Stakeholder Theory, Society and SocialCohesion

____________________________________________________________

François LÉPINEUXProfessor

ESC Rennes School of Business, FranceE-mail: francois.lepineux @esc-rennes.fr

Paper published in Corporate Governance: The International Journal of Business in Society

Vol.5, n°2, 2005, pp. 99-110.

Also published as INSEAD Working Paper 2004/42/CMER.

Abstract

Stakeholder theory is a “weak” theory, which suffersfrom a number of flaws. This article is based on theintuition that many of these problems are linkedtogether, and that they are fundamentally due to thefact that stakeholder theory fails to appreciate theplace of civil society as a stakeholder. It startswith an examination of the confusing status ofsociety in stakeholder theory, and suggests thatcivil society should be on top of the stakeholderlist. It then underlines the emergence of a globalsociety, distinct from national societies. Anextended classification system is presented, whichcomprises a binary categorization, an intermediate

1

taxonomy, and a developed typology; this system isillustrated in the form of a mapping. The articlethen addresses the issue of the theory’s normativeunderpinnings: the concept of social cohesion isproposed as an alternative justification. The meaningof this concept is specified, and its relevance as anormative foundation is justified. Eventually, thisreinterpretation of stakeholder theory, whichemphasizes the importance of civil society and socialcohesion, provides some rationales for the connectionof its empirical and normative streams - thusrendering it more consistent and more robust.

2

Introduction

Stakeholder theory is affected by numerousshortcomings and imperfections. Among these, thefollowing may be mentioned: the definition of itsobject is controversial; accordingly, the spectrum ofstakeholders and their classification are variable;the question of the balancing of interests betweenthem is a problematic one; the theory lacks a solidnormative foundation; and its normative and empiricalstreams are, to a large extent, separate. Therefore,some authors doubt that stakeholder theory really hasthe status of a theory; it has been argued that itwas merely a research tradition (Treviño and Weaver,1999).

Stakeholder theory is considered in this article asa genuine theory - though a perfectible one, whichmay be labeled a “weak” theory. Besides, it ishypothesized that several flaws of this theory stemfrom the fact that it misjudges the prominence ofcivil society among all the stakeholders; areexamination of the place of society is thus aprerequisite for the strengthening of the theory.

1.The confusing status of society in stakeholdertheory

In his landmark book published twenty years ago,Freeman (1984) recounted the origins of thestakeholder concept, which was used for the firsttime at the Stanford Research Institute in 1963;stakeholders were first defined as:

3

“those groups without whose support the organization wouldcease to exist”.

The SRI researchers included shareowners,employees, customers, suppliers, lenders and societyin the list of stakeholders. Their argument was thatin order to survive, a company needs that itsstakeholder groups give their support to itscorporate objectives; and in order to formulatesuitable objectives, executives need to take theconcerns of these stakeholder groups into account.

Freeman then proposed a broader, now classicdefinition of the stakeholder concept (1984, p.46):

“any group or individual who can affect or is affected by theachievement of the organization’s objectives”.

Twenty years after this founding contribution, thestakeholder literature is now well developed andquite voluminous, fraught with many attempts todefine the stakeholder concept and to lay down thestakeholder list. One of the salient features of thisfield of research lies in the extraordinary diversityof the viewpoints that have been expressed, andaccordingly in the narrowness of the areas ofagreement among academics. The level of theoreticalintegration is low, not only between the three sides- normative, descriptive/empirical and instrumental -of the theory, but even within each of them. Forinstance, there is no agreement over the frontiers ofthe stakeholder set, and the spectrum is variableaccording to the authors, as well as theclassification.

4

It is not surprising, thus, to notice that theplace of civil society in stakeholder theory isunclear, ill defined. Depending on the varioustheorists, the status given to society is imprecise,indeed non-existent. For instance Clarkson (1995),presenting the results of an extended empiricalresearch program based on field studies, establisheda distinction between primary stakeholders, such asowners, employees, customers, suppliers, and the“public stakeholder group” composed of governments andcommunities; and secondary stakeholders, namely themedia and a wide range of interest groups. Normativeapproaches, although they insist on firms’responsibility to act morally towards social groupsand communities, are not much more satisfying withrespect to the status of society: for example Carroll(1991) includes “the public at large” within the stakeholderlist – but the public at large is a vague expression:does it mean nationwide society or something else?

In the stakeholder literature, community is moreoften quoted than society as one of the numerousgroups to which a company is supposed to actresponsibly: however the meaning of this notion ishardly more clear than that of society. This term isgenerally used to indicate the local communitysurrounding a company’s location, in other words itsgeographical neighborhood. But some immediateproblems arise with this definition: what is therange of this so-called community? Does the termrefer to the area around the firm’s headquarters, orto all the areas around all its facilities? In thecase of a multinational company, does it apply onlyin its home country or also in all the othercountries where it operates? In their study ofcorporate community relations, Waddock and Boyle

5

(1995) analyzed the difficulties inherent in thechange from managing relations with a singlecommunity - namely the headquarters community - tomanaging relations with multiple communities in theglobal business environment; the relevant expressionthen would be “communities as stakeholders”, insteadof “community” in the singular.

