territory on which to continue the dialogue.

By using the dialogue, we show how people in the

context of business meet and negotiate different boundary

conditions, how they weave into each others experiences,

thoughts and choices of action to find new ground for

continuing the dialogue and to maintain a promise to each

other to find useful solutions to problems. Through the

dialogue, the critique of Freeman and colleagues stake-

holder pragmatism and the emerging fallibilistic stake-

holder pragmatism is empirically articulated. From a

pragmatist point of view, front loading the dialogue in this

article is important; James, Dewey and Rorty had hope in

ordinary people and the ways in which they manage to deal

with their cognitive differences and strategies to handle a

contingent reality in useful ways.

The dialogue should thus not be conceived of as an

accurate, objective and certain account of the world, gen-

erated through scientific rigour and method. It should

neither be taken as proof of our defence and development

of stakeholder pragmatism, but rather as a story from

practise that contains promising re-articulations and sug-

gestions for how what we call fallibilistic stakeholder

pragmatism can become more useful to companies andtheir stakeholders as well as to stakeholder scholars.

Meeting the Other: Mapping the Territory

The dialogue takes its starting point in BAEs code of

ethics. The manager provides the background to why the

company has chosen to intensify their work with a code:

There was so much negative publicity around BAE,

there was Saudi [], Hungary, Czech Republic, and

so on. The top management, the board, asked how

can we get rid of this mark, because this will not be awinning formula in the future. The boards job is to

make money for the company and then they said:

ethics is becoming such an important competitive

tool, so we must ensure that we stay within the law,

regardless of where we are. This was the back-

ground. Indirectly, the boards position on the ques-

tion is it ethical to sell weapons? is that they already

do that by running the company, but they say that the

ground rules for how we do [business], will change

with this Code of Conduct.

A SPAS member picks up on this: If we were to write

an ethics code for the company in question, then the per-

spective would be widened. The other SPAS member fills

in: It would also be a very short code. The manager

anticipates the rest of it and concludes that the code would

simply state: Shut down! We all smile, but this could just

as well be the end of the dialogue. The manager and the top

management of the company see ethics as a tool with

which to enhance the companys competitiveness and the

SPAS members see the whole defence industry as unethi-

cal. There seems to be no common ground from which to

continue the dialogue. The distance between them is too

great; their views are toodivergentto allow them to weave

into each others experience.

Negotiating Boundary Conditions: The Role

and Responsibilities of Companies

A SPAS member then pushes the dialogue forward by

reading out loud from BAEs code that the company

through its operations shall provide social and economic

input to the societies in which it operates and that

employees could act as volunteers at local schools (where


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there are factories connected to BAE in one way or

another). From this, she asks the manager (paraphrased): If

you have staff in India, how much understanding do they

have about the situation in India, about the problems facing

the population, their safety and in what way you affect the

situation here? You sort of need this background in order to

formulate an ethics, do you not?

The manager temporarily dodges the question, sayingthat the Indian government decided to start a bidding

process for 400 guns in 2002; a process that has not come

any further. In that perspective, he concludes, time is on

your side. He continues:

But if you look at the situation in India. They have

had wars in all directions. It is a relatively young

state, and indeed, as you yourself have defined it, it is

a democratic state. And it would be strangely superior

of us to say that, no, in this case you do not meet the

requirements [for doing business]. We are not those

who decide what they should do with their taxmoney. [] And, anyhow, if we do not do it [deliver

guns], somebody else will.

A SPAS member intervenes; it sounds as if you are not

affecting their decision? The manager responds:

Of course we do! [] But the decision whether they

will buy 400, and maybe as many as 1200, guns is

their decision. It is not something that we are behind

in any way. They make that decision themselves and

that decision will be carried out whether or not BAE

is taking part in it.

The manager seems to assume that there is a (func-

tioning) level above, a political, governmental level, which

the company cannot and should not influence. The com-

panys role is limited in his view. Government and politics

are more or less excluded from the subsidiarys sphere of

influence.

If you do not want to affect anything, a SPAS member

continues, how come you include the normative passages

about social and economic effects, and the voluntary work

at schools? The manager replies that it is only a couple of

months ago that the company defined India as a home-

market; that is why this kind of work has not yet come very

far. But he is convinced of that this will be discussed in the

future and informs SPAS that BAE emphasises the transfer

of technology, the technical skills needed to assemble the

products, and that this will lead to new jobs in India.

However, reflecting on the companys statement about

creating social and economical benefits, he says:

Previously I have received requests if we want to

sponsor hospitals, for example, in India, and I have

said: Impossible. We cannot do this. At one end we

cannot shoot people and at the other end sponsor

hospitals. That is acting according to a double stan-

dard. [] I could not get it into my head how the

moral of that would look like.

