A Precis of a Communicative Theory of the Firm

16 Pages·0.136 MB·English

BusinessEthics: AEuropean Review
A pre´ cis of a communicative
theory of the firm
Jeffery D.Smithn
Introduction stakeholders as part of the communicative, i.e.
consensus-building fabric of modern society, or
Over the last two decades there have been whether such relationships are merely strategic in
noteworthy attempts to apply normative moral a way that emphasizes the satisfaction of private
and political theory to the conduct of business over collective interest. Although the answer to
firms. These applications draw upon the work of this general question remains open within the
Aristotle, Immanuel Kant, John Rawls, various communicative ethics literature, I take an ap-
figures of the social contract tradition, and the proach that maintains that economic organiza-
writings of the so-called communitarians (see tions are not only partly communicative in nature
Keeley 1988, Solomon 1993, Etzioni 1998, Do- but it is indeed appropriate that the ideals set
naldson & Dunfee 1999, Bowie 1999, Phillips forthbycommunicativeactionstructuretheterms
2003). A body of literature that has received of cooperation between their members. Business
substantially less attention by business ethicists, actors,whilestrategicallymotivatedinbasicways,
however, is the work of European theorists who cannot be exclusively strategic without jeopardiz-
advocate an approach termed discourse, or com- ing the successful attainment of their shared
municative ethics. interests. I also hold that communicative action
This paper proceeds under the assumption that is onlyenabled througha complicated network of
there is room to develop a communicative theory social institutions. If businesses shape and affect
of the modern business firm that can provide a the possibility of consensual social action in other
perspective from which to evaluate an array of spheres of modern society, then they too are
normative issues in business ethics, e.g. corporate partly subject to the normative constraints pro-
social responsibilities, stakeholder entitlements vided by the ideal of communicative interaction.
and obligations, managerial decision making, Inwhatfollows,Iwilldevelopthispositionwith
and corporate governance. This task, however, is exclusive focus on the philosophical work of
quite complex and cannot be completed in its arguably the most prominent communicative
entirety here; as a result, the purpose of this ethicist, Juergen Habermas (1990: 43–115,
analysiswillbetoprovideapreviewofamorecom- 1996a). Since I do not purport to provide an
prehensive application of communicative ethics. interpretation of Habermas as much as an
My focus will center on the first step of such an extension of some of his insights, I assume large,
application; that is, whether it is reasonable to controversial features of his work without de-
conceive of the relationships between business fense. The motive behind this exploration is a
curiosity in uncovering what entitlements and
responsibilities corporate stakeholders assume
when they are engaged in the mutually benefi-
nAssistantProfessorandDirectoroftheCenterforBusiness,Ethics
cial acceptance of risk and reward that consti-
andSociety,SchoolofBusiness,UniversityofRedlands,Redlands,
CA,USA. tutes business activity. Broadly speaking, I am
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and350MainSt,Malden,MA02148,USA. 317
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interested in what moral principles are implied able needs and solutions. The promise of com-
from the fact that business organizations are municative ethics for business ethicists is that it
composed of differently situated and differently can provide a procedural vantage point from
interested groups of individuals who sometimes which the relationships that characterize the
hold competing and mutually exclusive ends. modern corporation can be normatively assessed
Howcantheirdiverseeconomicinterestsbejustly and managed.
addressed given that these differences stand Habermas limits his normative theory to an
in contrast to the shared interests they have in exploration of the moral principles that can be
the success of the firm? Although I will provide rationally justified in the face of the persistent
no definitive answers to these questions in disagreement that characterizes modern, pluralis-
this paper,Iwill begintheprocess of constructing tic societies. He begins this account with the
a communicative perspective from which these assumption that moral claims have the feature of
questions can be asked. being made with the anticipation and expectation
thattherearegoodreasonstosupportthevalidity
of the claim that every listener can, in principle,
Communicative and strategic action acknowledge. Moral claims, thus, are a species of
whatIhavebeencallingcommunicativeaction,or
Juergen Habermas maintains that moral princi- consent-oriented action (Habermas 1984: 286,
ples are justified, and ultimately conferred valid- Baynes 1992: 80). Communicative action is social
ity, when they meet with the acceptance of activity with the primary aim of bringing about
individualsengagedinanargumentativediscourse mutual understanding, rational agreement, or
about the principle’s ability to satisfy the needs consent. Since communicative action is typically
and interests of all affected parties. His commu- mediated by language, Habermas focuses his
nicative ethics provides a procedure designed to attention on moral claims and their purported
provide an examination of the principles that can end of enabling the recognition of certain reasons
govern the interaction and cooperation of a as warranted grounds upon which to accept a
plurality of groups that have disparate value normative, action-oriented claim about what
orientations, interests, and conceptions of the ought to be done. Moral assertions are distinctive
good. Institutionalizing argumentative discourse in that they specify universally valid human
enables a type of coordination of interests by interests that are capable of obliging individuals
uncovering an insight into the interests of other whatever their specific value orientations or
individuals. This, in turn, builds solidarity be- limited set of interests. Linguistically mediated
tweenthosewhoreachcollectiveagreementabout moral action, then, is pragmatically based on the
how to regulate the terms of their social lives. presupposition that moral claims can lead to a
Communicativeethics,unlikeothercontempor- mutual recognition of the claim through inter-
ary work in ethical theory, maintains that moral subjectively acceptable reasons.
