Hostname: page-component-586b7cd67f-rcrh6 Total loading time: 0 Render date: 2024-11-26T13:01:23.667Z Has data issue: false hasContentIssue false
  • English
  • Français

Stakeholder Happiness Enhancement: A Neo-Utilitarian Objective for the Modern Corporation

Published online by Cambridge University Press:  23 January 2015

Thomas M. Jones  and
Will Felps
Thomas M. Jones
Affiliation:
University of Washington
Will Felps
Affiliation:
University of New South Wales
Get access Rights & Permissions [Opens in a new window]

Abstract:

Employing utilitarian criteria, Jones and Felps, in “Shareholder Wealth Maximization and Social Welfare: A Utilitarian Critique” (Business Ethics Quarterly 23[2]: 207–38), examined the sequential logic leading from shareholder wealth maximization to maximal social welfare and uncovered several serious empirical and conceptual shortcomings. After rendering shareholder wealth maximization seriously compromised as an objective for corporate operations, they provided a set of criteria regarding what a replacement corporate objective would look like, but do not offer a specific alternative. In this article, we draw on neo-utilitarian thought to advance a refined version of normative stakeholder theory that we believe addresses a major remaining criticism of extant versions, their lack of specificity. More particularly, we provide a single-valued objective function for the corporation—stakeholder happiness enhancement—that would allow managers to make principled choices between/among policy options when stakeholder interests conflict.

Keywords

utilitarianismhappinessnormative stakeholder theoryshareholder wealth maximizationshareholder primacycorporate objective function
Type
Articles
Information
Business Ethics Quarterly , Volume 23 , Issue 3 , July 2013 , pp. 349 - 379
Copyright
Copyright © Society for Business Ethics 2013

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

REFERENCES

Aquinas, T. 1947. Summa theologica. New York: Benziger Brothers.Google Scholar
Aristotle, 2000. Nicomachean ethics. Cambridge: Cambridge University Press.CrossRefGoogle Scholar
Arnott, R., Greenwald, B., Kanbur, R., & Nalebuff, B. (Eds.). 2003. Economics for an imperfect world: Essays in honor of Joseph E. Stiglitz. Cambridge: MA: MIT Press.CrossRefGoogle Scholar
Bailey, J.W. 1997. Utilitarianism, institutions, and justice. New York: Oxford University Press.CrossRefGoogle Scholar
Baumolt, W.J., Panzar, J.C., & Willig, R.D. 1982. Contestable markets and the theory of industry structure. New York: Harcourt Brace Jovanovich.Google Scholar
Bentham, J. 1823/1907. Introduction to the principles of morals and legislation, second edition. Oxford: Clarendon Press.Google Scholar
Blanchflower, D.G., & Oswald, A.J. 1999. Well-being, insecurity and the decline of American job satisfaction. NBER Working Paper Series.Google Scholar
Blanchflower, D.G., & Oswald, A.J. 2011. International happiness: A new view on the measure of performance. Academy of Management Perspectives. 25(1): 6–22. http://dx.doi.org/10.5465/AMP.2011.59198445Google Scholar
Bosse, D.A., Phillips, R.A. & Harrison, J.S. 2009. Stakeholders, reciprocity, and firm performance. Strategic Management Journal, 30: 447–56. http://dx.doi.org/10.1002/smj.743CrossRefGoogle Scholar
Brickman, P., Coates, D. & Janoff-Bulman, R. 1978. Lottery winners and accident victims: Is happiness relative?. Journal of Personality and Social Psychology, 36: 917–27. http://dx.doi.org/10.1037/0022-3514.36.8.917CrossRefGoogle ScholarPubMed
