J Bus Ethics (2013) 114:225237 DOI 10.

1007/s10551-012-1338-y

In Defence of Stakeholder Pragmatism

m Tommy Jensen Johan Sandstro

Received: 20 September 2011 / Accepted: 30 April 2012 / Published online: 19 May 2012 Springer Science+Business Media B.V. 2012

Abstract This article seeks to defend and develop a stakeholder pragmatism advanced in some of the work by Edward Freeman and colleagues. By positioning stakeholder pragmatism more in line with the democratic and ethical base in American pragmatism (as developed by William James, John Dewey and Richard Rorty), the article sets forth a fallibilistic stakeholder pragmatism that seeks to be more useful to companies by expanding the ways in which value is and can be created in a contingent world. A dialogue between a defence company and peace and arbitration society is used to illustrate the main plot of this article. Keywords Defence industry Ethics Separation thesis Stakeholder theory Pragmatism

Thesis (Freeman 1994, 1999; Wicks 1996; Wicks and Freeman 1998; Harris and Freeman 2008): Much of business ethics has proceeded under the inuence of the Separation Thesis. Philosophers have been hesitant to get their hands dirty by understanding the day to day life of value-creation activity. Business theorists have been loath to enter what they see as the intellectual morass of moral theory. Happily this scenario is changing as there is more dialogue among philosophers, business academics and managers. Yet the shadow of the Separation Thesis looms large. Unless we can reinvent business from the ground up, we remain open to the charge of reserving a special place for business ethicists ready to make it up as we go along. Thus, our task is to take metaphors like the stakeholder concept and embed it in a story about how human beings create and exchange value (Freeman 1994, p. 418). Freeman in particular has been targeting the Separation Thesis from a pragmatist perspective. Rejecting the Separation Thesis then is not a matter of developing a revised stakeholder theory, but of contributing to what Freeman sees as a genre of stories about how we could live (Freeman 1994, p. 413; 2001, pp. 499500), providing arguments or further narrative which include business and moral terms to ll in the blanks (2001, pp. 499500). He sees the future of this genre as one trying to escape xed language games by developing a stakeholder pragmatism that is rich in conversations and in which divergent views emerge. This will improve the genres usefulness in showing us better ways to live our lives (Freeman 1999, especially pp. 235236). For Freeman and colleagues, the issue at stake is, therefore, not if stakeholder theory has a moral content or

Introduction Edward Freeman and colleagues represent a critical voice m 2011). We within stakeholder theory (Jensen and Sandstro should not, they argue, keep ethics out of business, but rather acknowledge that business always is moral in nature (Freeman 1994, p. 412). Since the early 1990s, this argument has frequently been referred to as rejecting the Separation

T. Jensen Business Administration, Stockholm University, Stockholm, Sweden e-mail: tommy.jensen@fek.su.se m (&) J. Sandstro University of Technology, Environmental Management, Lulea , Sweden Lulea e-mail: johan.sandstrom@ltu.se

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not; the issue at stake is the theorys (as a divergent genre) capability of capturing ethical dilemmas in business and of coming up with ideas of how to practically solve them (Freeman 1994). Maintaining the Separation Thesis then does not only neglect an important part of a theory but is also at risk of producing detrimental second order effects (Harris and Freeman 2008, p. 541) by making up supposedly moral neutral theories [] which can be used to justify a great deal of harm (Freeman 1994, p. 412). This article builds on Freemans stakeholder pragmatism; a perspective that needs to be defended and developed, and that has received its fair share of critique. Sandberg (2008), for example, concludes that the Separation Thesis seems to mean a lot of things to Freeman and colleagues. They have quite different versions in mind in different contextsranging from semantic, empirical and reformative to some which are straightforwardly normative (Sandberg 2008, p. 213). Sandbergs analysis reveals that their previous attempts are carried out within many different conceptual regimes and without clear justications about the kind of moral content the theory has. Sandbergs (2008) analysis, however, fails to grasp Freemans pragmatism, which to Sandbergs defence is not always clearly articulated by Freeman. While Sandberg searches for accuracy and certainty, Freeman, as a pragmatist, does not rely on such scientic criteria (Harris and Freeman 2008). They are simply not relevant for pragmatists, which are better categorized as fuzzyists (Rorty 1991). Pragmatists try to obscure taken for granted boundaries and dualisms: real/semantic; theoretical/ empirical; neutral/reformative; objective/normative (Rorty 1979/2009). This means that a theory or a theorist does not have to be consistent or remain truthful to a single uniform moral content; suggesting that morality has some kind of inner essence (Rorty 1991). A moral account can come in many different disguises, or stated more pragmatically, with different styles of narration, plots and purposes (Czarniawska 1999; Rorty 1999). Having different versions of the Separation Thesis in mind in different contexts is merely a starting point for a pragmatist seeking to provide useful accounts in a contingent world (Rorty 1989). It is not a problem per se that the Separation Thesis means a lot of things to Freeman and colleagues, whether semantic, empirical, reformative or normative, as long as they instill doubts in managers or researchers own self-images, and about the society to which they belong (Rorty 1999, p. 127); as long as they provide useful alternatives to the world managers and researchers have constructed for themselves (Czarniawska 1999, p. 9). Defending stakeholder pragmatism is not a matter of crafting a more accurate and certain response to such criticism put forward by Sandberg. That would be to surrender to the language of essentialism