Although critical to the managers view of the role of

companies and governments, the SPAS members position

on the basic structure of society is not so radically dif-ferent. One of them states:

We have been focusing on politics, the political

channels. We see export of weapons as primarily a

democratic and a political issue; therein lays the

power. We do not want the power to be located to

the companies. We do not want a situation in which

the companies decide whether to export or not; that

explains our direction. To be honest, I do not see

that changes in how companies act change things that

much; the solution is not there. And I do not think

that we can influence you [the manager] in that

direction. I think that if you chose to work for a gunsmanufacturer then you have thought hard about it,

you have invested a lot of personality and identity,

the whole life, in this decision. It takes a lot to

reconsider. The solution is politics, and political

regulation and guidelines.

She also takes the role of business for granted, but sees

SPASs role as influencing the level above, that is, those

who she thinks should have the power, i.e., governments

and politicians. The other SPAS member, however, jumps

in to modify this view:

I do think that companies can take an increasedresponsibility, but not through starting welfare pro-

jects and so on. Rather to take the full consequence of

the reflections made. We perhaps should not sell to

Indonesia. That is perhaps what we wish to see more

on behalf of the company. We have talked about this

in our previous meetings [referring to the manager].

Companies sometime swiftly state that we do not

interfere in the assessments made, but you have the

power to do this. Just because an authority says that

you are allowed to sell, does not mean that you have

to do it.

This SPAS member emphasises the role and responsi-

bility of the company differently. Evidently, she, who have

met and discussed these issues with the manager several

times before, stresses that companies indeed can make a

difference by going beyond what the law demands. The

manager also responds to her statement that: This is

something I would respect and it is something that is dis-

cussed in Sweden, that we should not sell to non-demo-

cratic countries and to countries that violate human rights.


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The dialogue, that is, has evolved into a discussion on

boundary conditions. SPASs critique of the manager and

the managers own emphasis on BAEs code (which in

some cases clearly have reached beyond laws and regula-

tions) acknowledge that the subsidiary also is a political

actor; not merely an economic actor that speaks only

through its economic power in a context defined by the

laws of the market.The dialogue then zooms in on whether there are too

many rules and legislations surrounding the sales of weap-

ons. The manager emphasises that it is the Swedish state that

decides if guns should be exported and that the subsidiary

should not interfere with these kinds of decisions. They are,

he claims, amateurs when it comes to security policy,

defence policy and judgements about foreign policy. It is

good, the manager continues, that this kind of answer

belongs to an impartial organisation and he concludes that

the current rules are not too difficult to face up to (however,

in recent years, the Swedish Agency for Non-Proliferation

and Export Controls have authorised Swedish defencecompanies to export defence material to countries such as

Egypt, India, Pakistan, Saudi Arabia and Thailand).

Indonesia is then brought up as a case in which BAE

indeed decided to refrain from doing business despite there

being no legal obstacles to stop them from doing so. The

manager states that it is simply not worth risking an

infected debate and that it is not worth the money. In

other words, with reference to its own code, BAE makes a

tougher evaluation than to just remain within boundaries

defined by the level above (as in existing legislation) and

by admitting to this, one of the SPAS members states:

How nice it is to see that our work is worth carrying out.

[] It is evidence to that our work produces results. The

manager agrees, you do achieve results in your work and

you do a good job, you have good arguments.

From the case of Indonesia, the SPAS members target

India. A huge challenge in India, they argue, is the defence

budget. There is a significant lack of transparency regard-

ing what the money is spent on and it is, therefore, difficult

to have a democratic dialogue about alternative ways to

spend the money: The defence budget is called the sacred

cow in India, one of the SPAS members says, and As an

Indian you cannot question it, not even talk about it. The

manager then mentions that BAE has done surveys in India

about the brand name and that he has questioned the

selection of respondents. There were mostly people from

the better off minority: Business leaders, politicians, offi-

cers, journalists and parts of the general public as well.

However, he says, there are at least 300 million people who

cannot read and who are excluded in the selection for the

survey. They were not asked because they have no influ-

ence on anything. They barely exist in the Indian society.

This statement makes SPAS return to a key issue:

SPAS member 2: But how can you then state that

India is a democratic country?

Manager: I have asked myself this question. But

apparently all have the right to vote. And somehow

they [the Indian state] know where all [people] live.

But then the village leader tells them how to vote

SPAS member 2: That is not that democratic.

Manager: No, not at all, but they still have the right tovote. If they then choose to listen to the village lea-

der, because they discover that he is the wisest, or if

they listen to a politician, I do not know which is

better.

One of the SPAS members then tells about a trip they

made to a slum land in Bangalore the year before, talking

to labour union movement and to a variety of low-status

workers, and asked them whether they have any possibility

to exert democratic influence at all. The answer was no.

They felt that no political party or politician in India rep-

resented their voice. Their right to vote was meaningless tothem. The manager responds that There are people in

Sweden who would say the same. A SPAS member

counters Yes, but the question then is not if you are to die

of diarrhoea or not; the stake is on another level.

Negotiating Boundary Conditions: Organisational

Roles and Personal Ethics

This prompts the issue of experiencing India first hand to

be able to formulate a personal ethics in relation to

dilemmas facing the Indian population. It is an issue

brought up previously in the dialogue, but this time it ismade more personal.

Manager: We have no program that allows for our

staff to visit, for example, slums, or to arrange lec-

tures about it, or anything like that. I admit to that.