Broome, J. 1991. Weighing goods. Oxford: Basil Blackwell.Google Scholar
Buss, D. 2000. The evolution of happiness. American Psychologist, 55: 15–23. http://dx.doi.org/10.1037/0003-066X.55.1.15CrossRefGoogle ScholarPubMed
Cascio, W.F., Young, C.E., & Morris, J.R. 1997. Financial consequences of employment-change decisions in major U.S. corporations. Academy of Management Journal, 40: 1175–89. http://dx.doi.org/10.2307/256931CrossRefGoogle Scholar
Chalos, P., & Chen, C.J.P. 2002. Employee downsizing strategies: Market reaction and post announcement financial performance. Journal of Business Finance & Accounting, 29: 847–70. http://dx.doi.org/10.1111/1468-5957.00453CrossRefGoogle Scholar
Child, J. 1972. Organizational structure, environment and performance: The role of strategic choice. Sociology, 6: 1–22. http://dx.doi.org/10.1177/003803857200600101CrossRefGoogle Scholar
Christensen, T.C., Barrett, L.F., Bliss-Moreau, E., Lebo, K., & Kaschub, C. 2003. A practical guide to experience-sampling procedures. Journal of Happiness Studies 4: 53–78. http://dx.doi.org/10.1023/A:1023609306024CrossRefGoogle Scholar
Clark, A.E. 2001. What really matters in a job? Hedonic measurement using quit data. Labour Economics, 8: 223–42. http://dx.doi.org/10.1016/S0927-5371(01)00031-8CrossRefGoogle Scholar
Clark, A.E., Georgellis, Y., & Sanfey, P. 2001. Scarring: The psychological impact of past un-employment. Economica, 68: 221–41. http://dx.doi.org/10.1111/1468-0335.00243CrossRefGoogle Scholar
Cohen, M.D., March, J.G., & Olsen, J.P. 1972. A garbage can model of organizational choice. Administrative Science Quarterly, 17: 1–25. http://dx.doi.org/10.2307/2392088CrossRefGoogle Scholar
Creed, P.A., & Macintyre, S.R. 2001. The relative effects of deprivation of the latent and manifest benefits of employment on the well-being of unemployed people. Journal of Occupational Health Psychology, 6: 324–31. http://dx.doi.org/10.1037/1076-8998.6.4.324CrossRefGoogle ScholarPubMed
Demsetz, H. 1975. Two systems of belief about monopoly. In Goldschmid, H., Mann, H.M., & Weston, J.E. (Eds.), Industrial concentration: The new learning: 164–84. Boston: Little, Brown.Google Scholar
Diener, E., & Biswas-Diener, R. 2008. Happiness: Unlocking the mysteries of psychological wealth. Malden, MA: Wiley-Blackwell. http://dx.doi.org/10.1093/acprof:oso/9780199732739.001.0001CrossRefGoogle Scholar
Diener, E., Kahneman, D., Tov, W., & Arora, R. 2010. Income’s association with judgments of life versus feelings. In Diener, E., Helliwell, J.F., & Kahneman, D. D. (Eds.), International differences in well-being. 3–15. New York: Oxford University Press.CrossRefGoogle Scholar
Diener, E., Lucas, R.E., & Scollon, C.N. 2006. Beyond the hedonic treadmill: Revising the adaptation theory of well-being. American Psychologist. 61(4): 305–14. http://dx.doi.org/10.1037/0003-066X.61.4.305CrossRefGoogle ScholarPubMed
Diener, E., & Seligman, M.E.P. 2004. Beyond money: Towards an economy of well-being. Psychological Science in the Public Interest, 5(1): 1–31. http://dx.doi.org/10.1111/j.0963-7214.2004.00501001.xCrossRefGoogle Scholar
Diener, E., & Seligman, M.E.P. 2006. Measure for measure: The case for a national well-being index. Science & Spirit, 17(2): 36–37. http://dx.doi.org/10.3200/SSPT.17.2.36-37CrossRefGoogle Scholar
Diener, E., Suh, E.M., Lucas, R.E., & Smith, H.E. 1999. Subjective well-being: Three decades of progress. Psychological Bulletin. 125 276–302. http://dx.doi.org/10.1037/0033-2909.125.2.276CrossRefGoogle Scholar