norms governing social interaction are the result In this light, Habermas’ work can be broadly
of reasoned, dialogical exchanges between differ- viewed as an attempt to redeem the Kantian
ently situated individuals. In this respect, com- project of uncovering a universal basis for moral
municative ethics is centrally procedural in that it principles without appealing to an overly formal
does not recommend substantive moral norms conception of practical reason or otherwise
but, instead, proposes that they result from controversial metaphysical assumptions about
institutionalized discourses where those affected human autonomy. The possibility of universal
jointly arrive at well-reasoned principles. Impor- moral principles rests, instead, on the pragmatic
tance is placed on establishing reliable mechan- necessity of individuals to coordinate their activ-
isms for discursive interaction where different ities amongst each other on the basis of shared
constituencies and groups can address competing reasons. Habermas maintains that the reasons
interest claims on the basis of mutually recogniz- thatsupporttheuniversalvalidityofmoralclaims
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BusinessEthics: AEuropean Review
can be uncovered through a process of dialogic oriented toward mutual understanding and con-
interaction among participants who may have sensus can be preserved in the face of ongoing
very different interests or conceptions of the good disagreement when those who disagree ‘thematize
life; hence, by identifying principles that express contested validity claims and attempt to vindicate
universal interests, he takes seriously the liberal or criticize them through arguments’ (Habermas
notion that certain human interests can be 1984:18).Forthespecialcaseofmoralclaims,the
recognized by all individuals whatever their efforts to preserve rational consensus through a
concreteworld viewsorparticular ends.A society process of argumentative discourse presuppose a
thatisabletocoordinateitsactivitiesmustrelyon number of rules. Indeed, Habermas (1990: 86–93)
claims that everyone can, even if only implicitly, explains that these rules are inescapable assump-
offertheirassent.InHabermas’terms(1984:286– tions behind the very effort to engage in commu-
287; 1990: 102), the restoration of communicative nicative action. As long as you are a participant
action, oriented toward consensus, is necessary using language to make claims that are designed
for the basic processes of socialization, social to secure recognition from listeners, you presup-
integration, and shared cultural reproduction. pose that there can be reasons uncovered that
Although much of our day-to-day interaction support your assertion. The ideal process of
proceeds in a communicative fashion – i.e., we presenting and reconstructing this search for
act and speak in ways that implicitly rely on reasons just is the pragmatic expression of the
agreement – Habermas admits that communica- very rules that guide Habermasian discourse.
tive action often breaks down because of the These rules include the equal rights of all affected
inability of certain claims to generate consensus. partiestoparticipateintheprocessofargumenta-
The inability of individuals to act in consensual tion,anabsenceofcoerciveactions,consistencyin
fashionrunstheriskofleadingtowhatHabermas the use of language, the right of everyone to offer
(1990:58) calls rational–purposive action–action any relevant objection, the truthfulness of all
thatisnotorientedtowardrationalunderstanding participants, and the right of everyone to express
and mutual consent but premised on the attain- their needs and interests (cf. Baynes 1992: 80).