Other researchers (Tichy, Mc Gill and St. Clair,1997; Altman, 2000) confirm that community issues arebecoming more complex for companies - and executives- confronted with them. However, the meaning ofcommunity in the stakeholder literature is still notfixed, all the more as this term may be used as asynonym for society in English (and in some otherlanguages as well). In their review of existingdefinitions of community groups, Burton and Dunn(1996/1) pointed out that it was often associatedwith other notions, such as “general public” or“natural environment”. It may also broaden out to thewhole world, thus resulting in a complete muddle.

It would be too long to make an exhaustiveinventory of all the existing definitions andapproaches of community and society that may be foundin this profuse literature. Suffice it to say that anoverview of stakeholder theory gives the impressionthat these concepts are referred to in a confusingway, and that civil society appears as an optionalstakeholder. All the typologies or categorizationschemes which have been advanced could themselves besplit into two groups: those that include society (ora related term), and those that ignore it. In theirreview of stakeholder definitions, Mitchell, Agle andWood (1997) highlighted the existence of two types ofnarrow views: those which identify stakeholders in

6

terms of their moral claims, and those which envisionthem according to their relevance to the firm’seconomic interests. While the former generally permitthe inclusion of community and society in thestakeholder list, the latter generally don’t.Alternative binary classifications of stakeholdersinclude the direct / indirect, contractor / non-contractor and voluntary relationship / involuntaryrelationship splits, among others, but the treatmentof civil society in these reflections remains ratheruncertain.

This leads to the conclusion that stakeholdertheory fails to recognize the importance of civilsociety and grants it a subordinate, incidentalplace. But without society, stakeholder theory isincomplete. Civil society is not an optionalstakeholder. It is a fundamental stakeholder, indeedthe most important of all. Besides, someclarification is needed, in order to differentiatebetween the level of communities (businesses’neighborhoods), the level of nationwide civilsociety, and the level of global society.

Civil society should be on top of the stakeholderlist

Civil society is a stakeholder per se, distinct fromcommunities and other specific groups. The only wayto get out of the lexical entanglement is topostulate that communities are local, neighboringsocial groups, within a limited geographic areaaround a given facility or establishment; in thatperspective, other uses of the term are deemedinappropriate. It then becomes possible to define

7

civil society as nationwide society, namely thenation itself, which is the primordial meaning ofthis term. And this distinction between communitiesand society echoes the classic, sociologicalseparation between two levels of sociability: whilegeneric sociability expresses life in society assuch, specific sociability permits the constitutionof limited social groups.

It may certainly be argued that civil societyrepresents a number of “stakes” with respect tobusinesses; its demands or concerns are not the sameas those held by other particular categories ofstakeholders, since they are of a more generalnature. Public expectations regarding firms’responsibility are rising, and companies must nowconfront generalized societal pressures with respectto a number of issues. For instance, environmentalawareness has been growing in developed countries forthe last three decades; beyond the fact thatenvironmental issues are consistently brought to thefore by specialized activist groups or NGOs, whichconstitute another category of stakeholders, the willto safeguard the planet is now widespread throughoutcivil society.

Another essential concern in developed countries isthe rise of social inequalities, which have advancedrelentlessly since the 1980s. Most OECD countrieshave experienced a significant rise in incomedisparities during the last twenty years. In theUnited States, despite the low rate of unemployment,about 40 million people live below the threshold ofpoverty; a new social group has appeared, the so-called “working poor” who have several jobs but canhardly make a living out of it. In the European

8

context, the social divide is nothing less thanstriking: the European Union counts 50 to 70 millionpoor according to various estimations, and thepoverty phenomenon has become structural. The numberof people living with less than half of the mediumincome has tripled in the United Kingdom in less thantwenty years, and represents now nearly a quarter ofthe population, while during the same period, thehigher incomes have doubled. Similarly, almost halfof the French population is exposed to a risk ofprofessional precariousness, and 5 million peopleundergo unemployment or social exclusion.

During the first three decades after World War Two,a consensus has existed over the sense of economicgrowth, which resulted in an increase of publicfacilities, material comfort, individual and generalwelfare. But nowadays, this sense has vanished: theeconomic system produces more and more inequalitiesbetween those who are included and those who areexcluded, those who benefit from it and those whodon’t. The salaries and other remunerations (stockoptions, etc.) of top executives in largemultinational companies have reached astoundinglevels, whereas workers and employees with aprecarious status are more and more numerous. Growthbeneficial to all has been replaced by anincreasingly unequal sharing out of wealth, socialpositions and means of access to citizenship. How canthe pursuit of economic development be justified ifit leads to a society which rejects in large numbersthose who don’t have the required skills to be partof it?