Do, A.M., Rupert, A.V., & Wolford, G. 2008. Evaluations of pleasurable experiences: The peak-end rule. Psychonomic Bulletin & Review. 15(1): 96–98. http://dx.doi.org/10.3758/PBR.15.1.96CrossRefGoogle ScholarPubMed
Donaldson, T., & Preston, L.E. 1995. The stakeholder theory of the corporation: Concepts, evidence, and implications. Academy of Management Review, 20 65–91.CrossRefGoogle Scholar
Erez, M. 1977. Feedback: A necessary condition for the goal setting-performance relation-ship. Journal of Applied Psychology, 62: 624–27. http://dx.doi.org/10.1037/0021-9010.62.5.624CrossRefGoogle Scholar
Evan, W.M., & Freeman, R.E. 1987. A stakeholder theory of the modern corporation: Kantian capitalism. In Beauchamp, T.L., & Bowie, N.E. (Eds.), Ethical theory and business: 97–106. Englewood Cliffs, NJ: Prentice Hall.Google Scholar
Freeman, R.E., Harrison, J., Wicks, A.C., Parmar, B., & de Colle, S. 2010. Stakeholder theory: The state of the art. Cambridge: Cambridge University Press. http://dx.doi.org/10.1017/CBO9780511815768CrossRefGoogle Scholar
Freeman, R.E., Wicks, A.C., & Parmar, B. 2004. Stakeholder theory and ‘The corporate objective revisited’ (a reply to Sundaram and Inkpen). Organization Science, 15: 364–69. http://dx.doi.org/10.1287/orsc.1040.0066CrossRefGoogle Scholar
Fried, Y. 1991. Meta-analytic comparison of the job diagnostic survey and job characteristics inventory as correlates of work satisfaction and performance. Journal of Applied Psychology, 76: 690–97. http://dx.doi.org/10.1037/0021-9010.76.5.690CrossRefGoogle Scholar
Friedman, M. 1970. The social responsibility of business is to increase its profits. New York Times Magazine (September 13).Google Scholar
Ghoshal, S., Bartlett, C.A., & Moran, P. 1999. A new manifesto for management. MIT Sloan Management Review, 40(3): 9–20.Google Scholar
Gilbert, D.T. 2006. Stumbling on happiness. New York: Random House.Google Scholar
Green, F. 2006. Demanding work: The paradox of job quality in the affluent economy. Princeton, NJ: Princeton University Press.Google Scholar
Greenblatt, S. 2012. The swerve: How the world became modern. New York: Norton.Google Scholar
Griffin, J. 1986. Well-being: Its meaning, measurement, and moral importance. Oxford: Clarendon Press.Google Scholar
Hardin, R. 1988. Morality within the limits of reason. Chicago: University of Chicago Press.Google Scholar
Hardin, R. 2003. Indeterminacy and society. Princeton, NJ: Princeton University Press.Google Scholar
Hare, R.M. 1981. Moral thinking: Its levels, method, and point. Oxford: Oxford University Press. http://dx.doi.org/10.1093/0198246609.001.0001CrossRefGoogle Scholar
Hart, H.L.A. 1955. Are there any natural rights?. Philosophical Review, 64(2): 175–91. http://dx.doi.org/10.2307/2182586CrossRefGoogle Scholar
Hayek, F.A. 1976. The mirage of social justice. Chicago: University of Chicago Press.Google Scholar
Headey, B. 2008. Life goals matter to happiness: A revision of set-point theory. Social In-dicators Research, 86(2): 213. http://dx.doi.org/10.1007/s11205-007-9138-yCrossRefGoogle Scholar
Helliwell, J.F. 2003. How’s life? Combining individual and national variables to explain subjective well-being. Economic Modeling, 20: 331–60. http://dx.doi.org/10.1016/S0264-9993(02)00057-3CrossRefGoogle Scholar
Hosseini, J., & Brenner, S.N. 1992. The stakeholder theory of the firm: A methodology to generate value matrix weight. Business Ethics Quarterly, 2: 99–119. http://dx.doi.org/10.2307/3857566CrossRefGoogle Scholar