mentofcertainendsnottiedtoconsensusassuch. Through a complex maneuver, Habermas con-
Rational–purposive actions come in two forms: cludes that from these necessary presuppositions
instrumental actions that are goal-oriented inter- of argumentative discourse and the idea that
ventions in the physical world, and strategic moralclaimsarejustifiedonlyiftheycangenerate
actionsthatareattemptstoinfluencethethoughts consensus to coordinate social action between
and behavior of others for the purpose of individuals, there is one basic rule that all moral
achieving private ends. Although there is an norms must meet in order to carry the force
overlapping area between instrumental and stra- of reason (Habermas 1990: 57–68; Rehg 1994:
tegic action, strategic action is particularly worri- 56–84). He labels this rule (U) because, like
someforHabermasbecauseitissocialinteraction Immanuel Kant’s Categorical Imperative, it sti-
that subordinates, or perhaps purposely avoids, pulates that all justifiable principles must be
mutual understanding in order to achieve other universalizable. In Habermas’ case, however,
ends like power, economic efficiency, or other universalizability is not a formal requirement of
egocentric aims. Breakdowns in communicative maxims of action, but a requirement concerning
action can naturally lead to strategic action the acceptability of a proposed principle within
because coordination needs to take place even argumentative discourse.
without consensus.
(U): a moral principle is justified just in case all
Strategic acts such as deception, coercion,
affected can freely accept the consequences and
manipulation, and instrumental purpose can be
side effects that the general observance of the
avoided if breaks in the fabric of communicative principle can be expected to have for the satisfac-
consensus are repaired through a discursive tion of the interests of each individual (Habermas
process of argumentation; that is to say, action 1990: 93)
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(U) summarizes the basic procedural logic behind distributive schemes that acknowledge the impor-
moral argumentation and the discovery of accep- tance of economic resources in the attainment of
table reasons to support a proposed principle: a these entitlements are likely candidates for uni-
principle is rationally justified only on the versalizable moral principles.
condition that all others who are affected by the
principle are rationally convinced of its validity.
So the consensus required by (U) is significant Communicative ethics and business
because it identifies moral principles that partici-
pants in discourse ‘arrive at together’ by looking There are two general ways in which commu-
for reasons that every other participant can nicative ethics is relevant to business. First, as an
endorse (Rehg 1994: 77, 78). institution that affects the distribution of rights,
Before exploring the applications of this responsibilities, benefits, and burdens in modern
approach to themes in business ethics, it is worth society, businesses and their agents have respon-
reiterating some important limitations to Haber- sibilities to uphold the principles that are identi-
mas’theory.Moraldiscourseisaprocesswhereby fied and justified through public moral discourse.
individuals who are communicatively oriented Insofar as consensus emerges about the appro-
attempt to restore consensus on issues that have priate ways to encourage and regulate business
temporarily resulted in disagreement. Habermas activitytherearenormstowhichbusinessesought
is careful to stress that his theory itself does to adhere. In other words, businesses, at a
not offer any substantive principles; rather, his minimum, need to further the interests of all
theory is purely procedural in that such principles who are affected by their activity. Second,
canonlybedeterminedthroughactualdiscourses. corporations, despite being largely private asso-
Moral claims that are redeemed through dis- ciations, are stable and successful only when it is
course represent values that are generalizable recognized that the relationships between their
because claims that survive the process of moral stakeholders are communicative, and not merely
discourse are those that can be recognized by strategic in nature. This fact yields the interesting
everyone.Moralreasons, thus,canbeunderstood resultthatdiscourseis not simply amechanismto
as discursive reasons, i.e., reasons that can be regulatebusinessatthelevelRawlsreferstoasthe
recognized as acceptable warrants by participants ‘basic structure of society’, but is also germane to
within discourse. the negotiation and management of moral con-
The domain of the moral is clearly limited by cerns between consociates within organizations. I
Habermas to those normative issues that are will take up each of these applications in turn
capable of expressing generalizable interests. (Rawls 1971: 7).