Businesses are now confronted with this questionwhich stems from the whole civil society. Companies

9

are the main economic and social actors, and theiraggregate activities have a tremendous impact onnational societies. Being social institutions, theyfulfill essential functions: they provide jobs to thegreatest part of the labor force; they represent adecisive factor for the creation and the preservationof social ties; their innovations, their strategicchoices influence the fate of societies in which theyoperate. Consequently, they bear a part of theresponsibility for the rise of social inequalitiesdescribed above; to a large extent indeed, theseinequalities can be attributed to the development ofan employment model based on more and moreflexibility, which continuously adds toprecariousness. For that reason, and also becauselarge companies have a great social power, civilsociety expects them to act responsibly in thisregard, and to help reduce the social divide. Socialresponsibility follows from social power: althoughthis argument has already been put forward 30 yearsago by Davis (1975) or Bowie (1979), it has gainedspecial relevance in the current context ofglobalization. From a normative standpoint, it is notpossible for stakeholder theory to ignore thephenomena of social inequalities, poverty or socialexclusion, and to fail to recognize the expectationsof civil society in this regard. Hence, civil societydeserves a prominent place in the stakeholder list.

Besides, other stakeholder groups bear societalstakes as well, which means that beyond theirdifferential claims, they also put forward a visionof how companies should act towards society at large.In other words, stakeholder groups such as employees,owners, customers, NGOs, etc., are expectingcompanies to take into account not only their own

10

claims, but also those of the whole society. In arecent article, Waddock, Bodwell and Graves (2002)advocate that businesses are experiencing strongpressures from several stakeholder groups foraccepting greater social responsibility, and thatmany multinational corporations respond to thesepressures by developing total responsibilitymanagement systems. For instance, employees arebecoming more sensitive to the social responsivenessof companies, and their decisions about where towork, as well as their motivations, rely in part onfirms’ ability to acknowledge and manage theirresponsibility in this regard. Similarly, a growingnumber of consumers assert that they are ready to paymore for products made in a socially and ecologicallyresponsible manner; they are willing to give sense totheir consuming practices, and include ethical valueadded in their decision criteria. Besides, as far asinvestors are concerned, the socially responsibleinvestment trend is gathering momentum: the financialcommunity is increasingly aware of the potentialbenefits - or at least of the absence of extra risk -inherent in socially screened equities, andshareholder activists push companies to adopt moreresponsible practices.

All these elements are convergent and suggest thatminds are changing: stakeholder groups and civilsociety exert intense pressures on businesses for agreater integration of the societal dimension -especially the problem of social exclusion - in theirdecision processes. In Europe and the United States,this evolution has come to the point where thesocietal concern is spreading throughout the wholeeconomic system: investors, consumers, employees, andall the other types of economic actors are becoming

11

increasingly aware of this dimension. Publicperception of the role of businesses in society haschanged: more and more people understand that theyare at the same time employees, consumers andcitizens, which results in a search for coherencebetween these three roles. The new emerging valuesare placing societal issues higher on the businessagenda. Therefore, civil society is a prominentstakeholder not only in itself, but also because itis in the background of other stakeholders’ claims.

The emergence of global society

Furthermore, it is necessary to differentiatebetween national societies and global society. Theglobalization phenomenon currently in progress may beconsidered from several standpoints, the most usualbeing the historical, economic, financial, andtechnological ones; yet the sociological standpointis interesting too, since this process leads to theconstitution of global civic actors.

Of course this global society, which is nowemerging, does not express itself throughinstitutional devices such as governments, and thereis no such thing yet as a parliament for all thecitizens of the world (even though this could happenin the future); but transnational networks andorganizations are developing. Two significantexamples can be mentioned to exemplify this trendtowards the structuring of global actors: the GlobalCompact launched by Kofi Annan, and the alter-globalization movement. These two examples are quitedifferent by nature, but in both cases, economic orsocial organizations from all over the planet have

12

freely decided to join a common, self-organizedinitiative, to share their experiences and to unitetheir efforts. Many other networks or movements couldbe quoted, be they willing to change the course ofevents or not, which plead for the constitution of aworldwide civil society.

Besides, the already noted problem of socialinequalities can be transposed on a global scale:today the whole world is affected by a social dividebetween developed countries (OECD members and someothers) and developing countries, between the Northand the South. With a few exceptions, the gap iswidening between rich nations and poor nations, andwithin each nation, be it rich or poor, between thesmall minority of those who hoard power and wealthand the large minority of the have-nots: this is oneof the major issues entailed by the globalizationprocess, and represents one of the main stakes of thecoming decades. What is currently being establishedis a new kind of apartheid on a worldwide scale. Thisglobal apartheid does not follow from the existenceof inequalities among countries and individuals,since these have always existed and are to someextent unavoidable; it follows from the almostincredible, historically unprecedented magnitude ofthese inequalities, from their relentless growth, andfrom the trapping effect that they induce for all theoutsiders.