Jensen, M.C. 2002. Value maximization, stakeholder theory and the corporate objective. Business Ethics Quarterly, 12: 235–56. http://dx.doi.org/10.2307/3857812CrossRefGoogle Scholar
Jones, T.M. 1995. Instrumental stakeholder theory: A synthesis of ethics and economics. Academy of Management Review, 20: 404–37.CrossRefGoogle Scholar
Jones, T.M., & Felps, W. 2013. Shareholder wealth maximization and social welfare: A utilitarian critique. Business Ethics Quarterly, 23(2): 207–38. http://dx.doi.org/10.5840/beq201323215CrossRefGoogle Scholar
Jones, T.M., Felps, W., & Bigley, G.A. 2007. Ethical theory and stakeholder-related decisions: The role of stakeholder culture. Academy of Management Review, 32: 137–55. http://dx.doi.org/10.5465/AMR.2007.23463924CrossRefGoogle Scholar
Jones, T.M., & Wicks, A.C. 1999. Convergent stakeholder theory. Academy of Management Review, 24: 206–22.CrossRefGoogle Scholar
Kagan, S. 1991. The limits of morality. Oxford: Clarendon Press. http://dx.doi.org/10.1093/0198239165.001.0001CrossRefGoogle Scholar
Kahneman, D., Diener, E., & Schwarz, N. 1999. Well-being: The foundations of hedonic psychology. New York: Russell Sage Foundation. Google Scholar
Kahneman, D., & Krueger, A.B. 2006. Developments in the measurement of subjective well-being. Journal of Economic Perspectives, 20(1): 3–24. http://dx.doi.org/10.1257/089533006776526030CrossRefGoogle Scholar
Kahneman, D., Krueger, A.B., Schkade, D.A., Schwarz, N., & Stone, A.A. 2004. A survey method for characterizing daily life experience: The day reconstruction method. Science, 306: 1776–80. http://dx.doi.org/10.1126/science.1103572CrossRefGoogle ScholarPubMed
Kahneman, D., Wakker, P.P., & Sarin, R. 1997. Back to Bentham? Explorations of experienced utility. Quarterly Journal of Economics, 112: 375–405. http://dx.doi.org/10.1162/003355397555235CrossRefGoogle Scholar
Kaldor, N. 1939. Welfare propositions in economics and interpersonal comparisons of utility. Economic Journal, 49(195): 549–52.http://dx.doi.org/10.2307/2224835CrossRefGoogle Scholar
Kaler, J. 2003. Differentiating stakeholder theories. Journal of Business Ethics, 46(1): 71–83. http://dx.doi.org/10.1023/A:1024794710899CrossRefGoogle Scholar
Kaplow, L., & Shavell, S. 2001. Fairness versus welfare. Harvard Law Review, 114(4): 961–1388. http://dx.doi.org/10.2307/1342642CrossRefGoogle Scholar
Latham, G.P. 2004. Motivate performance through goal-setting. In Locke, E.A. (Ed.), Handbook of principles of organizational behavior. (updated ed.), 107–19. Malden, MA: Blackwell.Google Scholar
Layard, R. 2005. Happiness: Lessons from a new science. London: Allen Lane.Google Scholar
Ledolter, J., & Swersey, A.J. 2007. Testing 1-2-3: Experimental design with applications in marketing and service operations. Palo Alto, CA: Stanford University Press.CrossRefGoogle Scholar
Levinthal, D., & March, J.G. 1993. The myopia of learning. Strategic Management Journal, 14: 95–112. http://dx.doi.org/10.1002/smj.4250141009CrossRefGoogle Scholar
Lipsey, R.G., & Lancaster, K. 1956-1957. The general theory of second best. Review of Economic Studies, 24(1): 11–32. http://dx.doi.org/10.2307/2296233CrossRefGoogle Scholar
Love, E., & Nohria, N. 2005. Reducing slack: The performance consequences of downsizing by large industrial firms, 1977-1993. Strategic Management Journal, 26: 1087–1108. http://dx.doi.org/10.1002/smj.487CrossRefGoogle Scholar
