Stakeholder Theory and Representative Anthony Weiner

It is fascinating to read the commentary vis-à-vis Representative Anthony Weiner (the member of Congress with the texting and tweeting problems, for the few souls in Kazakhstan who may not have picked up on this ongoing saga). The commentary has a running thread: “This is a matter between Representative Weiner and his constituents in his congressional district.” Before the contact-with-a-17-year-old issue and the photos from the House gym emerged, Mr. Weiner’s voters were running 51% for his remaining in Congress.

How fascinating that the “only voters count” commentary comes from the same folks who are proponents of stakeholder theory. R. Edward Freeman, credited as the scholar who brought the theory to the forefront of academic discussion, holds that corporations should not just limit their ethical decision processes to consideration of how their shareholders (i.e., those who can vote) are affected. Stakeholder theory would have corporations consider how corporate decisions impact others: employees, members of the community, suppliers, and creditors. For example, making a decision to outsource production to factories in countries with cheaper labor benefits shareholders but costs current employees, as stakeholders, their jobs, and does not consider the impact of such factories on the employees in other countries and the resulting effects on their cultures and societal structures. In other words, stakeholder theory demands consideration of the interests of non-voting parties. Stakeholder theory holds that such expanded consideration will benefit both the corporation and society because the decisions will consider long-term impact, result in good community relations, and improve analysis of particular questions.

However, when it comes to political scandals, we dismiss the expanded analysis stakeholder theory provides and return to voter determination only. The impact of Mr. Weiner’s conduct and his subsequent denials on others, on the credibility of members of Congress, and on the fabric of society fall by the wayside as voters are the limit of accountability. Even the just-plain-creepy aspects of the sordid conduct are dismissed in favor of a voters-only policy.

If we were to follow stakeholder theory consistently, we would be required to ask, “Who is affected by Mr. Weiner’s decision to engage in the conduct as well as his decision to remain in his seat?” Well, beyond those all-knowing voters, we all were. His conduct left him vulnerable to pressure, threats, and demands. A member of Congress who wants to keep embarrassing conduct private is an elected official who is corruptible and whose judgment is impaired. We are all affected by Mr. Weiner’s indiscretions because it left him subject to blackmail and us stakeholders at risk.

The analyses of what Mr. Weiner should do are very limited: only voters in his district should have a say in finding the answer to, “Should he go or should he stay?” Sounds like free-market-Milton Friedman theory to the Barometer: Shareholders who have an interest in the corporation have a say in what the corporation and its managers do. All you others, well, it’s none of your business, literally and figuratively. Funny how the inconsistencies in stakeholder theory emerge when non-corporate ethical issues arise.

About mmjdiary

Professor Marianne Jennings is an emeritus professor of legal and ethical studies from the W.P. Carey School of Business at Arizona State University, retiring in 2011 after 35 years of teaching undergraduate and graduate courses in ethics and the legal environment of business. During her tenure at ASU, she served as director of the Joan and David Lincoln Center for Applied Ethics from 1995-1999. In 2006, she was appointed faculty director for the W.P. Carey Executive MBA Program. She has done consulting work for businesses and professional groups including AICPA, Boeing, Dial Corporation, Edward Jones, Mattel, Motorola, CFA Institute, Southern California Edison, the Institute of Internal Auditors, AIMR, DuPont, AES, Blue Cross Blue Shield, Motorola, Hy-Vee Foods, IBM, Bell Helicopter, Amgen, Raytheon, and VIAD. The sixth edition of her textbook, Case Studies in Business Ethics, was published in February 2011. The ninth edition of her textbook, Business: lts Legal, Ethical and Global Environment was published in January 2011. The 23rd edition of her book, Business Law: Principles and Cases, will be published in January 2013. The tenth edition of her book, Real Estate Law, will also be published in January 2013. Her book, A Business Tale: A Story of Ethics, Choices, Success, and a Very Large Rabbit, a fable about business ethics, was chosen by Library Journal in 2004 as its business book of the year. A Business Tale was also a finalist for two other literary awards for 2004. In 2000 her book on corporate governance was published by the New York Times MBA Pocket Series. Her book on long-term success, Building a Business Through Good Times and Bad: Lessons from Fifteen Companies, Each With a Century of Dividends, was published in October 2002 and has been used by Booz, Allen, Hamilton for its work on business longevity. Her latest book, The Seven Signs of Ethical Collapse was published by St. Martin’s Press in July 2006 and has been a finalist for two book awards. Her weekly columns are syndicated around the country, and her work has appeared in the Wall Street Journal, the Chicago Tribune, the New York Times, Washington Post, and the Reader's Digest. A collection of her essays, Nobody Fixes Real Carrot Sticks Anymore, first published in 1994 is still being published. She has been a commentator on business issues on All Things Considered for National Public Radio. She has served on four boards of directors, including Arizona Public Service (1987-2000), Zealous Capital Corporation, and the Center for Children with Chronic Illness and Disability at the University of Minnesota. She was appointed to the board of advisors for the Institute of Nuclear Power Operators in 2004 and served on the board of trustees for Think Arizona, a public policy think tank. She has appeared on CNBC, CBS This Morning, the Today Show, and CBS Evening News. In 2010 she was named one of the Top 100 Thought Leaders in Business Ethics by Trust Across America. Her books have been translated into four different languages. She received the British Emerald award for authoring one of their top 50 articles in management publications, chosen from over 15,000 articles. Personal: Married since 1976 to Terry H. Jennings, Maricopa County Attorney’s Office Deputy County Attorney; five children: Sarah, Sam, and John, and the late Claire and Hannah Jennings.
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