13

If it is true that companies bear a part of theresponsibility for the deepening of socialinequalities on a nationwide scale in countries wherethey operate, then it doesn’t seem unreasonable toargue that multinational companies (MNCs) are atleast partly responsible for the emergence of thisglobal apartheid. MNCs’ activities affect a greatnumber of countries: those of the headquarters andresearch centers, those where the production takesplace, those where the goods or services aremarketed, those where subcontractors are located…When these large, indeed global companies decide torelocate their plants, facilities or offices incountries with lower labor costs, they necessarilyimpact on society in both the home and hostcountries; insofar as many MNCs act likewise and movefor example to Mexico or China, the aggregate impactis high. But in their decision process, a largenumber of MNCs tend to target the countries thatpresent the weakest social laws and requirements; asa result, this kind of competition is pulling allsocial legislations down, thereby worsening thesituation of the poorest and aggravating the socialdivide. This is not the least concern of the emergingglobal civic actors, and that is the reason whyglobal society is an important stakeholder for MNCs.

An extended classification system

Thus, stakeholder theory ought to be extended, andit seems appropriate to suggest a new, systematicclassification of stakeholders, which encompassesglobal society and distinguishes it from nationalsocieties. This classification system is itself

14

declined in three ways: a binary categorization, anintermediate taxonomy, and a developed typology.

As regards the stage of binary categorization, theseparation stated earlier between stakeholders aseconomic interests and stakeholders as moralinterests may seem somewhat arbitrary, as it can beargued that all categories of stakeholders representa combination of economic and moral interests.Besides, they also represent a social interest,because the way a firm responds (or does not respond)to their concerns and demands yields socialrepercussions, and their behavior may affect thecompany’s ability to preserve its license to operate.Consequently, it can be said that all kinds ofstakeholders represent a combination of three sortsof interests: economic, social and moral, theproportions of which vary according to each categoryof stakeholder. The economic interest / moralinterest split is not fully satisfying with respectto stakeholder classification, and an alternativescheme is needed.

The binary categorization proposed heredifferentiates between societal stakeholders on the onehand, and business stakeholders on the other. Stakeholdersof the first general category are termed societalrather than social for two reasons: firstly, becausethey are not limited to social groups orinstitutions, but extend to national and global civilsocieties; and secondly, because many of the socialgroups that are part of this category have stakeswhich concern the whole society - for instance,environmental activists or the media. Notsurprisingly, the other general category is termedbusiness stakeholders because all of its constituents

15

have business relations or interests relating to theconcerned organization. Such a clear-cut distinctionseems more convincing than many others that have beenadvanced in the stakeholder literature, since therecan be no hesitation: a given stakeholder is eitherof the societal type, or of the business type ,without any ambiguity.

The next stage of this systematic classification isthat of intermediate taxonomy: each of the twogeneral categories may in turn be split into threecomponents. Thus, societal stakeholders comprisethree intermediate categories: global society,national societies, and social groups orinstitutions. Similarly, business stakeholdersinclude three kinds of actors: shareholders, internalstakeholders, and external business stakeholders.

Drawing on these two first steps, the last stage ofclassification consists in a developed typology ofthe stakeholder spectrum. The main societalstakeholders are: global society, civil societies ofthe countries where a company is located and/oroperates, local communities surrounding itsestablishments (and those neighboring theestablishments of its subcontractors, especially indeveloping countries), international institutions,governments, activist groups, NGOs, civicassociations, and the media. The main businessstakeholders are: shareholders, executives andmanagers, employees and workers, trade unions,customers, suppliers, subcontractors, banks,investors, competitors, and business organizations.

The whole classification system is illustrated inthe form of a mapping in the following figure, which

16

represents the complex interplay between theorganization and its stakeholders, and betweenstakeholders themselves. In this regard, the largearrows connecting the two general categories (the“arms” of the chart) suggest that these two universesinfluence one another, whereas the arrows within eachpart of the chart illustrate the reciprocal linksbetween the organization and its stakeholders, andbetween the stakeholders themselves, as it is clearthat stakeholder relations go beyond dyadic tiesmodeled like a bicycle wheel (Rowley, 1997).Consequently, every category of stakeholders isconnected with the others, and this mapping tends toconfirm that stakeholder theory is related to systemstheory – a point already made by Freeman (1984) inhis historical overview of the stakeholder concept,after the investigations conducted by Ackoff (1974).

17

The organization and its stakeholders: amapping

18

Globalsociety

Hostcountries National societiesHome country

Intl.Institutions, Governments Local communities Social groups or institutionsActivist groups Civic associations NGOs, Media, etc.