Lucas, R.E. 2007. Adaptation and the set-point model of subjective well-being: Does happiness change after major life events?. Directions in Psychological Science, 16(2): 75–79. http://dx.doi.org/10.1111/j.1467-8721.2007.00479.xCrossRefGoogle Scholar
Lucas, R.E., Clark, A.E., Georgellis, Y., & Diener, E. 2003. Reexamining adaptation and the set point model of happiness: Reactions to changes in marital status. Journal of Personality and Social Psychology, 84(3): 527–39. http://dx.doi.org/10.1037/0022-3514.84.3.527CrossRefGoogle ScholarPubMed
Lucas, R.E., Clark, A.E., Georgellis, Y., & Diener, E. 2004. Unemployment alters the set-point for life satisfaction. Psychological Science, 15: 8–13. http://dx.doi.org/10.1111/j.0963-7214.2004.01501002.xCrossRefGoogle ScholarPubMed
Mancini, A., Bonnano, G.A., & Clark, A.E. 2011. Stepping off the hedonic treadmill: Individual differences in response to major life events. Journal of Individual Differences, 32(3): 144–52. http://dx.doi.org/10.1027/1614-0001/a000047CrossRefGoogle Scholar
Marcouxi, A.M. 2000. Balancing act. In DesJardins, J.R., & McCall, J.J. (Eds.), Contemporary issues in business ethics, 92–98. Stamford, CT: Wadsworth/Thomson Learning.Google Scholar
Marshall, A. 1920. Principles of economics: An introductory volume. London: Macmillan.Google Scholar
Mill, J.S. 1863. Utilitarianism. London: Parker, Son, and Bourn.Google Scholar
Miron-Shatz, T., Stone, A., & Kahneman, D. 2009. Memories of yesterday's emotions: Does the valence of experience affect the memory-experience gap?. Emotion, 9(6): 885–91. http://dx.doi.org/10.1037/a0017823CrossRefGoogle ScholarPubMed
Mitchell, T.R., Thompson, L., Peterson, E. & Cronk, R. 1997. Temporal adjustments in the evaluation of events: The “rosy view.”. Journal of Experimental Social Psychology, 33: 421–48. http://dx.doi.org/10.1006/jesp.1997.1333CrossRefGoogle ScholarPubMed
Ng, Y.K. 1997. A case for happiness, cardinalism, and interpersonal comparability. Economic Journal, 107: 1848–58. http://dx.doi.org/10.1111/j.1468-0297.1997.tb00087.xCrossRefGoogle Scholar
Nussbaum, M.C. 2000. Women and human development: The capabilities approach. Cambridge: Cambridge University Press. http://dx.doi.org/10.1017/CBO9780511841286CrossRefGoogle Scholar
Offer, A. 2006. The challenge of affluence: Self-control and well-being in the United States and Britian since 1950. Oxford: Oxford University Press.Google Scholar
Oliver, R.L. 2010. Satisfaction: A behavioral perspective on the consumer. (2nd ed.). Armonk, N.Y.: M. E. Sharpe.Google Scholar
Orlitzky, M., & Frenkel, S. 2005. Alternative pathways to high-performance workplaces. International Journal of Human Resource Management, 16: 1325–48. http://dx.doi.org/10.1080/09585190500220176CrossRefGoogle Scholar
Parfit, D. 1998. Reasons and persons. Oxford: Oxford University Press.Google Scholar
Pfeffer, J. 1998. The human equation: Building profits by putting people first. Boston: Harvard Business School Press.Google Scholar
Pfeffer, J. 2010. Building sustainable organizations: The human factor. Academy of Management Perspectives, 24: 34–45. http://dx.doi.org/10.5465/AMP.2010.50304415Google Scholar
Posner, R.A. 1979. Utilitarianism, economics, and legal theory. Journal of Legal Studies, 8(1): 103–40. http://dx.doi.org/10.1086/467603CrossRefGoogle Scholar
Post, J.E., Preston, L.E., & Sachs, S. 2002. Redefining the corporation: Stakeholder management and organizational wealth. Stanford, CA: Stanford University Press.CrossRefGoogle Scholar