Ethical matters concerning individual or group
Public morality, law, and business
identity, value-oriented assessment of personal
ends, or questions of the good life are important Habermas’ discourse ethics is a theory of social
to be sure; however, discourses concerning these morality that governs the entire scope of public
questions are not geared toward the ‘mutually interpersonal and institutional relations. To the
expectable values’ discovered within moral dis- extentthatbusinessesareunitsofcivilsocietythat
course. Habermas envisions his communicative impact such core human interests as self-determi-
ethics as providing the conceptual framework nation, opportunity, and welfare, there are well-
needed to develop a theory of justice that defined responsibilities to the general interest of
articulates the basic elements of a stable system citizens. Reed (1999a, b), for example, has argued
of public morality. Although he is reluctant to that business activity functions in the general
specify the content of this system, the demands interestonlywhen threeconditionsaremet. First,
of public recognition through individual rights, individual profit seeking through cooperative
liberties,formalopportunities,guaranteestoalife modes of production is justified only when
consistent with one’s lifeworld commitments, and the firm intends to provide gains in economic
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welfaretoitsstakeholdersandthatthesegainsare accept its role in regulating social life. The key
appropriately distributed to everyone who has difference for the domains of morality and
contributed to the firm’s productive activities. legitimacy rests in the fact that legal discourses
Second, because of specific failures of the market encompass moral, ethical and pragmatic reasons
todeliversuchgainsinwelfare,therearegenerally in the course of examining the validity of a
recognizable reasons to prefer regulatory struc- proposed law. The creation of law characteristi-
tures that ensure the protection of the natural cally takes into consideration a wider array of
environment, public safety, and competition in functional questions and aims (e.g., assessments
order that the public benefits of individual profit of efficient means and strategies), focuses, at
seeking are realized. Finally, business activity times, on negotiation and bargaining processes,
upholds the general interest as long as it does not andtendstobeconcernedwithconcreteproblems
‘invade other realms’ that should be governed by and policies rather than the mere implementation
non-economic ends. Reed is particularly con- of abstract moral insights (Rehg 1994: 219;
cerned with the ways in which businesses have Habermas 1996b: 453). Still, the fact that Haber-
been able to supplant reflective individual choice mas (Habermas 1988: 243–244) argues that
bycontributingtothecreationofa‘consumercul- ‘legality can produce legitimacy only to the extent
ture’ and how the ends of business have distorted that ... legal discourses are institutionalized in
thecommunicativeaimsofotherinstitutions,e.g., ways made pervious to moral argumentation’
political parties and administrative agencies. exposes the deep linkage between legitimacy and
Another way that the norms of public morality morality that Habermas derives from the ideal of
are brought to bear on business is through the communicative action. Law, in a fundamental
creation of relevant laws by legislative, adminis- sense,is a mechanismfortheintegrationof moral
trative, or judicial means. This issue receives interests into norms that are implemented and
extensive treatment within Habermas’ (1996b) enforced through positive means.
theory of law in Between Facts and Norms. There In this light, corporate agents can be said to act
he develops a principle of democratic law forma- illegitimately when their actions either (a) contra-
tion whereby formal political institutions have a vene the established provisions of existing legit-
central(althoughnotexclusive)role toplayin the imate law or (b) undermine the conditions
maintenance of legitimate law. According to his necessary for the ongoing development of legit-
so-called principle of democracy, Habermas imate law (cf. Reed 1999b: 27). The former
(1996b: 110) maintains that statutes can claim requirement needs little explanation beyond the
legitimacy only when they meet ‘with the assent fact that businesses are legal agents subject to the
(Zustimmung)ofallcitizensinadiscursiveprocess constraints endorsed through a discursively struc-
oflegislationthat...hasbeenlegallyconstituted’. tured legislative process. The latter provision is
Laws consistent with this principle reflect a kind more complicated, but no less important. Haber-
of popular autonomy among the citizenry to mas stresses that modern society must be under-
reflectively endorse the laws to which they are to stood as a ‘self-legislating’ legal community that
be subjected (Habermas 1988, 1996b: 118–131; seeks to organize its common life on the basis
Reed1999b:26).Habermas(1996b:107)drawsan of laws that receive the assent of all affected
indirect, but important, connection between (U) individuals. The ideal of a self-legislating polity
andtheprincipleofdemocracy.IndeedHabermas necessitates the legal recognition of certain rights,
holds that both principles are ‘co-original’ in the all of which are necessary to maintain a society
sense that the normative realms of morality and constituted on the basis of law, so construed
legitimacy are derived from the same core (Habermas 1996b: 121–126). Accordingly, basic
principle, (D), expressed in the very idea of rights of private autonomy are necessary to
communicative action, i.e., that an action norm preservethefreedomofspeech,conscience,move-
isvalidonlyontheconditionthatallofthosewho ment, and association necessary to engage in
are possibly affected by it could find reason to public discourse. Habermasalso outlines rights to
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legal protection and due process under the law so of corporate responsibility that stipulates that
as to prevent capricious penalties against those businesses have responsibilities only as members
who express dissent or who are otherwise subject of civil society ignores this complexity and leaves
to the authority of other, more powerful institu- businesses qua businesses immune from direct
tions. Finally, he argues for two broad categories moral scrutiny.