Shareholders

Executives Internal stakeholdersEmployees Trade unions

Customers External business stakeholdersSuppliers Banks, Investors Competitors, Business organizations, etc.

19

Organization

Societalstakeholders

2. Social cohesion as a normative core forstakeholder theory

An overview of the normative stream of stakeholdertheory suggests that there is little agreement amongscholars over its normative foundation. Severalapproaches have been advanced in the literature,focusing either on property rights (Donaldson andPreston, 1995) or on the rise of a Kantian capitalism(Evan and Freeman, 1993), developing a feministinterpretation (Wicks, Gilbert and Freeman, 1994;Burton and Dunn, 1996), concentrating on theprinciple of fairness (Phillips, 1997), or on thecommon good (Argandoña, 1998). This mere statement ofexisting approaches obviously demonstrates the widediversity of standpoints and schools of thoughts thathave expressed themselves in this regard, andtherefore normative stakeholder theory is somewhatdisconcerting.

However, all these interpretations are subject tocriticism, mainly because they are not connected tothe reality of corporate behavior and stakeholderexpectations. The relationship between normative andempirical business ethics is certainly problematicand again researchers are divided over this subject(Weaver and Treviño, 1994; Donaldson, 1994; Werhane,1994); but to a large extent, it is undeniable thatthe normative stream of stakeholder theory hasdeveloped independently from the descriptive /empirical stream.

The criticism relating to the lack of realism couldbe rejected by moral philosophers, alleging that thenormative dimension of the theory shouldn’t interfere

20

with the realm of experience; but this argument isitself highly questionable, as it leads to unrealphilosophy (Victor and Stephens, 1994). The sameobservation can be made on this position as theFrench writer Péguy has already made about Kant:

“Kant has pure hands, but he has no hands.”

Put differently, the lack of realism is a classicpitfall in theory elaboration; this does not meanthat normative ethical conclusions can be deducedfrom empirical data; it means, rather, that empiricalfindings can be incorporated in normative theorybuilding - a path followed by Donaldson and Dunfee(1994) for the elaboration of their integrativesocial contracts theory. As far as stakeholder theoryis concerned, the lack of realism in the definitionof its normative core seriously undermines the wholetheory and hinders its integration. Existingnormative foundations of this theory are not fullysatisfying, because they are not rooted in reality;hence, the question of the ultimate moraljustification of the theory remains open. As a matterof fact, companies that are striving to managestakeholder relations, or those engaged in asustainable development process, do not respond totheir stakeholders’ claims because they assume thelatter have property rights, or because they seekfairness or the common good.

From a European point of view, the choice of socialcohesion as a normative foundation for stakeholdertheory is more satisfying because it corresponds tothe objectives pursued by companies. Rathersurprisingly, the term social cohesion does notappear in the corporate social responsibility

21

literature, although it is fraught with variedcharacterizations of corporate actions: whereas manyauthors deal with corporate community involvement(for example Burke, Logsdon, Mitchell, Reiner andVogel, 1986), others focus on corporate philanthropy(Smith, 1994) or community development (Somaya,1996); others still place emphasis on corporatesocial initiatives (Hess, Rogovsky and Dunfee, 2002)or corporate citizenship (Altman, 1998) – but socialcohesion is not mentioned. This may probably beascribed to the Anglo-Saxon origin of the greatestpart of this literature and of the companies itrefers to; however in Europe, many companies striveto be more socially responsible, and developstakeholder relations, with a view to strengtheningsocial cohesion.

European countries at the cutting edge of corporatesocietal involvement include: France, the UnitedKingdom, Belgium, Denmark, the Netherlands, Germany,Sweden, Spain and Italy, but significant actionsexist throughout the whole European Union. Most ofthese initiatives in favor of social cohesion startedin the mid-1990s, when the social divide began towiden seriously. In 1995 was launched the EuropeanBusiness Network for Social Cohesion, now renamed CSREurope, a business-driven network whose missionoriginally was to encourage and help companies toprosper in ways that stimulate job creation, increaseemployability and prevent social exclusion, therebycontributing to a sustainable economy and a more justsociety. Marsden and Mohan (1999) have conducted aresearch on 500 business best practices in Europe,based on the information collected by the networkregarding different activities undertaken by 340companies to promote some aspect of social cohesion.

22

The results show that 74% of these companiesconcentrate on employability issues, while 26% areinvolved in other aspects, such as urbanregeneration, ethnic diversity, or educationalissues. The driving forces behind their engagementare linked to business considerations in almost allcases, and equally split between internal andexternal motives; these initiatives are generally ledin partnership with at least one category ofstakeholders, and bring about both business benefitsand economic / social integration (of disadvantagedgroups, long-term unemployed, young people, etc.) -thereby helping strengthen social cohesion.