(Putnam 1981/1997). A more relevant evaluation criterion is rather: Is this story or metaphor useful? Following American pragmatists, such as William James (1907/2009), John Dewey (1922/1930) and Richard Rorty (1989, 1991, 1999), the term useful has an ethical base. Companies are not only seen as acting in society by being necessarily social (Dewey 1888/1997, p. 203), exercising democracy in thought and action, acting as a warrant for the existence and endurance of democratic institutions (Dewey 1888/1997, p. 266) but also as acting for society by extending responsibility to people whom we have previously thought of as they (Rorty 1989, p. 192), regardless if they are nearby or far away. Useful accounts are those working in the direction of increasing responsibility towards those who are worse off (Rorty 1991, 1999) and have an outward direction to include more and more people. It is also in the relation to this take on pragmatism that this article sets out to develop Freeman and colleagues stakeholder pragmatism. The main weakness in their attempts that needs to be addressed is the incommensurability between advocating stakeholder capitalism and stakeholder pragmatism, as it severely complicates the rejection of the Separation Thesis (see Deetz 1995; Stieb 2009; Walsh 2005; Wheeler et al. 2002). The main purpose of this article is, therefore, to develop a stakeholder pragmatism better capable of crafting more useful (in a pragmatist sense) stories about corporate responsibility. In this article, we illustrate our conceptually driven development of Freeman and colleagues stakeholder pragmatism by empirically grounding it in a stakeholder dialogue between a defence company and a peace association. For the purpose of this article, using this dialogue has at least three advantages. First, it allows practise to provide arguments to why the Separation Thesis ought to be rejected. Second, by analysing the dialogue, we allow practitioners to illustrate the constraints introduced through Freeman and colleagues stakeholder capitalism. Third, the practitioners involved in the dialogue show ways in which it is possible to build further on the ethical base in American pragmatism. In other words, they bring us useful stories, divergent views and undetected possibilities, as well as additional reasons to reject the Separation Thesis. Based on this, we suggest a developed form of stakeholder pragmatism that we refer to as fallibilistic stakeholder pragmatism. Next, we set the stage for the dialogue.

A Dialogue Between Guns and Doves Our story is based on a dialogue between a senior manager from a Swedish subsidiary to the worlds second largest defence company, BAE Systems Ltd.; two representatives

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from the Swedish Peace and Arbitration Society (SPAS), the oldest peace and arbitration society in the world; an actor invited by SPAS, who at the time was preparing a theatrical play about the defence industry; and two researchers (including one of the authors of this article). The lead-up to the dialogue with SPAS stretches back to 2003, when we initiated our rst study of the BAE subsidiarys work with its code of ethics (the senior manager of BAE in the dialogue being our point of contact since 2003). We have since then returned to the subsidiary to study the implementation of new or revamped codes. The dialogue reported on in this article is part of a project on codes and globalization, in which we followed members of the subsidiary to different countries around the world to study how the code was used outside the local, Swedish context. We met SPAS for the rst time in 2010 on our third trip with the subsidiary, the one to New Delhi, India. The context is a defence fair in New Delhi and the dialogue takes place in a hotel conference room. The main theme of the conversation is the ethics of arms trade in light of corporate responsibility, politics, human rights and democracy. The conversation also focuses on the subsidiarys current affairs in India and, predominantly because of our research interests, on BAEs code of ethics. It also came to target SPAS work with inuencing people in power (predominantly politicians) to ease tensions, speed up disarmament, promote the transfer of military resources to development and support democratic movements. The dialogue lasted for about 3 h. It was taped and later transcribed. We retell the dialogue chronologically, following the main conversational turns, but also by using an authors prerogative to highlight those parts of the dialogue that t the purpose of the article (Czarniawska 1999). The main turns are the following: (1) Meeting the other: mapping the territory; (2) Negotiating boundary conditions: the role and responsibilities of companies; (3) Negotiating boundary conditions: organisational roles and personal ethics; (4) Weaving into each others experiences; (5) A valuable exercise: new territory on which to continue the dialogue. By using the dialogue, we show how people in the context of business meet and negotiate different boundary conditions, how they weave into each others experiences, thoughts and choices of action to nd new ground for continuing the dialogue and to maintain a promise to each other to nd useful solutions to problems. Through the dialogue, the critique of Freeman and colleagues stakeholder pragmatism and the emerging fallibilistic stakeholder pragmatism is empirically articulated. From a pragmatist point of view, front loading the dialogue in this article is important; James, Dewey and Rorty had hope in ordinary people and the ways in which they manage to deal with their cognitive differences and strategies to handle a contingent reality in useful ways.

The dialogue should thus not be conceived of as an accurate, objective and certain account of the world, generated through scientic rigour and method. It should neither be taken as proof of our defence and development of stakeholder pragmatism, but rather as a story from practise that contains promising re-articulations and suggestions for how what we call fallibilistic stakeholder pragmatism can become more useful to companies and their stakeholders as well as to stakeholder scholars. Meeting the Other: Mapping the Territory The dialogue takes its starting point in BAEs code of ethics. The manager provides the background to why the company has chosen to intensify their work with a code: There was so much negative publicity around BAE, there was Saudi [], Hungary, Czech Republic, and so on. The top management, the board, asked how can we get rid of this mark, because this will not be a winning formula in the future. The boards job is to make money for the company and then they said: ethics is becoming such an important competitive tool, so we must ensure that we stay within the law, regardless of where we are. This was the background. Indirectly, the boards position on the question is it ethical to sell weapons? is that they already do that by running the company, but they say that the ground rules for how we do [business], will change with this Code of Conduct. A SPAS member picks up on this: If we were to write an ethics code for the company in question, then the perspective would be widened. The other SPAS member lls in: It would also be a very short code. The manager anticipates the rest of it and concludes that the code would simply state: Shut down! We all smile, but this could just as well be the end of the dialogue. The manager and the top management of the company see ethics as a tool with which to enhance the companys competitiveness and the SPAS members see the whole defence industry as unethical. There seems to be no common ground from which to continue the dialogue. The distance between them is too great; their views are too divergent to allow them to weave into each others experience. Negotiating Boundary Conditions: The Role and Responsibilities of Companies A SPAS member then pushes the dialogue forward by reading out loud from BAEs code that the company through its operations shall provide social and economic input to the societies in which it operates and that employees could act as volunteers at local schools (where