oflegalrightsthatprotectindividuals’entitlement It is fruitful to understand how corporate
to direct and indirect participation in legislative responsibilities fit within the politico-legal recog-
processes as well as the welfare conditions nece- nition of universal moral norms; however, busi-
ssary for the exercise of all other rights (Baynes nesses, as organizations, are significant in their
1994: 210–212). It is therefore incumbent upon own right in helping to shape the possibilities of
corporations to refrain from activities that under- communicative action. Corporations are success-
mine these rights because they serve as necessary ful to a large extent when their stakeholders can
conditionsforthedevelopmentoflegitimatelaws. identify and share interests that enable efficient
Such expectations may include, for instance, coordination of their efforts. The prevalence of
prohibitions on penalizing employees who are work, expansion of private enterprise into areas
interested in organizing labor unions, respect for formerly managed by public entities, and the
theprivacyofemployeesintheworkplace,anem- dependence of local communities on corporations
ployer provision of due process before dismissals, for development, underscore how the interests of
and the responsibility not to engage in political all corporate stakeholders are intimately con-
activities that undermine the ability of individuals nected with one another. Thus, in approaching
and communities to effect legislative change. the application of communicative ethics to busi-
With this said, we should resist the temptation ness, I contend that we must be attentive to both
to conceive of corporate responsibility as arising the need for corporations to internalize moral
merely from the external constraints of public responsibilities as well as identify and apply such
morality discussed thus far. Viewing the firm as responsibilities via moral discourse at the organi-
simply one of many regulated institutions fails to zational level. I will take up some challenges to
addressthespecialdivisionsandrelationshipsthat this contention in the following section and then
characterize life within the firm. As a number of move to a more systematic review of the commu-
contemporary stakeholder theorists have argued, nicative dimensions of stakeholder relationships.
the unique nature of commercial relationships,
and their associated risks and rewards, generates
Communicative action within organization
special moral considerations beyond mere obedi-
encetopoliticallyendorsedregulations(Phillips& The normative authority of Habermas’ procedure
Margolis 1999). Moral matters in business are of moral discourse originates from the practical
characteristicallymattersabouthowagentswithin commitment of individuals to engage in commu-
the organization are to exercise moral discretion nicative action. There is no a priori or otherwise
andbalancetheinterestsof individualswhomake metaphysically controversial foundation for com-
contributions to the success of firm. Such issues municative ethics; its foundation rests simply in
are not exclusively a function of how the insti- the analysis of the normative presuppositions
tution’s goals fit within the larger aims of civil behind actions oriented toward reaching mutual
society or how the outcomes of business need to understanding.
be adjusted to suit norms that take into account This point is crucial; for if businesses, as social
other socially endorsed principles. Letting moral institutions,arethoughttofurthercommunicative
obligations trickle down to business merely from ends, we should expect business relationships to
thepriordemandsofthelawsimilarlyneglectsthe exhibit this pragmatic characteristic. Upon first
observation made by others that business is itself blush, however, this seems dubious; there is a
a union of individuals with shared, yet simulta- rehearsed history of argument in business ethics
neously distinct interests. Opting for a definition that speaks to the inherent strategies that lurk
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behind the motives of business agents. The fact through happenstance but through negotiated
that stakeholders often enter into business rela- collective action. The most obvious examples of
tionships with doubts about trust, solidarity, and suchformsofstrategicactionarenegotiatedlabor
the extent to which other stakeholders may disputes.If weassumethatanegotiateddisputeis
employ strategies that compromise their interests strategic in character, then, again, the conver-
suggests that business relationships are inherently gence of assent between employees and managers
strategic rather than communicative. More to the does not have its roots in mutual recognition of
point:businessactorstaketheirrelationshipswith some asserted interest, or a shared rationale as to
other stakeholders as strategic in the sense that why the settlement is preferable, but simply an
they expect stakeholders to employ tactics that agreement that relies on the contingent, over-
further some specified goal (often a self-interested lapping aims of each party. A similar strategic
goal) at the expense of mutual understanding and analysis might be offered for manufacturers and
consensus-building (French & Allbright 1998). supplierswhocompromiseingoodfaithaboutthe
Would not this speak strongly against the insti- termsandconditionsof along-termcontractonly
tutional application of communicative ethics in in the name of their private accomplishments.
