3-4 Paragraphs

Stakeholder Management Capability:

A Discourse–Theoretical Approach Abe Zakhem

ABSTRACT. Since its inception, Stakeholder Manage-

ment Capability (SMC) has constituted a powerful

hermeneutic through which business organizations have

understood and leveraged stakeholder relationships. On

this model, achieving a high level of capability largely

depends on managerial ability to effectively bargain with

stakeholders and establish solidarity vis-à-vis the successful

negotiation, implementation, and execution of "win–

win" transactional exchanges. Against this account, it is

rightly pointed out that a transactional explanation of

stakeholder relationships, regarded by many as the bottom

line for stakeholder management, fails to provide mana-

gerial direction regarding how to resolve a variety of

normative stakeholder claims that resist commoditization.

In response to this issue, this paper has two overlapping

goals. It seeks to elaborate a discourse theoretical

approach to the problem by first drawing out Jurgen

Habermas’ theory of communicative action and delin-

eating the various types of rational discourse. Second, the

paper attempts to present concrete implications for SMC

relative to reshaping the contours of rational, process,

and transactional analysis in light of central discourse

theoretical conclusions.

KEY WORDS: critical theory, discourse ethics, stake-

holder management capability, stakeholder management

theory, communicative action

Introduction

Managerial stakeholder models often represent

attempts to understand and describe a wide variety of

business relationships as forms of transactional

exchange. In very general terms, transactional rela-

tionships involve the mutual and voluntary trade of

assets for gain. Now broadly construed, ‘‘assets’’

correspond to a wide range of tangible (e.g., capital

and labor) and intangible (e.g., goodwill and social

capital) interests and associated metrics. Since its ori-

ginal characterization (Freeman, 1984), the notion of

Stakeholder Management Capability (SMC) has

constituted one of the more influential and transac-

tional frameworks for understanding and leveraging

stakeholder relationships. Essentially, SMC involves

managerial analysis at rational, process, and transac-

tional levels. Corresponding to each level of analysis,

managers are charged with: 1) mapping stakeholders

and identifying their perceived stakes, 2) structuring

organizational processes to reflect and align organi-

zational and stakeholder goals and expectations, and

3) negotiating transactions or ‘‘bargains’’ with stake-

holders sufficient for ‘‘balancing’’ competing interests

and surfacing discontent. On this model, achieving a

high-level of capability, indeed, the very ‘‘bottom

line’’ for SMC, comes down to the success or failure

of transactional exchanges (Freeman, 1984, p.69).

Provided that managers execute ‘‘win–win’’

exchanges, SMC promises a powerful and useful

heuristic for effective strategic management (Carroll

and Bucholtz, 2006). Despite the optimism, this

strategic and largely instrumental approach has come

under fire. It is rightly pointed out that although a

transactional account of stakeholder relationships may

help to balance stakeholder currencies, SMC fails to

provide managerial direction regarding how to con-

ceptualize, address, and resolve normative interests

that resist commoditization. Adapting a common

example, normative demands for the end of ‘‘sweat-

shop’’ labor are often not leveraged as pleas for

balancing the transactional interests of ‘‘slave’’ labor

against the interests of the business organization.

Dr. Abe J. Zakhem works primarily in the areas of ethical theory

and business ethics. He has worked in private industry as a

senior management consultant and chief operating officer and

is currently an assistant professor at Seton Hall University.

Journal of Business Ethics (2008) 79:395–405 � Springer 2007 DOI 10.1007/s10551-007-9405-5

On the contrary, claims of this kind constitute

outright rejections of exploitive labor practices by

way of a universal appeal to non-transferable human

rights. Without much effort we can identify a wide

variety of similar claims (e.g., deeply held commu-

nity values and demands for corporate legitimacy)

that call for the recognition and enforcement of

deeply held and non-economic moral obligations.

To reduce such interests to the status of negotiable

assets seems both morally objectionable and too

simple a model for effectively capturing the complex

nature of normative conflict (Orts and Strudler,

2002, p.222). The problem is further exacerbated by

the fact that any single strategic initiative can serve

as a normative flash point for competing stakeholder

conceptions of that, which is good, right, and

legitimate.

Certainly, the normative and practical limitations

of a purely transactional orientation to stakeholder

management constitutes a recognized concern.

