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An Organizational Field Approach to Corporate Rationality: The Role of Stakeholder Activism

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  • O’Connell, Lenahan L.
  • Stephens, Carroll U.
  • Betz, Michael
  • Shepard, Jon M.
  • Hendry, Jamie R.

Abstract

This paper contends that rationality is more properly evaluated as a property of an organization’s relationships with its stakeholders than of the organization itself. We predicate our approach on the observation that stakeholders can hold goals quite distinct from those of owners and top managers, and these too can be rationally pursued. We build upon stakeholder theory and Weber’s classic distinction between wertrationalitat and zweckrationalitat, adding to them the “new institutionalist†concept of the organization field (1983, 1991). Stakeholders employ a variety of direct and indirect mechanisms to rationalize relations with the firm. We discuss four: internal subunits, legislated stakeholder participation, legislated access to information, and direct stakeholder activism. These developments are blurring the distinction between the environment and the organization by importing the values and goals of external stakeholders into the internal organization. They are also precipitating a more structured set of relationships among the actors who comprise the field. To the extent that the zweckrationalitat values of managers and owners as well as the wertrationalitat concerns of stakeholders are met, the firm is more rational.

Suggested Citation

  • O’Connell, Lenahan L. & Stephens, Carroll U. & Betz, Michael & Shepard, Jon M. & Hendry, Jamie R., 2005. "An Organizational Field Approach to Corporate Rationality: The Role of Stakeholder Activism," Business Ethics Quarterly, Cambridge University Press, vol. 15(1), pages 93-111, January.
    • Handle: RePEc:cup:buetqu:v:15:y:2005:i:01:p:93-111_00
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    Citations

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    Cited by:

    1. Cedric Dawkins, 2014. "The Principle of Good Faith: Toward Substantive Stakeholder Engagement," Journal of Business Ethics, Springer, vol. 121(2), pages 283-295, May.
    2. Sefa Hayibor, 2017. "Is Fair Treatment Enough? Augmenting the Fairness-Based Perspective on Stakeholder Behaviour," Journal of Business Ethics, Springer, vol. 140(1), pages 43-64, January.
    3. Viveros, Hector, 2017. "Unpacking stakeholder mechanisms to influence corporate social responsibility in the mining sector," Resources Policy, Elsevier, vol. 51(C), pages 1-12.
    4. Jiwon Yang & Jay Hyuk Rhee, 2020. "CSR disclosure against boycotts: evidence from Korea," Asian Business & Management, Palgrave Macmillan, vol. 19(3), pages 311-343, July.
    5. Veronica Devenin & Constanza Bianchi, 2018. "Soccer fields? What for? Effectiveness of corporate social responsibility initiatives in the mining industry," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 25(5), pages 866-879, September.
    6. Elise Perrault, 2015. "Why Does Board Gender Diversity Matter and How Do We Get There? The Role of Shareholder Activism in Deinstitutionalizing Old Boys’ Networks," Journal of Business Ethics, Springer, vol. 128(1), pages 149-165, April.
    7. Jerry Calton & Patricia Werhane & Laura Hartman & David Bevan, 2013. "Building Partnerships to Create Social and Economic Value at the Base of the Global Development Pyramid," Journal of Business Ethics, Springer, vol. 117(4), pages 721-733, November.
    8. Jerry Calton, 2006. "Social Contracting in a Pluralist Process of Moral Sense Making: A Dialogic Twist on the ISCT," Journal of Business Ethics, Springer, vol. 68(3), pages 329-346, October.

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