There is not enough time. It cost too much, of course,

to have people staying here for these reasons. But,

most of the staff here [at the fair] has been here many

times. I have been here about 2025 times and I have

learned a lot about this society, travelled the country

[]. I have been to Mumbai, to Bangalore. I have not

been to Calcutta, and after reading about the condi-

tions there I am not sure I want to go there, because

then I fear that my consciousness could be really,

really corroded.

SPAS member 2: What would happen then, if it was

corroded?

Manager: It is evident that I in this situation would

start to think about why India buys guns. Why do

they not spend their money on other things? Why do

they spend huge sums of money on defence and

defence material and the manufacturing of it? And it


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is not only that, they also have an army of a million

men down here. What does it cost?

SPAS member 2: But you do not see any possibilities

for you, with your position, to have influence?

Manager: No, then I have to quit my job.

SPAS member 2: Have you considered that?

Manager: No, well, sometimes, but not in connection

to this, then something concrete has occurred, you aremad at somebody. But, firstly, there will be someone

else [a competitor] who enters, because the Indians

will not change their mind and I feel that I have no

influence. So leaving [the company] is out of the

question. However, I believe that we can do a better

job than others. If [competitor A] and [competitor B]

enter, then I believe that they will do a worse job with

transfer of technology and social responsibility than

we do.

SPAS member 2: So you think that out of two evils,

you contribute by being a little better [than the

others]?Manager: Yes, that is right.

SPAS member 2: What about your personal ethics,

your moral?

Manager: It got a crack once. [In a discussion with an

Indian PR-agent] I said that why do we not do as they

do in the USA? We support our guys. That is, our

boys and girls should have the best equipment when

they are in warzones because we would not like our

boys and girls to return in black bodybags. Then he

went quiet for a while and said; you know what,

[name], we have a lot of people in India. I thought

that was scary.

The manager seems to find it difficult to grasp the

glaring social disparities in India. It escapes his imagina-

tion; enormous luxury co-existing with extreme poverty.

And again he refers to the fact that changes in the country

does not gain the large majority of people (who cannot

read, who have no influence). A SPAS member says:

SPAS member 2: Then it seems relevant to question

where the democratic aspect lays?

Manager: I agree.

SPAS member 2: Then it must be possible to question

whether India is a democracy?

The dialogue has opened up a core assumption, which

the manager handles by turning the dialogue around.

Manager: But is India a democracy according to you?

SPAS member 1: Both yes and no. [] The foun-

dation of democracy is that it is possible to raise a

voice. And there is no final end where we can say

now it is a democracy. It is not enough to state that

everyone has a right to vote.

SPAS member 2: It is also about if all sectors of

society are represented. Do they feel that they are

represented? Is there a possibility to question all

sectors? [] I think that there is a risk that in Sweden

the arms trade is justified by saying: India is the

largest democracy.

There seem to be something more to the relationsbetween the subsidiary and SPAS than what at first was

acknowledged. They do affect each other to some extent

and the subsidiary comes across as more political than what

first seemed the case. SPAS acknowledges that BAE actu-

ally had taken responsible action by withdrawing from

Indonesia and the manager acknowledges the work of SPAS

as important, even though this might lead to lost business

opportunities for the subsidiary, opportunities that some

other, less responsible, defence company might pick up on.

As the dialogue zooms in on personal ethics in relation

to the organizational role, the manager also shows doubts

about what is right and wrong in relation to the subsidiarysrole and responsibility in society. He challenges some of

his previous statements about the context for business;

aboutwho is included and excludedas a stakeholder to the

company (the survey on brand name awareness); and about

what kind of stakes we are talking about (to die of diar-

rhoea, the glaring social disparities, we have a lot of

people in India, the conditions in Calcutta). He reflects on

Indian democracy and thereby also on whether it is

appropriate to do business in India (although his company

will do a better job than the competitors). The level above

might not be in good condition after all.

As this main turnto also include tensions betweenorganizational roles and personal ethicsis taken, the

character of the dialogue changes. From here and onwards,

the discussion on boundaries is also explicitly personal.

Weaving into Each Others Experiences

A SPAS member returns to the question of economic and

social benefits, highlighted in BAEs code of ethics: What

kind of welfareprojects do youhave? Themanager answers:

We sponsor [elite sports] clubs in Sweden. The other SPAS

member reacts: It does not affect the societies to which you

sell arms? [] I interpreted your voluntary work that way.

The manager states that it is the country of origin in which the

work is done. One SPAS member then concludes that the

code seems to be more about creatinglegitimacythan taking

responsibilityand we pick upon this. We state that in BAEs

work with ethics, the so-called Woolf Committee Report

(2008) has become a central document and one of the most

frequentlyused words in thereport is reputation (224 times;

see Jensen and Sandstrom2010). The manager is baffled by

this: Does it say reputation, does it?


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SPAS member 1: But you have defined India as your

home market [] who will act as sponsor here?

Manager: It is currently under investigation, the

whole thing is so new [], but I am pretty sure that

this kind of practise will be implemented here. There

will be goodwill projects here; not because they

[BAEs management] want to be nice. Look at the

other companies doing this, they are careful to tell[others] about it.