the way that his being suggested? Finally, there are undoubtedly situations where
This question can be cast more precisely by a stakeholding group asserts their interests by
examining three distinct types of rational–purpo- attempting to subordinate or suppress the satis-
sive action in business that may, sometimes, be factionofanothergroup’sinterests.Call thiskind
rhetorically confused with communicative action. of strategic action intentional control of interest
First, competing stakeholder interests may con- satisfaction. Acts of manipulation, deceit, and
verge through happenstance. In this situation there coercion are likely to be placed in this category.
is little, if any, noticeable conflict between the A neglect of long-term shareholder wealth by
interests of stakeholders but it is nonetheless intentionally misleading investors through inac-
accurate to assert that stakeholders are primarily curate financial statements or overt attempts to
motivated by egocentric goals. Take, for instance, deceive through crafty advertising schemes may
the convergence of strategic interests that results serve as instances of the intention to control
from technological innovation in product devel- interest satisfaction.
opment. Innovation often results in market We should expect interesting cases of strategic
position, brand name recognition, and growth in actionunder all of these headings. But notice that
revenue for managers and shareholders. At the while we can uncover examples, this, by itself,
same time, consumers often receive strategic leavesthequestionofwhetheragentsimplicitlyor
benefits from the development of products that explicitly engage in communicative action largely
better suit their needs and preferences. Here the unanswered. Habermas speaks of strategic action
motives behind manufacturer and consumer as following the rules of rational choice so as to
decisions are not oriented toward the mutual efficiently influence the decisions of an opponent.
recognition of each others’ interests, i.e., through It is, in his terms, an attempt to purposefully
respect and recognition of their interest claims, change the behavior of others to accomplish an
but, rather, on the calculated satisfaction of self- end to which you have committed yourself.
oriented aims. In this regard, the action exhibited Individual success, defined by the attainment of
in this category of rational–purposive action is egocentric ends, is definitive of strategic action
instrumental in Habermas’s sense of the term (Habermas 1984: 286). It would certainly seem as
because while managers, shareholders and con- if the latter two categories of rational–purposive
sumers can be said to share the end of techno- action, i.e., convergence through negotiation and
logical innovation, their reasons in favor of intentional control of interest, exhibit features of
innovation are completely self-interested. this sort of action. Yet the fact that business is
Second, consider the category of cases where characterized by strategy need not imply that its
there is a convergence of stakeholder interests not individual relationships are exclusively structured
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by strategic motives; nor need it imply that characteristic of modern business life should not
communicative purposes are absent from the deter us from noting that resolutions to such
motives of stakeholders. It is a mistake, in short, conflict need not take the form of rational–
to point to instances of strategy and infer from purposive attempts to assert one’s interests over
those instances that strategy is constitutive of any theinterestsofanopponent.Strategy,asaspecies
business relationship whatsoever. It is one thing of rational–purposive action, is characteristically
to notice the presence of strategic action. It is a way that individuals respond to situations of
quite another to infer that its presence norma- conflict and competition; however, it is unlikely
tively structures what we expect of actors. that stakeholders conceive of conflict resolution
Moreover, strategic and communicative mo- purely in terms of asserting their interests at the
tives hardly seem mutually exclusive in the way expense of others’ preferences.
suggestedbythesegeneralcategories.Thereasons Workintheareaofmulti-stakeholderdialogues
that a labor union may have to support a and the interaction between corporate constitu-
negotiated settlement can be simultaneously self- encies, especially between non-governmental or-
directed and takeaccount of the interests of other ganizations and high-level management, has
stakeholders.1 A process of negotiation often shownhowdialogicprocessesfacilitatetheshared
involves what is casually referred to as a give- goals of interest group consideration, trust,
and-take process. A prior demand or condition is flexibility, access to information, and agenda-
sometimes given up by one party in order that setting power (Bendell 2003: 67–68). Stakeholders
other, more pressing concerns are addressed typically have shared goals about the long-term
in a would-be settlement. Stakeholders take what successofthefirmandthefactthattheyseekvery
they find most important, in part, because of a broad-based outcomes in common serves as an
recognitionofwhatotherpartiesmaylegitimately impetustoaddresscoordinationproblemsinways
find objectionable. The motive in such a process that improve the chances of reaching these goals.