According to this European view of businesses’engagement, it seems appropriate to suggest thatsocial cohesion be a normative justification forstakeholder theory. The concept of social cohesion isnot easy to define. This expression primarily refersto society at large within the national framework,and points out the principle which unites its membersagainst all the dislocating forces that may threatenit: precisely, what makes it possible for a givensociety to exist. Society is more than a mereconglomeration of individuals; this implies theexistence of an organic bond between them, of aunifying principle that goes beyond each individual.Society as a whole exists as a distinct reality, notreducible to the sum of its constituents, anddiffering in its essence from all the peculiarcommunities that are formed within it.

Besides, the concept of social cohesion alsoapplies at a lower level, that of the community.Historically, the distinction between community andsociety goes back to the famous book by Ferdinand

23

Tönnies, one of the founding fathers of modernsociology: in Gemeinschaft und Gesellschaft (1887), heexplored the clash between small-scale communities,based on kinship and neighborhood, and large-scalesocieties. This theme was also studied by Max Weber afew decades later in his posthumous book Wirtschaft undGesellchaft (1921): in a more analytical way, heunderlined that the societal relationship and thecommunity relationship are opposed to one another –since in the first kind of relationship, individualsare linked only by personal and often antagonisticinterests, which induces a loss of awareness ofeveryone’s common belonging to a whole. Morerecently, Etzioni (1992) argued that society nowadaysis neither a gemeinschaft nor a gesellschaft, but “a mixtureof the two sociological conditions”; his vision of a “newcommunity” is intended to balance the need for unityand diversity. But this view is not fully convincing:small-scale communities and nationwide civil societyexist at the same time, but they remain clearlydistinct from one another; communities are includedin society, but the former and the latter cannot bemixed or melted into an intermediate concept.

Social cohesion is all the more difficult to defineas its interpretation depends on the sociological andcultural context under consideration. At this point,it is useful to compare two countries with trulydifferent conceptions in this regard, for instanceFrance and the United States.

The French society is characterized by a long-standing republican tradition and an ideal ofequality and fraternity. Social cohesion “à lafrançaise” is ultimately grounded in thephilosophical principles which have inspired the

24

French Revolution and the advent of the Republic; itgoes hand in hand with solidarity. This idea ofsolidarity, which arose during the French Revolution,was the underpinning principle of public policiesafter the Second World War. The conception of socialcohesion which prevails in France entails a highdegree of social mixing, through an integrationprocess spurred on by the State, which results in astrong national consciousness. The French model ofsociety is typically republican; it involves livingtogether, not side by side, and therefore seeks theintegration of all within the same group, namely thenation.

In the United States, by contrast, the concept ofsocial cohesion rather points out the ties that mayexist within such or such community, and seldom thecohesion of nationwide society: this sense does notcorrespond to the American socio-culturalenvironment. The Constitution is the only stronglyunifying element of a nation which does not think ofitself very much in terms of a united society. Thesocial role of churches should also be emphasized:long-established in the life of their communities,the numerous religious institutions assume missionsthat the State is not willing to bear. Besides, theAmerican society is also characterized by a strongphilanthropic tradition which dates back to the earlystages of America’s economic history, and has beenmaintained ever since by the business world, whichgives back to society part of the wealth it hasaccumulated through its activities.

But these sociological features, in spite of theircohesive effects, have not been able to prevent thephenomenon of social dislocation. As a matter of

25

fact, the American society increasingly looks like acluster of various communities constituted on thebasis of ethnic criteria, social status, age, andother factors; these multiple social groups liveseparately from each other. The retired people, thewealthy citizens often live in enclosed, protectedresidential areas, whereas the Blacks, the Asians,the Latinos and all the minorities are confined tourban ghettos, in Los Angeles, New York or elsewhere…This kind of segregation has become widespread in theUnited States, and this country offers now the moststriking example of the disuniting of a democraticand developed nation, with the simultaneousdevelopment of vast areas of endemic poverty in thecentre of the great cities, and of small islets ofabundance on the outskirts.

The American model of society used to be referredto as a melting pot, but this metaphor is certainlychallenged by the facts now, since it generates ajuxtaposition of numerous, contrasting - sometimesantagonistic - communities. More generally, in theEnglish-speaking countries, the meaning of socialcohesion at the national level is not very differentfrom mere social peace, although this generalizationis somewhat abusive.

It is more accurate to assert that every nation hasits own interpretation of social cohesion, andaccordingly its own model of society; in this regardthere seems to be nothing but exceptions. However, itis no exaggeration to say that the issue of socialcohesion - at the national level - is important inall European countries, whatever the way they tackleit; the instruments of integration policies maydiffer, but living together is the purpose that is

26

sought after in all cases. The phrase “socialcohesion” is sometimes replaced by other expressions,that are so to speak functional equivalents; but whatis meant beyond the words always implies a true senseof how a nation holds itself together.