SPAS member 1: From our perspective it seems a bit

unnecessary to do these types of projects, better to

shut down the whole company instead, better effects.

We have perhaps returned to where we started (Shut

down!), but SPAS, one of the researchers states, is to some

extent in the same position as BAE. It also has to create

legitimacy to survive and to succeed with its mission. In

relation to BAEs code, one of the researchers states that if

you take away this companys name and put another name

in its place it would be the same. All texts look the same.There is a best practise so to speak. [] It could be SPAS!

The SPAS members are not amused by this, but one of

them says: Yeah, maybe.

The manager then brings up an activist group called

Ofog that SPAS has connections to. Ofog (2011) describes

itself as an antimilitaristic network working with nonvio-

lent direct action against the arms trade, NATO, military

exercises and other parts of militarism in Sweden and

abroad. The name Ofog literally translates into mischief.

The manager asks what SPAS thinks of this organisation

and its methods:

SPAS member 1: They are needed to reveal socialshortcomings and for them to be able to make these

shortcomings visible they need to take this kind of

action. This risks becoming a pseudo-discussion. But

we have chosen to not work in this way.

SPAS member 2: Same goal, different means.

[]

SPAS member 1: We definitely support civil dis-

obedience, but we cannot do it based on ad hoc

decisions, we need to consider the right things. []

For example, we have supported conscientious

objectors and that is a form of civil disobedience that

we have chosen to back up, because it only affects

that individual, but I can sympathize with those who

get so pissed off that they choose to use force to

destroy weapons.

SPAS member 2: But we support them with infor-

mation, because if they choose to do this kind of

operations, then it should be based upon correct

information, on a correct analysis. If their actions

are based upon wrong information we would also

suffer.

Given its relation to Ofog (and that Ofog previously has

destroyed defence equipment on the subsidiarys property),

SPAS could just as well fall into the category of stake-

holders that the subsidiary would never enter into a dia-

logue with. However, the manager sees enough value in

SPAS to continue the dialogue, but there is also an element

of seeing oneself in the other. As one of the SPAS members

again emphasises that it is a strategic decision [to useparliamentary methods] based on what action causes best

effects in the long term, one of us intervenes:

Researcher: Then [] it seems as if your consider-

ations bare similarities with BAEs view.

SPAS member 2: Pragmatic.

Researcher: How you [SPAS] gain most influence,

how you [BAE] make most money [].

SPAS member 1: In this case, absolutely.

Similarities are also triggered by a question asked by the

actor to the manager:

Actor: How did you think about taking this kind of

job [for a defence company]? You, your family,

relatives?

Manager: There was a lot of discussion. I thought

hard about this, but it is a company that runs opera-

tions that are supported by 7580 % of the Swedish

population, yes, we should have a defence. It

depends of course on how you measure it but

SPAS member 2: Defence yes [but what about export

of weapons?]

SPAS member 1: And what about [Swedens] policy

of non-alignment?Actor: But did you never hear, I mean weapons

Manager: Yes, there were debates with relatives, are

you going to start working for a defence company,

the defence industry? But I said, yes, it is a kind of

business that the Swedish government has approved

and thereby it is not illegal. []

[]

Actor: Do you still have to defend your position.

Manager: No, not any more.

SPAS member 2: You learn how to deal with it, or,

I do not know. I sometime do not tell what I [do for a

living].

A Valuable Exercise: New Territory on Which

to Continue the Dialogue

There are, that is, not only similarities between BAE and

SPAS but also between the manager (as a manager at a

defence company) and one of the SPAS members (as a

peace activist). In their experiences from working for their

respective organisation, they are not as radically different


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from each other as they perhaps thought they were and the

dialogue reveals this. In this spirit, the manager and one of

the SPAS members emphasise the value of dialogues such

as this one. In the words of SPAS member 2:

Ethics is something that takes shape and form through

conversations. And to be able to develop an ethical

position you must be confronted by others views andbe allowed to bend and discuss these matters with

people. Part of our job is to debate exports of

weapons, which we do with you [the manager], and to

have an open, social conversation about what it is,

not only from the perspective on how many jobs that

are created, how much it costs, but also from a moral

point of view; how reasonable is it that our tax-

money is spent on weapons, even if it has good

effects for us, when it causes so much damage when

it is exported.

The manager nods approvingly and continues:

One of my purposes with meeting you like this is to

solve issues where we believe we disagree, where we

have different opinions, because of misunderstand-

ings. We shall talk about issues in which we genu-

inely have different opinions and try to discuss these

matters. But to have a pseudo-discussion, based upon

what we believe the other thinks of us, should be

eliminated, which is achieved best by meetings like

this.

The Dialogue as Critique

During the dialogue, we can see how the role and

responsibility of the company changes as different

boundary conditions are revealed and challenged. At the

outset, the company is constructed as a rather apolitical

actor, but during the dialogue, it becomes an actor that

through its actions and non-actions is political by nature.