may be self-interested in the sense that each party Stakeholders are thus likely to engage in co-
is motivated to negotiate on the basis of what operative behavior at the level of conflict resolu-
serves their interests; however, this would not tion and policy creation; for a lack of such
exclude the possibility that the interests of others procedural cooperation tends to undermine the
provide acceptable limits on what sort of settle- satisfactionofsharedinterests(Cohen2003).This
ment is eventually endorsed. Communicative underscores the extent to which the distinction
action can, in short, drive a process of searching betweenstrategicandcommunicativeactionwith-
for norms of social coordination that are none- ineconomicorganizationsisnottobetakenasan
theless shaped by each party’s own interest in unquestioneddualism,buttwointerlockingpieces
discussing the norms in the first place. of coordinated social action.2
It is also mistaken to assume from the fact that
stakeholdersoftencompeteforentitlementsorthe
satisfaction of interests that such competition is The communicative dimensions of
preferablyresolved throughmerestrategicmeans. business
This comment is issued from the perspective of
stakeholders themselves. Political philosophers To make these points more plausible it will
often refer to situations characterized by a be argued in this section that there are four
competition for resources and entitlements as important reasons to suppose thatbusiness actors
exhibiting ‘circumstances of justice’ (Sandel 1982: proceed with communicative, rather than exclu-
28). It is fair to say that, in many situations, sively rational–purposive, intentions. These rea-
stakeholders are involved in circumstances of sons include the shared purposes of stakeholders,
justice where they, in effect, offer competing the collaborative nature of decision making
claims for consideration and interest satisfaction. in organizations, the tendency to seek mutual
The fact, however, that such circumstances are recognition, and the need of communicative
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action to sustain the coordination necessary for identifiable conflicts between stakeholder inter-
the firm to achieve its economic goals. ests. In either case, however, the fact that
stakeholder relationships are measured by this
ideal of mutuality indicates that the pragmatic
Shared purposes and collaboration
foundation behind communicative ethics has
Business stakeholders have a number of interests relevance to economic organizations. Moreover,
thatnotonlycoincidebut,inastrongersense,are the fact that stakeholders have core interests in
shared. These shared interests express an under- common will often provide the basis for ongoing
lying sense of purpose that circumscribes the interest exploration that yields ‘co-created mean-
expectations and shared intentions of each corpo- ings’thattendstoenhanceproblemidentification,
rate stakeholder. First and foremost, each stake- conflictresolution,andmanagerialresponsiveness
holder implicitly recognizes the importance of within organizations (Crane & Livesey 2003:
economicendslike marketshare,growth, innova- 48–49). Consider, for instance, the experimenta-
tion,costminimization,returnoninvestment,and tion with the so-called ‘farm out committees’ in
meritocratic rewards. This is an obvious truism industries dependent upon highly technical main-
for the most immediate stakeholders such as tenance and production. A fine example of such a
employees, financiers, and suppliers. Customers committee was established by Northwest Airlines
too tend to have an interest in such goals because (NWA) as part of negotiated labor settlement
the increased price competitiveness of goods and where technicians gave up wage increases in
product innovation tend toward preference satis- exchange for stock ownership and control over
faction. Even communities that often have little sourcing decisions (Smith 1998). These commit-
input in the eventual location of businesses tees disseminate information to labor unions who
typically come to recognize the importance of a wish to competitively bid on work that would
relationship with a competitive, stable corporate otherwise be outsourced. The ability of labor
partner. Second, it is arguable that many stake- unions to compete for work that would normally
holders share interests to the extent that their be sent to other firms creates a sense of
identities are tied to the firm’s operations as a accomplishment, tangible recognition of their
persistent and purposeful community (cf. Bowie achievement, savings on maintenance costs and,
1999:82–119).Employeesthathavelong-standing of course, job stability. In a real sense, manage-
relationships with management teams, for in- ment and labor both discover, through a process
stance, understand themselves and their cohort of exchanging information and creative problem
as part of a larger network of individuals with solving with the other party, that their shared
similar histories, problems, and experiences. interests in cost minimization and information
Indeed, a corporation’s mission statement, code sharing are mutually recognizable from the
of conduct, and organizational structures will others’ perspective.