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there are factories connected to BAE in one way or another). From this, she asks the manager (paraphrased): If you have staff in India, how much understanding do they have about the situation in India, about the problems facing the population, their safety and in what way you affect the situation here? You sort of need this background in order to formulate an ethics, do you not? The manager temporarily dodges the question, saying that the Indian government decided to start a bidding process for 400 guns in 2002; a process that has not come any further. In that perspective, he concludes, time is on your side. He continues: But if you look at the situation in India. They have had wars in all directions. It is a relatively young state, and indeed, as you yourself have dened it, it is a democratic state. And it would be strangely superior of us to say that, no, in this case you do not meet the requirements [for doing business]. We are not those who decide what they should do with their tax money. [] And, anyhow, if we do not do it [deliver guns], somebody else will. A SPAS member intervenes; it sounds as if you are not affecting their decision? The manager responds: Of course we do! [] But the decision whether they will buy 400, and maybe as many as 1200, guns is their decision. It is not something that we are behind in any way. They make that decision themselves and that decision will be carried out whether or not BAE is taking part in it. The manager seems to assume that there is a (functioning) level above, a political, governmental level, which the company cannot and should not inuence. The companys role is limited in his view. Government and politics are more or less excluded from the subsidiarys sphere of inuence. If you do not want to affect anything, a SPAS member continues, how come you include the normative passages about social and economic effects, and the voluntary work at schools? The manager replies that it is only a couple of months ago that the company dened India as a homemarket; that is why this kind of work has not yet come very far. But he is convinced of that this will be discussed in the future and informs SPAS that BAE emphasises the transfer of technology, the technical skills needed to assemble the products, and that this will lead to new jobs in India. However, reecting on the companys statement about creating social and economical benets, he says: Previously I have received requests if we want to sponsor hospitals, for example, in India, and I have said: Impossible. We cannot do this. At one end we

cannot shoot people and at the other end sponsor hospitals. That is acting according to a double standard. [] I could not get it into my head how the moral of that would look like. Although critical to the managers view of the role of companies and governments, the SPAS members position on the basic structure of society is not so radically different. One of them states: We have been focusing on politics, the political channels. We see export of weapons as primarily a democratic and a political issue; therein lays the power. We do not want the power to be located to the companies. We do not want a situation in which the companies decide whether to export or not; that explains our direction. To be honest, I do not see that changes in how companies act change things that much; the solution is not there. And I do not think that we can inuence you [the manager] in that direction. I think that if you chose to work for a guns manufacturer then you have thought hard about it, you have invested a lot of personality and identity, the whole life, in this decision. It takes a lot to reconsider. The solution is politics, and political regulation and guidelines. She also takes the role of business for granted, but sees SPASs role as inuencing the level above, that is, those who she thinks should have the power, i.e., governments and politicians. The other SPAS member, however, jumps in to modify this view: I do think that companies can take an increased responsibility, but not through starting welfare projects and so on. Rather to take the full consequence of the reections made. We perhaps should not sell to Indonesia. That is perhaps what we wish to see more on behalf of the company. We have talked about this in our previous meetings [referring to the manager]. Companies sometime swiftly state that we do not interfere in the assessments made, but you have the power to do this. Just because an authority says that you are allowed to sell, does not mean that you have to do it. This SPAS member emphasises the role and responsibility of the company differently. Evidently, she, who have met and discussed these issues with the manager several times before, stresses that companies indeed can make a difference by going beyond what the law demands. The manager also responds to her statement that: This is something I would respect and it is something that is discussed in Sweden, that we should not sell to non-democratic countries and to countries that violate human rights.

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The dialogue, that is, has evolved into a discussion on boundary conditions. SPASs critique of the manager and the managers own emphasis on BAEs code (which in some cases clearly have reached beyond laws and regulations) acknowledge that the subsidiary also is a political actor; not merely an economic actor that speaks only through its economic power in a context dened by the laws of the market. The dialogue then zooms in on whether there are too many rules and legislations surrounding the sales of weapons. The manager emphasises that it is the Swedish state that decides if guns should be exported and that the subsidiary should not interfere with these kinds of decisions. They are, he claims, amateurs when it comes to security policy, defence policy and judgements about foreign policy. It is good, the manager continues, that this kind of answer belongs to an impartial organisation and he concludes that the current rules are not too difcult to face up to (however, in recent years, the Swedish Agency for Non-Proliferation and Export Controls have authorised Swedish defence companies to export defence material to countries such as Egypt, India, Pakistan, Saudi Arabia and Thailand). Indonesia is then brought up as a case in which BAE indeed decided to refrain from doing business despite there being no legal obstacles to stop them from doing so. The manager states that it is simply not worth risking an infected debate and that it is not worth the money. In other words, with reference to its own code, BAE makes a tougher evaluation than to just remain within boundaries dened by the level above (as in existing legislation) and by admitting to this, one of the SPAS members states: How nice it is to see that our work is worth carrying out. [] It is evidence to that our work produces results. The manager agrees, you do achieve results in your work and you do a good job, you have good arguments. From the case of Indonesia, the SPAS members target India. A huge challenge in India, they argue, is the defence budget. There is a signicant lack of transparency regarding what the money is spent on and it is, therefore, difcult to have a democratic dialogue about alternative ways to spend the money: The defence budget is called the sacred cow in India, one of the SPAS members says, and As an Indian you cannot question it, not even talk about it. The manager then mentions that BAE has done surveys in India about the brand name and that he has questioned the selection of respondents. There were mostly people from the better off minority: Business leaders, politicians, ofcers, journalists and parts of the general public as well. However, he says, there are at least 300 million people who cannot read and who are excluded in the selection for the survey. They were not asked because they have no inuence on anything. They barely exist in the Indian society. This statement makes SPAS return to a key issue:

SPAS member 2: But how can you then state that India is a democratic country? Manager: I have asked myself this question. But apparently all have the right to vote. And somehow they [the Indian state] know where all [people] live. But then the village leader tells them how to vote SPAS member 2: That is not that democratic. Manager: No, not at all, but they still have the right to vote. If they then choose to listen to the village leader, because they discover that he is the wisest, or if they listen to a politician, I do not know which is better. One of the SPAS members then tells about a trip they made to a slum land in Bangalore the year before, talking to labour union movement and to a variety of low-status workers, and asked them whether they have any possibility to exert democratic inuence at all. The answer was no. They felt that no political party or politician in India represented their voice. Their right to vote was meaningless to them. The manager responds that There are people in Sweden who would say the same. A SPAS member counters Yes, but the question then is not if you are to die of diarrhoea or not; the stake is on another level. Negotiating Boundary Conditions: Organisational Roles and Personal Ethics This prompts the issue of experiencing India rst hand to be able to formulate a personal ethics in relation to dilemmas facing the Indian population. It is an issue brought up previously in the dialogue, but this time it is made more personal. Manager: We have no program that allows for our staff to visit, for example, slums, or to arrange lectures about it, or anything like that. I admit to that. There is not enough time. It cost too much, of course, to have people staying here for these reasons. But, most of the staff here [at the fair] has been here many times. I have been here about 2025 times and I have learned a lot about this society, travelled the country []. I have been to Mumbai, to Bangalore. I have not been to Calcutta, and after reading about the conditions there I am not sure I want to go there, because then I fear that my consciousness could be really, really corroded. SPAS member 2: What would happen then, if it was corroded? Manager: It is evident that I in this situation would start to think about why India buys guns. Why do they not spend their money on other things? Why do they spend huge sums of money on defence and defence material and the manufacturing of it? And it

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is not only that, they also have an army of a million men down here. What does it cost? SPAS member 2: But you do not see any possibilities for you, with your position, to have inuence? Manager: No, then I have to quit my job. SPAS member 2: Have you considered that? Manager: No, well, sometimes, but not in connection to this, then something concrete has occurred, you are mad at somebody. But, rstly, there will be someone else [a competitor] who enters, because the Indians will not change their mind and I feel that I have no inuence. So leaving [the company] is out of the question. However, I believe that we can do a better job than others. If [competitor A] and [competitor B] enter, then I believe that they will do a worse job with transfer of technology and social responsibility than we do. SPAS member 2: So you think that out of two evils, you contribute by being a little better [than the others]? Manager: Yes, that is right. SPAS member 2: What about your personal ethics, your moral? Manager: It got a crack once. [In a discussion with an Indian PR-agent] I said that why do we not do as they do in the USA? We support our guys. That is, our boys and girls should have the best equipment when they are in warzones because we would not like our boys and girls to return in black bodybags. Then he went quiet for a while and said; you know what, [name], we have a lot of people in India. I thought that was scary. The manager seems to nd it difcult to grasp the glaring social disparities in India. It escapes his imagination; enormous luxury co-existing with extreme poverty. And again he refers to the fact that changes in the country does not gain the large majority of people (who cannot read, who have no inuence). A SPAS member says: SPAS member 2: Then it seems relevant to question where the democratic aspect lays? Manager: I agree. SPAS member 2: Then it must be possible to question whether India is a democracy? The dialogue has opened up a core assumption, which the manager handles by turning the dialogue around. Manager: But is India a democracy according to you? SPAS member 1: Both yes and no. [] The foundation of democracy is that it is possible to raise a voice. And there is no nal end where we can say now it is a democracy. It is not enough to state that everyone has a right to vote.

SPAS member 2: It is also about if all sectors of society are represented. Do they feel that they are represented? Is there a possibility to question all sectors? [] I think that there is a risk that in Sweden the arms trade is justied by saying: India is the largest democracy. There seem to be something more to the relations between the subsidiary and SPAS than what at rst was acknowledged. They do affect each other to some extent and the subsidiary comes across as more political than what rst seemed the case. SPAS acknowledges that BAE actually had taken responsible action by withdrawing from Indonesia and the manager acknowledges the work of SPAS as important, even though this might lead to lost business opportunities for the subsidiary, opportunities that some other, less responsible, defence company might pick up on. As the dialogue zooms in on personal ethics in relation to the organizational role, the manager also shows doubts about what is right and wrong in relation to the subsidiarys role and responsibility in society. He challenges some of his previous statements about the context for business; about who is included and excluded as a stakeholder to the company (the survey on brand name awareness); and about what kind of stakes we are talking about (to die of diarrhoea, the glaring social disparities, we have a lot of people in India, the conditions in Calcutta). He reects on Indian democracy and thereby also on whether it is appropriate to do business in India (although his company will do a better job than the competitors). The level above might not be in good condition after all. As this main turnto also include tensions between organizational roles and personal ethicsis taken, the character of the dialogue changes. From here and onwards, the discussion on boundaries is also explicitly personal. Weaving into Each Others Experiences A SPAS member returns to the question of economic and social benets, highlighted in BAEs code of ethics: What kind of welfare projects do you have? The manager answers: We sponsor [elite sports] clubs in Sweden. The other SPAS member reacts: It does not affect the societies to which you sell arms? [] I interpreted your voluntary work that way. The manager states that it is the country of origin in which the work is done. One SPAS member then concludes that the code seems to be more about creating legitimacy than taking responsibility and we pick up on this. We state that in BAEs work with ethics, the so-called Woolf Committee Report (2008) has become a central document and one of the most frequently used words in the report is reputation (224 times; m 2010). The manager is bafed by see Jensen and Sandstro this: Does it say reputation, does it?

