Dignity at the Level of the Firm: Beyond the Stakeholder Approach
Ricardo Aguado, Jose Luis Retolaza, and Leire Alcaniz
Introduction: The Role of the Firm under Discussion
The role of the firm in today’s society is currently under discussion (Dierksmeier 2011). After the financial crisis that took place in 2008, many scholars proposed a new position for the firm inside society; one in which the generation of value for all stakeholders and the environmental responsibility were basic points (Porter and Kramer 2011). Some authors have pointed out a progressive loss of legitimacy of the firm inside society, due to the fact that the objectives of the firm and those of society differ (Pirson 2014). This gap is still growing. While the remuneration of managers is still connected to wealth creation for shareholders, society is increasingly asking firms not only for jobs, quality products and services, and investor wealth, but also for a positive engagement in public health and community development activities (Donaldson and Walsh
R. Aguado (h) • J.L. Retolaza • L. Alcaniz
Deusto Business School, University of Deusto, Bilbao, Spain
© The Editor(s) (if applicable) and The Author(s) 2017 81
M. Kostera, M. Pirson (eds.), Dignity and the Organization,
2015). However, the dominant economic anthropology (the neoclassical theory of the firm) still proposes that the objective of the firm is shortterm profit maximization (Jensen 2002). This maximization is thought to be the only possible rational behavior. Such an objective means also that there is no room for moral discussions about the aim of the firm, because there is only one rational path to follow: profit maximization. Nevertheless, the aforementioned loss of legitimacy of the firm is putting this neoclassical theory of the firm under strain, and even some mainstream economists are asking for corporations that can combine wealth creation for shareholders with economic prosperity, environmental care, and social wellbeing (Porter and Kramer 2006).
On the other hand, other academics have used the stakeholder approach to direct the objectives of the firm not only to maximize shareholders’ interest, but also the interests of all economic actors that interact inside or with the firm. Some specific authors, based on a humanistic vision of the firm, have highlighted the fact that human dignity and social wellbeing should be placed at the very center of economic activity and should be at least part of the final outcome of firms’ activity (Pirson 2011, 2014). On the one hand, this statement opens a new path for firms, one based on humanistic values, dignity, and social wellbeing. On the other hand, it introduces practical difficulties regarding the management of the firm and the decision making process. Some academics and institutions have tried to guide the behavior of firms in their transition towards a behavior based on dignity and social wellbeing: the UN Global Compact, the triple bottom line approach, and bene- ficiation and shared value (Voegtlin and Pless 2014). Under the humanistic paradigm, firms and persons making decisions in firms are moral actors, able to choose between different paths that will generate different economic and social outcomes (Kimakowitz et al. 2011). Nevertheless, the interests of stakeholders may have different levels of legitimacy, and their impacts on human dignity may be of different nature (Mele 2008).
The main objective of this chapter is to present a model that could enable firms to deal with the issue of morality (directed to the preservation and development of human dignity) that has been systematically neglected by the dominant theory of the firm (Dierksmeier 2015). The consideration of human dignity as a key element inside the way firms develop their strategy, operations and day-to-day decision-making may help to align social interests with firms’ behavior (Aguado et al. 2015; Pirson and Dierksmeier 2014). In order to do so, we will re-examine integrative social contracts theory (ISCT) and place the relationship between society and the firm as a macrosocial contract (in line with the tradition of Plato, Hobbes, Locke, Rousseau, and Rawls) bound to moral conditions (Donaldson and Dunfee 1994). This macrosocial contract, in order to be moral, will have to accomplish its goals using the so-called hypernorms. Hypernorms protect universal goods, such as human dignity and social wellbeing. The sources of hypernorms may be identified with the universal declaration of human rights and other UN initiatives (Global Compact) and broad humanistic values that are presented in different spiritual traditions and schools of philosophy at the global level. At the same time, firms would have some space to adapt those principles to their own culture and institutions through the development of micronorms, aligned with hypernorms and the macrosocial contract. Maslow’s motivational theory is presented as a way to introduce the broad concept of human dignity at the level of the firm, enabling the shift from hypernorms to micronorms and thus facilitating the measurement of human dignity at the micro level.
In short, the paper goes beyond the stakeholder approach and proposes the ISCT as a valid approach to integrate the discussion about human dignity at the level of the firm in an attempt to reconnect firms’ objectives with the interest of society. After this first introductory section, we devote a second section to the exploration of the notion of human dignity. The third section describes the Integrative Social Contracts Theory (ISCT) and the key role that human dignity can play in it. The fourth section presents Maslow’s motivational theory and its links with human dignity. The use of this theory facilitates the measurement of how firms make progress in their development of human dignity and allows them to move from general hypernorms to specific micronorms and operational indicators. The last section summarizes the main findings of the chapter.