In addition to these two meanings, the societalmeaning and the community-related meaning, the phrase“social cohesion” may also be used in a third, evenbroader sense: namely, social cohesion on a worldwidescale, between the North and the South, between thedeveloped countries and the developing countries,between the centre of the system and its periphery.Thus, social cohesion applies at three differentlevels: the local level (communities), the nationallevel (countries), and the global level (the wholeworld). This distinction between the three levels ofsocial cohesion perfectly fits in with theintermediate taxonomy of societal stakeholderspresented above, which differentiates between socialgroups or institutions, national societies, andglobal society; furthermore, it also corresponds tothe three types of belonging experienced by allindividuals: being part of a social group, of anation and of mankind.

Eventually, it is necessary to try and definesocial cohesion. This notion is easier to grasp in anegative manner, just like health: when it is firmand solid, one doesn’t notice its presence, but whenit starts to deteriorate, one begins to pay attentionto it. To some extent, the comparison may beexploited further by considering the social body inthe image of the physical body: the fragmentation ofthe former corresponds to the ruin of the latter…Thus in a negative way, social cohesion could be

27

characterized by the absence of social exclusion.However, this purely negative approach remains rathervague; a positive approach of the concept is needed,bearing in mind the definitional problems. Socialcohesion is the cement of a country’s national unity;it is what holds nations together. It may becharacterized as follows:

“a state of civil concord, which does not boil down to the absence ofviolent conflicts or exclusion phenomena, but implies concern for others,an active will to maintain social inequalities at a reasonable level, theimplementation of solidarity mechanisms, and provides everyone withthe opportunity to blossom.”

This definition is an ambitious one, in particularbecause concern for others goes beyond mere respectof others, and solidarity and blossoming exceed byfar the sheer will to live together; nevertheless,far from being definitive, it could serve as a basisfor discussion and for national adaptations.

Conclusion

The thrust of this article is that without civilsociety, stakeholder theory is incomplete. Therefore,it has endeavored to propose a reinterpretation ofthe theory, which underlines the importance of civilsociety and social cohesion. Instead of beingconsidered as an optional, subordinate stakeholder,civil society ought to hold a prominent position inthe stakeholder list. Moreover, it is necessary to

28

differentiate between national societies and globalsociety, which is now emerging. Indeed, stakeholdertheory cannot ignore the issue of social inequalitiesand the deepening of the social divide, within andbetween national societies. An extendedclassification system has been presented, comprisinga binary categorization - with the distinctionbetween societal stakeholders and businessstakeholders -, an intermediate taxonomy, and adeveloped typology.

The article then turned to the normative side ofthe theory, and advanced the concept of socialcohesion as an alternative justification. The meaningof this concept has been discussed; the three levelsof social cohesion correspond to the three categoriesof societal stakeholders presented in the taxonomy.Its relevance as a normative foundation has beenjustified, especially from a European perspective;indeed, in so far as many European companies act infavor of social cohesion, this interpretationprovides some rationales for the connection of theempirical and normative streams of the theory, thusrendering it more coherent and strengthening its verystatus as a theory. Besides, social cohesion as anormative core may help universalize stakeholdertheory, which stems from a peculiar socio-culturalcontext, namely that of the Anglo-Saxon countries.

29

REFERENCES

ALTMAN B.W., “Defining ‘Community as Stakeholder’ and‘Community Stakeholder Management’: a TheoryElaboration Study”, in Research in Stakeholder Theory, 1997-1998, Clarkson Centre for Business Ethics, Universityof Toronto, 2000.

ALTMAN B.W., “Transformed Corporate CommunityRelations: a Management Tool for Achieving CorporateCitizenship”, Business & Society Review, 102-103, 1998, pp.43-52.

ARGANDOÑA A., “The Stakeholder Theory and the CommonGood”, Journal of Business Ethics, 17 (9-10), 1998, pp. 1093-1102.

BOWIE N., “Changing the Rules”, in BEAUCHAMP T. andBOWIE N. (Eds.), Ethical Theory and Business, Prentice-Hall,Englewood Cliffs, New Jersey, 1979, pp. 147-150.

BURKE L., LOGSDON J.M., MITCHELL W., REINER M. &VOGEL D., “Corporate Community Involvement in the SanFrancisco Bay Area”, California Management Review, 28 (3),1986, pp. 122-141.

BURTON B.K. & DUNN C.P. (1996/1), “Stakeholder Theoryand Community Groups: a New View”, in Proceedings of theSeventh Annual Meeting of the International Association for Businessand Society held in Santa Fe, NM, 21-24 March 1996, pp. 549-554.

30

BURTON B.K. & DUNN C.P. (1996/2), “Feminist Ethics asMoral Grounding for Stakeholder Theory”, Business EthicsQuarterly, 6 (2), 1996.