The company has discretion; it has the power to contribute

to the creation of a better world in which to live, or at least

to reduce harm caused by its operations and the use of its

products. The dialogue highlights the fact that how it uses

this power is up for grabs; it is not carved in stone.

The dialogue also initiates a negotiation of boundaries in

which both parties share interests, actions and values, and

see the dialogue as a value creating exercise. The manager,

for example, challenges his initial divide of those who are

stakeholders and those who are not; opening up for what

was first not considered as a stakeholder (particularly poor

Indians) to later on in the dialogue become one. The dia-

logue triggers questions on: What are the right methods to

rely on when achieving goals, what is value for the

manager and for the SPAS members, respectively, and with

which actors is value created?

The dialogue also challenges the role separation

between being an organisational member (manager at

BAE, activist at SPAS) from other roles (family member,

relative, friend, etc.) making up the personal identity (as in

the threat of the corrosion of individual character). Tar-

geting the ethical content of the positions taken, it seems,leads to a negotiation of not only the subsidiarys and

SPASs stance on companies role and responsibility in

society but also of the individuals personal ethics in

relation to what the role as a member of an organization

demand. Within this personalized framework, it seems as

if the participants in the dialogue manage to weave into

each others experiences, to find similarity between them-

selves and the other.

The dialogue, it seems, is useful in both challenging key

assumptions in Freeman and colleagues stakeholder

pragmatism and in developing it in the direction of falli-

bilistic stakeholder pragmatism.

Challenging Key Assumptions in Previous Stakeholder

Pragmatism

Turning to the attempts to re-negotiate stakeholder theory

by Freeman and colleagues, there is potential for the

stakeholder genre to recognize the dialogue between the

BAE subsidiary and SPAS as useful. But, following Free-

man and colleagues, there are in some key writings a set of

core assumptions at work; a stakeholder capitalism that

hinder a stakeholder pragmatism capable of re-negotiating

boundary conditions as practised by the manager and the

SPAS members in the dialogue. This set of core assump-

tions is perhaps most clearly articulated by Freeman and

Phillips (2002), which explicitly situate the stakeholder

genre in a libertarian ideology, embracing liberty, personal

freedom, individual property rights, apolitical corporate

activity and the minimal night-watchman state. They

basically outline a libertarian stakeholder capitalism

(Freeman and Phillips2002; see also Phillips et al.2003;

Freeman2008) that limits how boundary conditions for the

role and responsibility of companies can be re-negotiated;

limits that to some extent were challenged and transgressed

in the dialogue.

More specifically, from their libertarian standpoint,

companies are voluntary associations rather than a part of

the basic structure of society (Phillips1997; Phillips et al.

2003; see also Freeman and Phillips2002; Phillips2003).

This is for Phillips et al. (2003, pp. 493494) a natural

boundary condition. Joining Milton Friedman, Freeman

and colleagues claim that there is another level of analysis

operative in Friedmans system and that this is also the

case with stakeholder theory (Phillips et al. 2003,


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pp. 493494; see also Freeman 2008, on the Friedman

Freeman issue).

Freeman and colleagues would essentially agree with

parts of the dialogue, but the dialogue also reveals that

neither the SPAS members nor the manager are as one-

dimensional as Freeman and colleagues, both regarding the

level above (which needs support from the levels below so

as to maintain certain political privileges and autonomy)and the level below (which needs support from the level

above in terms of granting individual rights and duties).

That is, the two spheres of society share responsibilities to

protect and develop democracy (Dewey1888/1997,1922/

1930) and in taking responsible action (Rorty1991,1999).

From the libertarian standpoint, viewing the company as

a distinct entity, with clear-cut boundaries around it, and in

which its counterparts are assumed to be autonomous, free

agents, it also makes sense to infuse moral inclusions and

exclusions by dividing stakeholders into morally distinct

categories. Phillips (1997) and Phillips et al. (2003) cate-

gorize stakeholders into normative and derivative stake-holders. They argue that the company is not morally

responsible for derivative stakeholders, that is, those that

do not directly contribute to the companys value creation

processes, but only for normative stakeholders, that is,

those that directly contribute to the companys value cre-

ation processes. Consequently, the others, who can only

harm or benefit the company outside the value creation

process, are not considered to be part of the companys

moral sphere.

Dunham et al. (2006) seem less categorical when dis-

tinguishing between a collaborative and a cooperative

approach. They argue that companies should collaborate

with stakeholders that they rely on for support (all the first-

tier, normative stakeholders, such as customers, employees

and suppliers, are included). Collaboration implies sharing

interests, actions and values. Stakeholders, such as SPAS,

that are affected by the company but that it does not rely on

for survival should, however, only be cooperated with.

Cooperation implies understanding perspectives, listening

to preferences and evaluating the inflicted impact on the

stakeholder.