Phillips, R. 1997. Stakeholder theory and a principle of fairness. Business Ethics Quarterly, 7: 51–66. http://dx.doi.org/10.2307/3857232CrossRefGoogle Scholar
Phillips, R. 2003. Stakeholder theory and organizational ethics. San Francisco: Berrett-Koehler.Google Scholar
Phillips, R., Freeman, R.E., & Wicks, A.C. 2003. What stakeholder theory is not. Business Ethics Quarterly, 13: 479–502. http://dx.doi.org/10.5840/beq200313434CrossRefGoogle Scholar
Rawls, J. 1999 (1971). A theory of justice. New York: Oxford University Press.CrossRefGoogle Scholar
Reiser, D.B. 2011. Benefit corporations: A sustainable form of organization?. Wake Forest Law Review, 46: 591–625.Google Scholar
Ryan, R.M., & Deci, E.L. 2001. On happiness and human potentials: A review of research on hedonic and eudaimonic well-being. Annual Review of Psychology, 52: 141–66. http://dx.doi.org/10.1146/annurev.psych.52.1.141CrossRefGoogle ScholarPubMed
Samuelson, P.A. 1948. Consumption theory in terms of revealed preference. Econometrica, 15: 243–53.Google Scholar
Scanlon, T. 1993. Value, desire, and quality of life. In Nussbaum, M.C., & Sen, A. (Eds.), The quality of life. Oxford: Clarendon Press. http://dx.doi.org/10.1093/0198287976.003.0015Google Scholar
Sen, A. 1985. Commodities and capabilities. Amsterdam: North-Holland.Google Scholar
Sidgwick, H. 1879. The establishment of ethical first principles. Mind, 4(13): 106–11. http://dx.doi.org/10.1093/mind/os-4.13.106CrossRefGoogle Scholar
Simmons, A.J. 1979. Moral principles and political obligations. Princeton, NJ: Princeton University PressGoogle Scholar
Singer, P.A.D. 1981. The expanding circle: Ethics and sociobiology. New York: Farrar, Straus and GirouxGoogle Scholar
Singer, P.A.D. 2011. Practical Ethics (3rd ed.). New York: Cambridge University Press. http://dx.doi.org/10.1017/CBO9780511975950CrossRefGoogle Scholar
Steptoe, A., Wardle, J., & Marmot, M. 2005. Positive affect and health-related neuroendocrine, cardiovascular, and inflammatory processes. PNAS, 107: 9985–90.Google Scholar
Stout, L. 2012. The shareholder value myth. San Francisco: Berrett-Koehler Publishers.Google Scholar
Sundaram, A.K., & Inkpen, A.C. 2004. The corporate objective revisited. Organization Science, 15: 350–63. http://dx.doi.org/10.1287/orsc.1040.0068CrossRefGoogle Scholar
Swedloff, R. 2013. The trouble with happiness (unpublished draft dated March 22, 2013). Available at papers.ssrn.com/sol3/papers.cfm?abstract_id=2237598; downloaded on April 10, 2013. Cited by permission.Google Scholar
Walsh, J.P. 2004. Introduction to the “Corporate Objective Revisited” exchange. Organization Science, 15(3): 349. http://dx.doi.org/10.1287/orsc.1040.0086CrossRefGoogle Scholar
Walsh, J.P. 2005. Book review essay: Taking stock of stakeholder management. Academy of Management Review, 30: 426–52. http://dx.doi.org/10.5465/AMR.2005.16387898CrossRefGoogle Scholar
Walsh, J.P., Weber, K., & Margolis, J.D. 2003. Social issues and management: Our lost cause found. Journal of Management, 29(6): 859–81.CrossRefGoogle Scholar
Warr, P. 2007. Work, happiness and unhappiness. New York: Lawrence Erlbaum.Google Scholar
Wicks, A.C., Gilbert, D.R., & Freeman, R.E. 1994. A feminist reinterpretation of the stakeholder concept. Business Ethics Quarterly, 4: 475–98. http://dx.doi.org/10.2307/3857345CrossRefGoogle Scholar
Wright, T.A., & Cropanzano, R. 2004. The role of psychological well-being in job performance: A fresh look at an age-old quest. Organizational Dynamics, 33: 338–51. http://dx.doi.org/10.1016/j.orgdyn.2004.09.002CrossRefGoogle Scholar