CARROLL A.B., “The Pyramid of Corporate SocialResponsibility: Toward the Moral Management ofOrganizational Stakeholders”, Business Horizons, 34, 1991,pp. 39-48.

CLARKSON M.B.E., “A Stakeholder Framework forAnalyzing and Evaluating Corporate SocialPerformance”, Academy of Management Review, 20 (1), 1995,pp. 92-117.

DAVIS K., “Five Propositions for SocialResponsibility”, Business Horizons, 18 (3), June 1975.DONALDSON T., “When Integration Fails: the Logic ofPrescription and Description in Business Ethics”,Business Ethics Quarterly, 4 (2), 1994, pp. 157-169.

DONALDSON T. & DUNFEE L.E., “Toward a UnifiedConception of Business Ethics: Integrative SocialContracts Theory”, Academy of Management Review, 19 (2),1994, pp. 252-284.

DONALDSON T. & PRESTON L.E., “The Stakeholder Theoryof the Corporation: Concepts, Evidence, andImplications”, Academy of Management Review, 20 (1), 1995,pp. 65-91.

ETZIONI A., The Spirit of the Community: Rights, Responsibilities andthe Communitarian Agenda, Crown, New-York, 1992.

EVAN W.M. & FREEMAN R.E., “A Stakeholder Theory ofthe Modern Corporation: Kantian Capitalism”, in T.

31

BEAUCHAMP & N. BOWIE (Eds.), Ethical Theory and Business,Prentice Hall, Englewood Cliffs, NJ, 1988, pp. 75-93.

FREEMAN R.E., Strategic Management: a Stakeholder Approach,Pitman Publishing, Boston, 1984.

HESS D., ROGOVSKY N. & DUNFEE T.W., “The Next Wave ofCorporate Community Involvement: Corporate SocialInitiatives”, California Management Review, 44 (2), 2002,pp. 110-125.

MARSDEN C. & MOHAN A., Research on 500 Business Best Practicesin Europe, Warwick Business School / European BusinessNetwork for Social Cohesion (CSR Europe), 1999.

MITCHELL R.K., AGLE B.R. & WOOD D.J., “Toward aTheory of Stakeholder Identification and Salience:Defining the Principle of Who and What ReallyCounts”, Academy of Management Review, 22 (4), 1997, pp.853-886.

PHILLIPS R.A., “Stakeholder Theory and a Principle ofFairness”, Business Ethics Quarterly, 7 (1), 1997, pp. 51-66.

ROWLEY T.J., “Moving Beyond Dyadic Ties: A NetworkTheory of Stakeholder Influences”, Academy of ManagementReview, 22, 1997, pp. 887-910.SMITH C., “The New Corporate Philanthropy”, HarvardBusiness Review, 72 (3), 1994, pp. 105-116.

SOMAYA S., “Non-philanthropic Corporate Involvementin Community Developmen”, Business & Society Review, 97,1996, pp. 32-38.

32

TICHY N.M., Mc GILL A.R. & St. CLAIR L., Corporate GlobalCitizenship, The New Lexington Press, San Francisco,1997.

TÖNNIES F., Community and Civil Society, CambridgeUniversity Press, 2001. (Gemeinschaft und Gesellschaft, 1st

ed. 1887).

TREVIÑO L.K. & WEAVER G.R., «The Stakeholder ResearchTradition: Converging Theorists – Not ConvergentTheory”, Academy of Management Review, 24 (2), 1999, pp.222-227.

VICTOR B. & STEPHENS C.U., “Business Ethics: ASynthesis of Normative Philosophy and EmpiricalSocial Science”, Business Ethics Quarterly, 4 (2), 1994, pp.145-155.

WADDOCK S.A. & BOYLE M.E., “The Dynamics of Change inCorporate Community Relations”, California ManagementReview, 37 (4), 1995, pp. 125-140.

WADDOCK S.A., BODWELL C. & GRAVES S.B.,“Responsibility: the New Business Imperative”, Academyof Management Executive, 16 (2), 2002, pp. 132-148.

WEBER M., Economy and Society. An Outline of Interpretive Sociology,University of California Press, 1986. (Wirtschaft undGesellschaft, 1st ed. 1921).

WEAVER G.R. & TREVIÑO L.K., “Normative and EmpiricalBusiness Ethics: Separation, Marriage of Convenience,or Marriage of Necessity?”, Business Ethics Quarterly, 4 (2),1994, pp. 129-143.

33

WERHANE P., “The Normative / Descriptive Distinctionin Methodologies of Business Ethics”, Business EthicsQuarterly, 4 (2), 1994, pp. 175-180.

WICKS A.C., GILBERT D.R. & FREEMAN R.E., “A FeministReinterpretation of the Stakeholder Concept”, BusinessEthics Quarterly, 4 (4), 1994, pp. 475-498.

34