Limits to Stakeholder Influence
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Limits to Stakeholder Influence

Why the Business Case Won't Save the World

Michael L. Barnett

In business, does it pay to be good? Drawing from two decades of published conceptual and empirical scholarship, this book outlines the mechanisms of the business case for corporate social responsibility and demonstrates the conditions that cause good corporate acts to succeed, or fail, in turning a profit. Central to the explanation is the role of stakeholders, who are portrayed as agents who can turn corporate “good into gold” but lack the capacity to do so consistently. This book takes a critical perspective, noting significant limits on the ability of stakeholders to reward good corporate behavior and rein in bad corporate acts. It concludes with several ways that scholars can improve this important and popular research topic.
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Chapter 4: STAKEHOLDER INFLUENCE CAPACITY AND THE VARIABILITY OF FINANCIAL RETURNS TO CORPORATE SOCIAL RESPONSIBILTY

Michael L. Barnett

Abstract

Should public corporations serve as agents of progressive social change? For example, should Levi Strauss fund a campaign to end racism? Should Ford contribute to finding a cure for AIDS? If so, how much should these corporations contribute to these social causes? Because there are ethical considerations inherent in answering these questions, reasonable people can and do disagree. Some argue that because corporations draw resources from society, they have a moral obligation to give back to society, whereas others counter that corporations are inefficient and inappropriate agents of social change, and any voluntary contributions to social causes are misappropriations of shareholders’ funds (Friedman, 1970).

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