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SPAS member 1: But you have dened India as your home market [] who will act as sponsor here? Manager: It is currently under investigation, the whole thing is so new [], but I am pretty sure that this kind of practise will be implemented here. There will be goodwill projects here; not because they [BAEs management] want to be nice. Look at the other companies doing this, they are careful to tell [others] about it. SPAS member 1: From our perspective it seems a bit unnecessary to do these types of projects, better to shut down the whole company instead, better effects. We have perhaps returned to where we started (Shut down!), but SPAS, one of the researchers states, is to some extent in the same position as BAE. It also has to create legitimacy to survive and to succeed with its mission. In relation to BAEs code, one of the researchers states that if you take away this companys name and put another name in its place it would be the same. All texts look the same. There is a best practise so to speak. [] It could be SPAS! The SPAS members are not amused by this, but one of them says: Yeah, maybe. The manager then brings up an activist group called Ofog that SPAS has connections to. Ofog (2011) describes itself as an antimilitaristic network working with nonviolent direct action against the arms trade, NATO, military exercises and other parts of militarism in Sweden and abroad. The name Ofog literally translates into mischief. The manager asks what SPAS thinks of this organisation and its methods: SPAS member 1: They are needed to reveal social shortcomings and for them to be able to make these shortcomings visible they need to take this kind of action. This risks becoming a pseudo-discussion. But we have chosen to not work in this way. SPAS member 2: Same goal, different means. [] SPAS member 1: We denitely support civil disobedience, but we cannot do it based on ad hoc decisions, we need to consider the right things. [] For example, we have supported conscientious objectors and that is a form of civil disobedience that we have chosen to back up, because it only affects that individual, but I can sympathize with those who get so pissed off that they choose to use force to destroy weapons. SPAS member 2: But we support them with information, because if they choose to do this kind of operations, then it should be based upon correct information, on a correct analysis. If their actions are based upon wrong information we would also suffer.

Given its relation to Ofog (and that Ofog previously has destroyed defence equipment on the subsidiarys property), SPAS could just as well fall into the category of stakeholders that the subsidiary would never enter into a dialogue with. However, the manager sees enough value in SPAS to continue the dialogue, but there is also an element of seeing oneself in the other. As one of the SPAS members again emphasises that it is a strategic decision [to use parliamentary methods] based on what action causes best effects in the long term, one of us intervenes: Researcher: Then [] it seems as if your considerations bare similarities with BAEs view. SPAS member 2: Pragmatic. Researcher: How you [SPAS] gain most inuence, how you [BAE] make most money []. SPAS member 1: In this case, absolutely. Similarities are also triggered by a question asked by the actor to the manager: Actor: How did you think about taking this kind of job [for a defence company]? You, your family, relatives? Manager: There was a lot of discussion. I thought hard about this, but it is a company that runs operations that are supported by 7580 % of the Swedish population, yes, we should have a defence. It depends of course on how you measure it but SPAS member 2: Defence yes [but what about export of weapons?] SPAS member 1: And what about [Swedens] policy of non-alignment? Actor: But did you never hear, I mean weapons Manager: Yes, there were debates with relatives, are you going to start working for a defence company, the defence industry? But I said, yes, it is a kind of business that the Swedish government has approved and thereby it is not illegal. [] [] Actor: Do you still have to defend your position. Manager: No, not any more. SPAS member 2: You learn how to deal with it, or, I do not know. I sometime do not tell what I [do for a living]. A Valuable Exercise: New Territory on Which to Continue the Dialogue There are, that is, not only similarities between BAE and SPAS but also between the manager (as a manager at a defence company) and one of the SPAS members (as a peace activist). In their experiences from working for their respective organisation, they are not as radically different

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from each other as they perhaps thought they were and the dialogue reveals this. In this spirit, the manager and one of the SPAS members emphasise the value of dialogues such as this one. In the words of SPAS member 2: Ethics is something that takes shape and form through conversations. And to be able to develop an ethical position you must be confronted by others views and be allowed to bend and discuss these matters with people. Part of our job is to debate exports of weapons, which we do with you [the manager], and to have an open, social conversation about what it is, not only from the perspective on how many jobs that are created, how much it costs, but also from a moral point of view; how reasonable is it that our taxmoney is spent on weapons, even if it has good effects for us, when it causes so much damage when it is exported. The manager nods approvingly and continues: One of my purposes with meeting you like this is to solve issues where we believe we disagree, where we have different opinions, because of misunderstandings. We shall talk about issues in which we genuinely have different opinions and try to discuss these matters. But to have a pseudo-discussion, based upon what we believe the other thinks of us, should be eliminated, which is achieved best by meetings like this.

manager and for the SPAS members, respectively, and with which actors is value created? The dialogue also challenges the role separation between being an organisational member (manager at BAE, activist at SPAS) from other roles (family member, relative, friend, etc.) making up the personal identity (as in the threat of the corrosion of individual character). Targeting the ethical content of the positions taken, it seems, leads to a negotiation of not only the subsidiarys and SPASs stance on companies role and responsibility in society but also of the individuals personal ethics in relation to what the role as a member of an organization demand. Within this personalized framework, it seems as if the participants in the dialogue manage to weave into each others experiences, to nd similarity between themselves and the other. The dialogue, it seems, is useful in both challenging key assumptions in Freeman and colleagues stakeholder pragmatism and in developing it in the direction of fallibilistic stakeholder pragmatism. Challenging Key Assumptions in Previous Stakeholder Pragmatism Turning to the attempts to re-negotiate stakeholder theory by Freeman and colleagues, there is potential for the stakeholder genre to recognize the dialogue between the BAE subsidiary and SPAS as useful. But, following Freeman and colleagues, there are in some key writings a set of core assumptions at work; a stakeholder capitalism that hinder a stakeholder pragmatism capable of re-negotiating boundary conditions as practised by the manager and the SPAS members in the dialogue. This set of core assumptions is perhaps most clearly articulated by Freeman and Phillips (2002), which explicitly situate the stakeholder genre in a libertarian ideology, embracing liberty, personal freedom, individual property rights, apolitical corporate activity and the minimal night-watchman state. They basically outline a libertarian stakeholder capitalism (Freeman and Phillips 2002; see also Phillips et al. 2003; Freeman 2008) that limits how boundary conditions for the role and responsibility of companies can be re-negotiated; limits that to some extent were challenged and transgressed in the dialogue. More specically, from their libertarian standpoint, companies are voluntary associations rather than a part of the basic structure of society (Phillips 1997; Phillips et al. 2003; see also Freeman and Phillips 2002; Phillips 2003). This is for Phillips et al. (2003, pp. 493494) a natural boundary condition. Joining Milton Friedman, Freeman and colleagues claim that there is another level of analysis operative in Friedmans system and that this is also the case with stakeholder theory (Phillips et al. 2003,

