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Stakeholder Theory, Fact/Value Dichotomy, and the Normative Core: How Wall Street Stops the Ethics Conversation


  • Lauren Purnell


  • R. Freeman


A review of the stakeholder literature reveals that the concept of “normative core” can be applied in three main ways: philosophical justification of stakeholder theory, theoretical governing principles of a firm, and managerial beliefs/values influencing the underlying narrative of business. When considering the case of Wall Street, we argue that the managerial application of normative core reveals the imbedded nature of the fact/value dichotomy. Problems arise when the work of the fact/value dichotomy contributes to a closed-core institution. We make the distinction between open- and closed-core institutions to show how in the case of the closed-core, ethical decision-making is viewed by the institution as a separate domain from the core business of the institution. The resulting blind spot stifles meaningful exchanges with stakeholders attempting to address the need for reform. We suggest in conclusion that ethical considerations are less about casting a value judgment and more about creating a process for meaningful conversation throughout an institution and its stakeholders. Copyright Springer Science+Business Media B.V. 2012

Suggested Citation

  • Lauren Purnell & R. Freeman, 2012. "Stakeholder Theory, Fact/Value Dichotomy, and the Normative Core: How Wall Street Stops the Ethics Conversation," Journal of Business Ethics, Springer, vol. 109(1), pages 109-116, August.
  • Handle: RePEc:kap:jbuset:v:109:y:2012:i:1:p:109-116
    DOI: 10.1007/s10551-012-1383-6

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    References listed on IDEAS

    1. Reed, Darryl, 1999. "Stakeholder Management Theory: A Critical Theory Perspective," Business Ethics Quarterly, Cambridge University Press, vol. 9(03), pages 453-483, July.
    2. Donaldson, Thomas & Dunfee, Thomas W., 2002. "Ties that bind in business ethics: Social contracts and why they matter," Journal of Banking & Finance, Elsevier, vol. 26(9), pages 1853-1865, September.
    3. Phillips, Robert, 2003. "Stakeholder Legitimacy," Business Ethics Quarterly, Cambridge University Press, vol. 13(01), pages 25-41, January.
    4. Phillips, Robert A., 1997. "Stakeholder Theory and A Principle of Fairness," Business Ethics Quarterly, Cambridge University Press, vol. 7(01), pages 51-66, January.
    5. R. Edward Freeman & Jared Harris, 2009. "Creating Ties That Bind," Journal of Business Ethics, Springer, vol. 88(4), pages 685-692, October.
    6. Freeman, R. Edward, 1994. "The Politics of Stakeholder Theory: Some Future Directions," Business Ethics Quarterly, Cambridge University Press, vol. 4(04), pages 409-421, October.
    7. Sandberg, Joakim, 2008. "Understanding the Separation Thesis," Business Ethics Quarterly, Cambridge University Press, vol. 18(02), pages 213-232, April.
    8. Wicks, Andrew C. & Gilbert, Daniel R. & Freeman, R. Edward, 1994. "A Feminist Reinterpretation of The Stakeholder Concept," Business Ethics Quarterly, Cambridge University Press, vol. 4(04), pages 475-497, October.
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    Cited by:

    1. Alejandra Marin & Ronald Mitchell & Jae Lee, 2015. "The Vulnerability and Strength Duality in Ethnic Business: A Model of Stakeholder Salience and Social Capital," Journal of Business Ethics, Springer, vol. 130(2), pages 271-289, August.
    2. Donal Crilly, 2013. "Recasting Enterprise Strategy: Towards Stakeholder Research That Matters to General Managers," Journal of Management Studies, Wiley Blackwell, vol. 50(8), pages 1427-1447, December.
    3. Susan Castro, 2014. "The Morality of Unequal Autonomy: Reviving Kant’s Concept of Status for Stakeholders," Journal of Business Ethics, Springer, vol. 121(4), pages 593-606, June.
    4. Andrew Abela & Ryan Shea, 2015. "Avoiding the Separation Thesis While Maintaining a Positive/Normative Distinction," Journal of Business Ethics, Springer, vol. 131(1), pages 31-41, September.
    5. Zhu, Qinghua & Liu, Junjun & Lai, Kee-hung, 2016. "Corporate social responsibility practices and performance improvement among Chinese national state-owned enterprises," International Journal of Production Economics, Elsevier, vol. 171(P3), pages 417-426.


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