Following Dunham et al. (2006), there is an opportunity

for a company, such as the subsidiary to establish a relation

with non first-tier stakeholders such as SPAS, but the

question is what kind of relation this would be and what

kind of core that would guide such a relation. Even though

the subsidiary would try to understand SPASs perspec-

tives, listen to its preferences and attempt to evaluate the

inflicted impact, in Dunham et al.s framework, it would be

a relation without a mutual sharing of interests, actions and

values. Defining the company as an autonomous, free agent

that engages only through free and voluntary economic

transactions with other autonomous actors on the market,

Freeman and colleagues construct inclusions and exclu-

sions of stakeholders that deny them the opportunity to

engage with non first-tier stakeholders in a collaborative

mode.

Alas, following the writings quoted above, Freeman and

colleagues would prompt a relation basically drained from

the pragmatic meaning of useful engagement. They are in a

sense moving away from a stakeholder pragmatism inspiredby James, Dewey and Rorty; a pragmatism that would

dismiss such attempts to reject the Separation Thesis for

being based on a too narrow moral sphere and on a too weak

responsibility to others causally connected to the company.

This narrow moral setting is not, however, conceptually

considered a problem and often poses no problem to nor-

mative strategically important first-tier stakeholders,

because stakeholders that are essential to value creation are

assumed to engage in relations with known self-interests,

representational conceptions of language, and free speech

(Deetz1995, p. 101). But, it is within this core that moral

responsibility takes its shape and form, which means thatmoral responsibility, even if it to some extent exceeds the

libertarian standpoint, is severely restricted also in strate-

gically relevant stakeholder relations.

Following Freeman and colleagues stakeholder capi-

talism makes it difficult to acknowledge that there is not

always a functioning level above and that the so-called

voluntary associations are, after all, not always that vol-

untarily for other actors. In this sense, there seem to be

stricter boundary conditions operating here than in case of

the BAE manager, which means that a senior manager at a

defence company provides a stronger challenge to the

Separation Thesis then Freeman and colleagues do. The

somewhat one-dimensional view of the role and responsi-

bility of companies (and states and NGOs) is in the dia-

logue opened up and negotiated.

It is further assumed that even though the world is

depicted as a turmoil in which companies and managers

need to navigate (Freeman and McVae 2001; Freeman

et al.2007, p. 172), the hegemony of the current order is

natural and is generally seen as non-problematic (it is the

best system that exists and it works despite shortcomings

within the system). Consequently, the interaction between

the company and society is seen as harmonious and well

integrated rather than full of friction and disintegration

(Deetz1996). The theorys, and the theorists, task to reject

the Separation Thesis is, therefore, basically about recog-

nizing the common sense practical world of global busi-

ness today (Freeman and Phillips 2002, p. 345) and to

find out what actually works in the world of value creation

and trade (p. 334) given the core assumptions of stake-

holder capitalism.

Previous criticisms of Freeman and colleagues have

emphasised this. Stieb (2009) states that their approach


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seems to appeal to self-interest and to be advocating []

business as usual (p. 405). Walsh (2005) argues that

Freeman and colleagues excel a version that will not

contribute to any societal interest that exceeds the reach of

its business model (p. 436; see also Orts and Strudler

2002). However, Freeman and colleagues efforts to outline

a stakeholder pragmatism do target the axiom-like condi-

tion of ethics and business (the Separation Thesis) byemphasising ethics in business; business as something

carried out within society, but that have to develop its own,

appropriate yet bounded ethics. Phrased differently, their

stakeholder pragmatism takes us further than treating

business as merely something distinct from society

business and societyallowing us to start viewing busi-

ness as in society. Freeman and colleagues have also been

successful in developing attractive suggestions for man-

agers on how to face up to this from-and-to-in transition.

The stakeholder capitalism underpinning their stake-

holder pragmatism, however, makes their pragmatism

restricted. The core and the boundary conditions it gives riseto do not take us beyond the assumption of an outside and a

level above when framing ethics in business. Following

James (1907/2009), Dewey (1922/1930, 1888/1997) and

Rorty (1989,1991,1999) makes it difficult to be satisfied

with this from-and-to-in transition, prompting us to go

further; to strive for a society in which all of its components

are not only accepted but also involved in the everyday

challenge of weaving new togetherness so as to better deal

with contemporary societal challenges. They ask of us, as

Dewey (1888/1997) states, to start from the assumption that

the economic and industrial life is initselfethical [], this

is what we do not recognize; but such is the meaning of the

statement that democracy must become industrial (p. 204).

In other words, business is not only wholly in society but

inevitably for society, implying a transition from-and-

to-in-to-for. James, Dewey and Rorty would also urge

stakeholder pragmatism to widen the term society so as to

include more people and places that are affected by the

companies operations. John Rawls, an important reference

for Freeman and Phillips (Phillips1997; Phillips et al.2003;

Freeman and Phillips2002) when they outline stakeholder

capitalism, would in his later works (e.g., Rawls1999) also

prompt us in such a direction.

Harris and Freeman (2008), in their reply to Sandbergs

(2008) criticism, also seem to open up for following James,

Dewey and Rorty when they point out that rejecting the

Separation Thesis is basically a mission impossible

because it is not really there; doing business has ethical

implications right from the start. All would of course be

well if stakeholder researchers rejecting the Separation

Thesis simply would not have to relate to it, but as it is, the

thesis is part and parcel of the language on stakeholders as

well as of the normal view in stakeholder theory. This is

also where Freeman and colleagues greatest pragmatic

achievements and contributions to stakeholder theory lie;

the acknowledgement that there is no ethically neutral

territory between business and society, and that it is not

really useful to continue to reify the Separation Thesis.