The Dialogue as Critique During the dialogue, we can see how the role and responsibility of the company changes as different boundary conditions are revealed and challenged. At the outset, the company is constructed as a rather apolitical actor, but during the dialogue, it becomes an actor that through its actions and non-actions is political by nature. The company has discretion; it has the power to contribute to the creation of a better world in which to live, or at least to reduce harm caused by its operations and the use of its products. The dialogue highlights the fact that how it uses this power is up for grabs; it is not carved in stone. The dialogue also initiates a negotiation of boundaries in which both parties share interests, actions and values, and see the dialogue as a value creating exercise. The manager, for example, challenges his initial divide of those who are stakeholders and those who are not; opening up for what was rst not considered as a stakeholder (particularly poor Indians) to later on in the dialogue become one. The dialogue triggers questions on: What are the right methods to rely on when achieving goals, what is value for the

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pp. 493494; see also Freeman 2008, on the Friedman Freeman issue). Freeman and colleagues would essentially agree with parts of the dialogue, but the dialogue also reveals that neither the SPAS members nor the manager are as onedimensional as Freeman and colleagues, both regarding the level above (which needs support from the levels below so as to maintain certain political privileges and autonomy) and the level below (which needs support from the level above in terms of granting individual rights and duties). That is, the two spheres of society share responsibilities to protect and develop democracy (Dewey 1888/1997, 1922/ 1930) and in taking responsible action (Rorty 1991, 1999). From the libertarian standpoint, viewing the company as a distinct entity, with clear-cut boundaries around it, and in which its counterparts are assumed to be autonomous, free agents, it also makes sense to infuse moral inclusions and exclusions by dividing stakeholders into morally distinct categories. Phillips (1997) and Phillips et al. (2003) categorize stakeholders into normative and derivative stakeholders. They argue that the company is not morally responsible for derivative stakeholders, that is, those that do not directly contribute to the companys value creation processes, but only for normative stakeholders, that is, those that directly contribute to the companys value creation processes. Consequently, the others, who can only harm or benet the company outside the value creation process, are not considered to be part of the companys moral sphere. Dunham et al. (2006) seem less categorical when distinguishing between a collaborative and a cooperative approach. They argue that companies should collaborate with stakeholders that they rely on for support (all the rsttier, normative stakeholders, such as customers, employees and suppliers, are included). Collaboration implies sharing interests, actions and values. Stakeholders, such as SPAS, that are affected by the company but that it does not rely on for survival should, however, only be cooperated with. Cooperation implies understanding perspectives, listening to preferences and evaluating the inicted impact on the stakeholder. Following Dunham et al. (2006), there is an opportunity for a company, such as the subsidiary to establish a relation with non rst-tier stakeholders such as SPAS, but the question is what kind of relation this would be and what kind of core that would guide such a relation. Even though the subsidiary would try to understand SPASs perspectives, listen to its preferences and attempt to evaluate the inicted impact, in Dunham et al.s framework, it would be a relation without a mutual sharing of interests, actions and values. Dening the company as an autonomous, free agent that engages only through free and voluntary economic transactions with other autonomous actors on the market,

Freeman and colleagues construct inclusions and exclusions of stakeholders that deny them the opportunity to engage with non rst-tier stakeholders in a collaborative mode. Alas, following the writings quoted above, Freeman and colleagues would prompt a relation basically drained from the pragmatic meaning of useful engagement. They are in a sense moving away from a stakeholder pragmatism inspired by James, Dewey and Rorty; a pragmatism that would dismiss such attempts to reject the Separation Thesis for being based on a too narrow moral sphere and on a too weak responsibility to others causally connected to the company. This narrow moral setting is not, however, conceptually considered a problem and often poses no problem to normative strategically important rst-tier stakeholders, because stakeholders that are essential to value creation are assumed to engage in relations with known self-interests, representational conceptions of language, and free speech (Deetz 1995, p. 101). But, it is within this core that moral responsibility takes its shape and form, which means that moral responsibility, even if it to some extent exceeds the libertarian standpoint, is severely restricted also in strategically relevant stakeholder relations. Following Freeman and colleagues stakeholder capitalism makes it difcult to acknowledge that there is not always a functioning level above and that the so-called voluntary associations are, after all, not always that voluntarily for other actors. In this sense, there seem to be stricter boundary conditions operating here than in case of the BAE manager, which means that a senior manager at a defence company provides a stronger challenge to the Separation Thesis then Freeman and colleagues do. The somewhat one-dimensional view of the role and responsibility of companies (and states and NGOs) is in the dialogue opened up and negotiated. It is further assumed that even though the world is depicted as a turmoil in which companies and managers need to navigate (Freeman and McVae 2001; Freeman et al. 2007, p. 172), the hegemony of the current order is natural and is generally seen as non-problematic (it is the best system that exists and it works despite shortcomings within the system). Consequently, the interaction between the company and society is seen as harmonious and well integrated rather than full of friction and disintegration (Deetz 1996). The theorys, and the theorists, task to reject the Separation Thesis is, therefore, basically about recognizing the common sense practical world of global business today (Freeman and Phillips 2002, p. 345) and to nd out what actually works in the world of value creation and trade (p. 334) given the core assumptions of stakeholder capitalism. Previous criticisms of Freeman and colleagues have emphasised this. Stieb (2009) states that their approach