often implicitly define itself as a social union A similar sort of linkage between shared
based on a shared identity because of the organizational ends and communicatively or-
commitment and concern stakeholders have for iented action is illustrated by other well-known
the success of the firm. cases of collaboration between employers, man-
This observation highlights Habermas’s point agers, and suppliers. The Saturn Corporation,
that different groups often share a core set of for instance, responded to customer complaints
interests that naturally leads them to coordinate during the late 1980s by developing a ‘relational
their activities to further what they perceive to employment contract’ that stipulated how labor
have in common. Many times this coordination and management ‘team members’ should strive to
operates in the background without examination; have joint decision-making responsibility at all
at other times, common purposes need to be levels of the organization (Calton & Lad 1995:
brought to the fore in the context of discourse in 15). Inspired in part by Japanese management
order to articulate generalizable solutions to models, Saturn encouraged critical exchanges
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Volume 13 Number 4 October 2004
among labor and management as a means to what business actors expect of others: stake-
generate more widely recognized solutions to holders naturally seek to meaningfully address
problems faced in the automobile industry. A moral conflicts through an implied exchange of
special committee was formed that made the reasons. It is clearly true that stakeholders
union, the United Auto Workers, an institutional disagree about how interests should be balanced
partner in participating in ‘consensus-based deci- in difficult circumstances. This disagreement,
sion-making from the shop floor to the levels of however, is meaningful and important to resolve
senior management’ (Kochan 1999: 1). The union only because stakeholders tend to acknowledge
and its membership were integral members of the that their needs and interests are most effectively
‘decision rings’ established throughout depart- satisfied through a sort of joint resolution that
ments and production facilities that helped to enables a continuation of the productive activities
make strategic decisions regarding supplier con- ofthefirm.Thispointissubtlebutimportant:any
tracts, product development, implementation of self-interest a stakeholder may have in resolving a
technology, and marketing (Calton & Lad 1995: conflict in a particular way is preempted by the
15; Kochan & Rubinstein 2000). Grounding this realization that sustainable conflict resolution is a
effort was the commitment that all stakeholders matter of uncovering consensus through shared
had something to gain by becoming more aware value orientations and reasonable expectations of
of the interests of customers and creating efficient otherstakeholders.Theparticularinterestsofany
production and supply chain policies. one stakeholder are best serviced when that
Collaboration of the sort being described by stakeholder engages in activities where there is
NWA’s outsourcing committee and Saturn’s consensus about what corporate decisions have a
management committee are noteworthy because rationale endorsed by all affected stakeholders.
there is a presumption in both cases that mutual This communicative feature of business also
consent is a large part of how strategic problems explains why the demands of stakeholders are
are resolved. Solutions are not sought that merely typically voiced as claims concerning the unwar-
look for a convergence of stakeholder interests in ranted exclusion of interests from corporate
proposing policies and decision-making proce- decision making. To see this, reflect upon the
dures – although this is certainly part of the secondcategoryofstrategicactionfromabove.In
motivation. The entire explanation behind these that situation, it was suggested that some labor
avenues of organizational policy making rests on union disputes proceed only because both parties
the fact that collaborative decision making is a are strategically motivated to achieve some self-
way to fully understand organizational problems interested aims and they can effectively influence
and solutions. This commitment is prior to the and change the behavior of their negotiating
advantages provided by mere negotiation; it partners. This picture of negotiated settlement,
recognizes that negotiation is more fruitful and however, fails to acknowledge the kinds of claims
sustainable when decisions are sought which made by stakeholders in labor disputes. For
integrate interests, objections and proposals of instance, the recent claims made by members of
different stakeholders. So, like Habermas’s pro- theUnitedFoodandCommercialWorkersUnion
cedural rule of moral discourse (U), participants (UFCW) in Los Angeles were, quite explicitly,
in such collaborative techniques view solutions as demands for recognition and fair treatment. They
justified only after seeking the assent of others asserted that management’s plan to require
who are critically engaged and take seriously the grocery store employees to shoulder a greater
multiple stakes of a proposed course of action. share of health insurance costs was unjust in light
ofthecontinuedgrowthinnetincomeofSafeway
and its subsidiaries (Greenhouse 2003: A10).
Mutual recognition
UFCW members were not merely making a
A second observation relevant to the commu- strategic claim cloaked in the language of
nicative dimensions of business activity concerns distributive justice; rather, they were intending
326 rBlackwellPublishingLtd.2004