So far, stakeholder pragmatism has released itself from

taking the from-and-to-in-to-for step through what

resembles a circular argumentation; anything that spoilsthe order, the harmony, the design, and thus refuses pur-

pose and meaning of stakeholder capitalism is ethics and

once it is ethics it is to be treated as such and, hence, it is

ethics because it is so treated (Bauman1991, p. 41). To

be able to break out of this circular argumentation, the

stakeholder capitalism has to be challenged, although not

completely abandoned. Pragmatism is not a revolutionary

movement as it is highly sensitive to history; old parts

might prove useful in the new language, even though we do

not a priori know which parts (Rorty 1991, 1999). By

revealing (some of) the core assumptions and boundary

conditions of Freeman and colleagues writings, a devel-opment of stakeholder pragmatism is opened up for. In the

following, we seize this opportunity to suggest what we

refer to as fallibilistic stakeholder pragmatism.

Towards Fallibilistic Stakeholder Pragmatism

A pragmatist attempt to debunk the social conditions that

prevent a better society is a pluralistic one. Pluralism,

however, is a fluid word. Bernstein (1988/1997,

pp. 396397) teases out different versions of pluralism that

differ from the pragmatic use of the word. A first common

meaning of pluralism, which Bernstein calls flabby,

expresses itself when our borrowings from different ori-

entations are little more than glib superficial poaching. A

second one, called polemical pluralism, expresses itself

where the appeal to pluralism doesnt signify a genuine

willingness to listen and learn from others, but becomes

rather an ideological weapon to advance ones own ori-

entation. A third one,defensivepluralism, expresses itself

as a form of tokenism, where we pay lip service to others

doing their own thing but are already convinced that there

is nothing important to be learned from them.

Our reading of Freeman and colleagues suggest that they

go beyond these versions of pluralism. They would dismiss

them as not useful, as acting as barriers to produce useful

stories about divergent ways of creating value. Their

attempts rather come across as fragmenting pluralism

where the centrifugal forces become so strong that we are

only able to communicate with the small group that already

shares our own biases, and no longer even experience the

need to talk with others outside of this circle (Bernstein

1988/1997, p. 397). Assuming that the company is the

unity from which things considered relevant (or value


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creating) is attached to implies that Freeman and col-

leagues proceed from the self rather than from the other.

Within such a framework, permeated by stakeholder

capitalism, a stakeholder outside the boundaries (be they

derivative or cooperative, or on the level above or level

below), if able to mobilize any resources at all, has to choose

between either misrepresenting itself by adapting to the

stakeholder formula dictated by corporate management orby representing itself well but by being considered obscure

and radical (Deetz1995; Wheeler et al.2002). In the first

case, they might acquire some degree of autonomy as a

stakeholder, but only in a language/conceptual game not of

their own choosing and when accepting the state of

other they have little self-definition (Deetz1995, p.192).

In the latter case, they will fail to have a voice. Fragmenting

pluralism implies that privilege is given to certain stake-

holders on the expense of comparative others and that

alternative ways of understanding the role and responsibility

of the company are lost (see Deetz 1996).It putsthe finger on

a key problem inherent in stakeholder capitalism.Freeman and colleagues may have as their intention to

increase involvement with different types of stakeholders,

but such involvement is limited by the essence of mean-

ingwhat value creation is, how problems and solutions

are definedalready being defined. Stakeholders are only

allowed to engage in how an already defined common

enterprise should be developed (Deetz1995).

But, as raised by SPAS in the dialogue and as

acknowledged by the manager, relying on a stakeholder

capitalism that stops at a certain level, at a certain outer

border, can have devastating effects, or be used to justify a

great deal of harm (Freeman1994, p. 412). Both parties in

the dialogue acknowledge that the world is interdependent

and complex and that with this comes new dimensions of

responsibility. To some extent, the dialogue has opened up

for a re-articulation of Freeman and colleagues stake-

holder capitalism that enables a development of a stake-

holder pragmatism in which the Separation Thesis is

rejected by engaging with the other through what Bernstein

(1988/1997) calls fallibilistic pluralism:

Such a pluralistic ethos places new responsibilities

upon each of us. For it means taking our own falli-

bility seriouslyresolving that however much we are

committed to our own styles of thinking, we are

willing to listen to others without denying or sup-

pressing the otherness of the other. It means being

vigilant against the dual temptations of simply dis-

missing what others are saying by falling back on one

of those standard defensive ploys where we condemn

it as obscure, woolly, or trivial, or thinking we can

always easily translate what is alien into our own

entrenched vocabularies. (p. 397)