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seems to appeal to self-interest and to be advocating [] business as usual (p. 405). Walsh (2005) argues that Freeman and colleagues excel a version that will not contribute to any societal interest that exceeds the reach of its business model (p. 436; see also Orts and Strudler 2002). However, Freeman and colleagues efforts to outline a stakeholder pragmatism do target the axiom-like condition of ethics and business (the Separation Thesis) by emphasising ethics in business; business as something carried out within society, but that have to develop its own, appropriate yet bounded ethics. Phrased differently, their stakeholder pragmatism takes us further than treating business as merely something distinct from society business and societyallowing us to start viewing business as in society. Freeman and colleagues have also been successful in developing attractive suggestions for managers on how to face up to this from-and-to-in transition. The stakeholder capitalism underpinning their stakeholder pragmatism, however, makes their pragmatism restricted. The core and the boundary conditions it gives rise to do not take us beyond the assumption of an outside and a level above when framing ethics in business. Following James (1907/2009), Dewey (1922/1930, 1888/1997) and Rorty (1989, 1991, 1999) makes it difcult to be satised with this from-and-to-in transition, prompting us to go further; to strive for a society in which all of its components are not only accepted but also involved in the everyday challenge of weaving new togetherness so as to better deal with contemporary societal challenges. They ask of us, as Dewey (1888/1997) states, to start from the assumption that the economic and industrial life is in itself ethical [], this is what we do not recognize; but such is the meaning of the statement that democracy must become industrial (p. 204). In other words, business is not only wholly in society but inevitably for society, implying a transition from-andto-in-to-for. James, Dewey and Rorty would also urge stakeholder pragmatism to widen the term society so as to include more people and places that are affected by the companies operations. John Rawls, an important reference for Freeman and Phillips (Phillips 1997; Phillips et al. 2003; Freeman and Phillips 2002) when they outline stakeholder capitalism, would in his later works (e.g., Rawls 1999) also prompt us in such a direction. Harris and Freeman (2008), in their reply to Sandbergs (2008) criticism, also seem to open up for following James, Dewey and Rorty when they point out that rejecting the Separation Thesis is basically a mission impossible because it is not really there; doing business has ethical implications right from the start. All would of course be well if stakeholder researchers rejecting the Separation Thesis simply would not have to relate to it, but as it is, the thesis is part and parcel of the language on stakeholders as well as of the normal view in stakeholder theory. This is

also where Freeman and colleagues greatest pragmatic achievements and contributions to stakeholder theory lie; the acknowledgement that there is no ethically neutral territory between business and society, and that it is not really useful to continue to reify the Separation Thesis. So far, stakeholder pragmatism has released itself from taking the from-and-to-in-to-for step through what resembles a circular argumentation; anything that spoils the order, the harmony, the design, and thus refuses purpose and meaning of stakeholder capitalism is ethics and once it is ethics it is to be treated as such and, hence, it is ethics because it is so treated (Bauman 1991, p. 41). To be able to break out of this circular argumentation, the stakeholder capitalism has to be challenged, although not completely abandoned. Pragmatism is not a revolutionary movement as it is highly sensitive to history; old parts might prove useful in the new language, even though we do not a priori know which parts (Rorty 1991, 1999). By revealing (some of) the core assumptions and boundary conditions of Freeman and colleagues writings, a development of stakeholder pragmatism is opened up for. In the following, we seize this opportunity to suggest what we refer to as fallibilistic stakeholder pragmatism. Towards Fallibilistic Stakeholder Pragmatism A pragmatist attempt to debunk the social conditions that prevent a better society is a pluralistic one. Pluralism, however, is a uid word. Bernstein (1988/1997, pp. 396397) teases out different versions of pluralism that differ from the pragmatic use of the word. A rst common meaning of pluralism, which Bernstein calls abby, expresses itself when our borrowings from different orientations are little more than glib supercial poaching. A second one, called polemical pluralism, expresses itself where the appeal to pluralism doesnt signify a genuine willingness to listen and learn from others, but becomes rather an ideological weapon to advance ones own orientation. A third one, defensive pluralism, expresses itself as a form of tokenism, where we pay lip service to others doing their own thing but are already convinced that there is nothing important to be learned from them. Our reading of Freeman and colleagues suggest that they go beyond these versions of pluralism. They would dismiss them as not useful, as acting as barriers to produce useful stories about divergent ways of creating value. Their attempts rather come across as fragmenting pluralism where the centrifugal forces become so strong that we are only able to communicate with the small group that already shares our own biases, and no longer even experience the need to talk with others outside of this circle (Bernstein 1988/1997, p. 397). Assuming that the company is the unity from which things considered relevant (or value

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creating) is attached to implies that Freeman and colleagues proceed from the self rather than from the other. Within such a framework, permeated by stakeholder capitalism, a stakeholder outside the boundaries (be they derivative or cooperative, or on the level above or level below), if able to mobilize any resources at all, has to choose between either misrepresenting itself by adapting to the stakeholder formula dictated by corporate management or by representing itself well but by being considered obscure and radical (Deetz 1995; Wheeler et al. 2002). In the rst case, they might acquire some degree of autonomy as a stakeholder, but only in a language/conceptual game not of their own choosing and when accepting the state of other they have little self-denition (Deetz 1995, p. 192). In the latter case, they will fail to have a voice. Fragmenting pluralism implies that privilege is given to certain stakeholders on the expense of comparative others and that alternative ways of understanding the role and responsibility of the company are lost (see Deetz 1996). It puts the nger on a key problem inherent in stakeholder capitalism. Freeman and colleagues may have as their intention to increase involvement with different types of stakeholders, but such involvement is limited by the essence of meaningwhat value creation is, how problems and solutions are denedalready being dened. Stakeholders are only allowed to engage in how an already dened common enterprise should be developed (Deetz 1995). But, as raised by SPAS in the dialogue and as acknowledged by the manager, relying on a stakeholder capitalism that stops at a certain level, at a certain outer border, can have devastating effects, or be used to justify a great deal of harm (Freeman 1994, p. 412). Both parties in the dialogue acknowledge that the world is interdependent and complex and that with this comes new dimensions of responsibility. To some extent, the dialogue has opened up for a re-articulation of Freeman and colleagues stakeholder capitalism that enables a development of a stakeholder pragmatism in which the Separation Thesis is rejected by engaging with the other through what Bernstein (1988/1997) calls fallibilistic pluralism: Such a pluralistic ethos places new responsibilities upon each of us. For it means taking our own fallibility seriouslyresolving that however much we are committed to our own styles of thinking, we are willing to listen to others without denying or suppressing the otherness of the other. It means being vigilant against the dual temptations of simply dismissing what others are saying by falling back on one of those standard defensive ploys where we condemn it as obscure, woolly, or trivial, or thinking we can always easily translate what is alien into our own entrenched vocabularies. (p. 397)

The dialogue contains moments in which the participants are willing to listen to the other without denying or suppressing their arguments. There is a willingness to share information and correct eventual misunderstandings, and the ow of arguments from different perspectives (the researchers included) is taken into serious consideration by the participants (e.g., to be able to develop an ethical position you must be confronted by others views, [w]e shall talk about issues in which we genuinely have different opinions, to be able to develop an ethical position you must be confronted by others views and be allowed to bend and discuss these matters, you do a good job, you have good arguments, [y]ou learn how to deal with it, or, I do not know. I sometime do not tell what I [do for a living]). This is important when arguing for fallibilistic stakeholder pragmatism because dialogues containing trustworthy information, allowing for different perspectives to emerge and in which voice to difference, negotiation of values and decisional premises (Deetz 1995, p. 100) are respected and considered, have benecial effects on participants capability to break out of his or her previous position (Bernstein 1988/1997; Fishkin 2009; Taylor 1994; Rorty 1989, 1999). Deetz (1995) refers to such efforts as the production of new integrative positions (p. 100). It has also been shown that dialogues characterized by fallibilistic pluralism increase the participants capabilities to acknowledge that issues expanding or crossing established boundariesin our case related to what is at stake and who the holders of stakes areare in their own interest as well as their responsibility. Through the dialogue, participants better understand how and why others interests are connected to their specic interests (Fishkin 2009), and that these connections have implications on the relation between personal ethics and organizational roles (Benhabib 2002). Assessing dialogues such as the one between SPAS and BAE through the lens of fallibilistic pluralism focuses on whether the participants have developed a readiness to reposition himself or herself. This is crucial, because if a readiness to re-position does not develop, the other will be judged along a certain canon, with certain norms, rules and values and not assessed on its own terms. Consequently, fallibilistic pluralism implies a readiness to emerge as different after dialogues have taken place (Bernstein 1988/ 1997; Dewey 1922/1930; James 1907/2009; Rorty 1991, 1999; Taylor 1994). As the dialogue unfolds in our case, such readiness gradually emerges as the participants manage to weave into each others experiences in such a way that they see themselves in the other. An important explanation to why the participants seem to achieve this is that they negotiate boundary conditions that are close to them as individuals (private self); they share personal beliefs and standpoints with each other, and discuss the

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relation between their personal ethics and their organizational roles. Freeman and colleagues walk this ground when they offer a feminist re-reading of stakeholder theory, an ethics of care (Wicks et al. 1994). They state that such a re-reading implies that the theory now can seek to acknowledge that the individual and the community, the self and the other are two sides of the same coin and must be understood in terms of each other (p. 483). Wicks et al. (1994, p. 484), in our view, set the stage for a useful (in a pragmatist sense) rejection of the Separation Thesis concerning who/what should be included in the companys moral sphere by acknowledging that to distance, or to other, an actor, is to distance, or to other, something that are an integral part of yourself. The divisions between derivative and normative stakeholders, collaborative and cooperative modes, level above and level below and between private ethics and organizational roles are in Wicks et al.s view not possible. As far as we know, this article is among the most useful (yet its stakeholder pragmatism is not outspoken), but least used articles existing in the backlog of Freeman and colleagues. Dialogues characterized by fallibilistic pluralism are important in moving towards a more useful stakeholder pragmatism. Such dialogues negotiate private and corporate boundary conditions and a readiness to emerge as a different person after the dialogue exist. Such dialogues are important organizational stories in the sense that they challenge dominant boundary conditions, such as those inherent in stakeholder capitalism concerning the role and responsibility of companies and the relation between personal ethics and organizational role. Although a dialogue such as the one reported on in this article may not lead to any changes relevant to the themes discussed, the participants may re-tell the story in other contexts, in other situations, that may trigger dialogues on useful ways of engaging with stakeholders. Storytelling in organizations is, after all, an important, even crucial, aspect of organizational learning (see Czarniawska 1999).

and unforced arguments (Dewey 1888/1997; Rorty 1999). They would embrace a liberal society that comes close to left-wing Kuhnianism, as Rorty would have it (1991, p. 38). This might come across as a harsh reformist suggestion, but accounts that address ethical issues are bound to cause friction because they bring forth the need for new and controversial custom (Rorty 1999, p. 76).
Acknowledgments This research was nanced by the Swedish Council for Working Life and Social Research. Our thanks go to our colleague Sven Helin and to the anonymous reviewers.

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