The dialogue contains moments in which the partici-

pants are willing to listen to the other without denying or

suppressing their arguments. There is a willingness to share

information and correct eventual misunderstandings,

and the flow of arguments from different perspectives (the

researchers included) is taken into serious consideration by

the participants (e.g., to be able to develop an ethical

position you must be confronted by others views, [w]eshall talk about issues in which we genuinely have different

opinions, to be able to develop an ethical position you

must be confronted by others views and be allowed to

bend and discuss these matters, you do a good job, you

have good arguments, [y]ou learn how to deal with it, or,

I do not know. I sometime do not tell what I [do for a

living]). This is important when arguing for fallibilistic

stakeholder pragmatism because dialogues containing

trustworthy information, allowing for different perspec-

tives to emerge and in which voice to difference, negoti-

ation of values and decisional premises (Deetz 1995,

p. 100) are respected and considered, have beneficialeffects on participants capability to break out of his or her

previous position (Bernstein 1988/1997; Fishkin 2009;

Taylor 1994; Rorty 1989, 1999). Deetz (1995) refers to

such efforts as the production of new integrative positions

(p. 100).

It has also been shown that dialogues characterized by

fallibilistic pluralism increase the participants capabilities

to acknowledge that issues expandingor crossing established

boundariesin our case related to what is at stake and who

the holders of stakes areare in their own interest as well as

their responsibility. Through the dialogue, participants better

understand how and why others interests are connected to

their specific interests (Fishkin2009), and that these con-

nections have implications on the relation between personal

ethics and organizational roles (Benhabib2002).

Assessing dialogues such as the one between SPAS and

BAE through the lens of fallibilistic pluralism focuses on

whether the participants have developed a readiness to re-

position himself or herself. This is crucial, because if a

readiness to re-position does not develop, the other will be

judged along a certain canon, with certain norms, rules and

values and not assessed on its own terms. Consequently,

fallibilistic pluralism implies a readiness to emerge as

different after dialogues have taken place (Bernstein1988/

1997; Dewey 1922/1930; James 1907/2009; Rorty 1991,

1999; Taylor1994). As the dialogue unfolds in our case,

such readiness gradually emerges as the participants

manage to weave into each others experiences in such a

way that they see themselves in the other. An important

explanation to why the participants seem to achieve this is

that they negotiate boundary conditions that are close to

them as individuals (private self); they share personal

beliefs and standpoints with each other, and discuss the


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relation between their personal ethics and their organiza-

tional roles.

Freeman and colleagues walk this ground when they

offer a feminist re-reading of stakeholder theory, an ethics

of care (Wicks et al. 1994). They state that such a

re-reading implies that the theory now can seek to

acknowledge that the individual and the community, the

self and the other are two sides of the same coin and mustbe understood in terms of each other (p. 483). Wicks et al.

(1994, p. 484), in our view, set the stage for a useful (in a

pragmatist sense) rejection of the Separation Thesis con-

cerning who/what should be included in the companys

moral sphere by acknowledging that to distance, or to

other, an actor, is to distance, or to other, something that

are an integral part of yourself. The divisions between

derivative and normative stakeholders, collaborative and

cooperative modes, level above and level below and

between private ethics and organizational roles are in

Wicks et al.s view not possible. As far as we know, this

article is among the most useful (yet its stakeholder prag-matism is not outspoken), but least used articles existing in

the backlog of Freeman and colleagues.

Dialogues characterized by fallibilistic pluralism are

important in moving towards a more useful stakeholder

pragmatism. Such dialogues negotiate private and corpo-

rate boundary conditions and a readiness to emerge as a

different person after the dialogue exist. Such dialogues are

important organizational stories in the sense that they

challenge dominant boundary conditions, such as those

inherent in stakeholder capitalism concerning the role and

responsibility of companies and the relation between per-

sonal ethics and organizational role. Although a dialogue

such as the one reported on in this article may not lead to

any changes relevant to the themes discussed, the partici-

pants may re-tell the story in other contexts, in other sit-

uations, that may trigger dialogues on useful ways of

engaging with stakeholders. Storytelling in organizations

is, after all, an important, even crucial, aspect of organi-

zational learning (see Czarniawska1999).

Implications for Research

To develop a fallibilistic turn within stakeholder pragma-

tism, stakeholder scholars must seek to tell stories that

re-articulate the language on stakeholders in a way that

increases sensitivity to the ways in which value is created,

what it means and can mean, and to how companies and

stakeholders are expanding, and in the future can expand,

moral responsibility so as to include more of those actors

that companies have effect on. Such stories would be stories

that embrace the liberal society as envisioned by Bernstein,

James, Dewey and Rorty, resting on fallibilistic pluralism

and unforced arguments (Dewey1888/1997; Rorty1999).

They would embrace a liberal society that comes close to

left-wing Kuhnianism, as Rorty would have it (1991,

p. 38). This might come across as a harsh reformist sug-

gestion, but accounts that address ethical issues are bound to

cause friction because they bring forth the need for new

and controversial custom (Rorty1999, p. 76).

Acknowledgments This research was financed by the Swedish

Council for Working Life and Social Research. Our thanks go to our

colleague Sven Helin and to the anonymous reviewers.

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Documents

In Defence of Stakeholder Pragmatism.pdf