Within stakeholder literature, this concern has been

met with rather traditional and largely deontological

attempts to instill in managerial analysis a ‘‘moral

point of view’’ that is sufficient for integrating

conceptions of the good and the right (Evan and

Freeman, 1993). Expanding the debate, this paper

addresses normative SMC concerns from a dis-

course–theoretical perspective. Accordingly, the first

part of the paper outlines the central features of

Jürgen Habermas’ theory of communicative action,

discourse ethics, and political theory and sets up a

general framework for a discourse–theoretical

approach. Particular attention will be paid to

defining a ‘‘moral point of view’’ from a discourse

ethical perspective. The second part advances

previous applications of Habermasian critical theory

to stakeholder management by recasting the SMC

categories of rational, process, and transactional

analysis in light of central discourse–theoretical

principles. Finally, the third and final part summa-

rizes the following conclusions. First, that rational

stakeholder mapping should be regarded as a

dynamic and discursive process that is ultimately

driven towards mutual understanding and partici-

patory solidarity. Second, that overcoming gaps

between discourse and practice requires continued

process analysis at both strategic and operational

levels. Lastly, that the ‘‘bottom line’’ for SMC must

be determined from a ‘‘moral point of view.’’

Communicative action and discourse

Echoing prominent social action theory, Habermas

supports the claim that social solidarity and order

require a basic level of norm regulated coordination

and conduct. Moving beyond traditional attempts to

account for the ‘‘binding’’ power of social norms,

Habermas advances the concept of communicative

practices. Properly defined, communicative practices

refer to those social interactions that are driven

towards dialogically motivating, sustaining, and

renewing intersubjective consensus and mutual

understanding (Habermas, 1984, p.17). In short,

Habermas explains that speakers of a language

express criticizable validity claims concerning how

social action ‘‘ought to be’’ structured. Speakers

further warrant that, if called upon, they will provide

publicly justified reasons and point to shared

convictions that support their contentions. Under-

standing the very conditions of validity, hearers

likewise commit to respond with counteracting

reasons in the event of disagreement and dispute.

Collectively, both parties commit to an intersub-

jective and consensual process of reasoning with

the illocutionary goal of achieving mutual

understanding. Habermas refers to this process as

‘‘communicative reasoning’’ (Habermas, 1984,

p.11). Within this framework, social norms ulti-

mately owe their ‘‘binding’’ force to the fact that

definitive obligations on the parts of speakers

and hearers are incurred in the collective pursuit of

rational and consensual agreement.

Although foundational, communicative practices

certainly do not account for or adequately explain all

of the mechanisms affecting social order and coor-

dination. In fact, communicative appeals are often

rejected in favor of dogmatically held worldviews

and perlocutionary aims and goals. Habermas uses

the category of ‘‘rational-purposive’’ action to

explain the mode of reasoning at work in such sit-

uations. As opposed to communicative reasoning and

action, rational-purposive reasoning is not oriented

towards mutual understanding and consent and tends

to assess situational significance relative to an agent’s

own ‘‘privately held’’ interests and standards of

choice. Although a necessary component of social

interaction and coordination, Habermas observes

that lifeworld orientations dominated by operation-

alized forms of rational-purposive reasoning tend to

396 Abe Zakhem

reduce meaningful action to ‘‘strategic action.’’

Strategic actions are thusly defined as attempts to

influence situations and the behavior of other social

agents with the intent of advancing individual ends

(Habermas, 1984).

The pervasive rationalization of strategic orienta-

tions, however, carries with it two interrelated

problems and one clear way out. First, Habermas

observes that the reduction of meaningful social

interaction to strategic considerations resoundingly

erodes the communicative ‘‘glue’’ that produces

mutual understanding and social solidarity. This

erosion in turn contributes to such social pathologies

as lifeworld fragmentation, legitimation crises, ano-

mie, alienation, and social dissonance (Habermas,

1987, p.143). Second, strategic actions tend to

devolve into the use and application of morally

questionable means, such as force, threats, violence,

or inducements to manipulate rational opponents.

For Habermas, the solution to this problem does not

rely on a simple denunciation of strategic actions. If

we desire to avoid the ill effects of strategic action,

then we first ought to harmonize our plans and

pursue our individual and private goals on the

condition of communicative agreement (Habermas,

1984, p.86). In other words, communicative agree-

ment and action must serve as the horizon against

which strategic actions are understood, evaluated,

and harmonized. When communicative bonds are

broken, which is often the case in modern, pluralistic

societies, we require a complementary process

through which the ‘‘fabric’’ of communicative

action is repaired (Smith, 2004, pp. 318–320).

In order to draw out such a process, recall Hab-

ermas’ theory of communicative action. As noted,

communicative action rests on expressed warrants

and commitments directed towards an intersubjec-

tive and dialogical pursuit of mutual understanding.

Distinct from motivating rational participants by way

of brute force or enticement, the rationality inherent

in communicative practices is ‘‘seen in the fact that a

communicatively achieved agreement must be based

in the end on reasons’’ (Habermas, 1984, p.17).

Further, all competent speakers of language are

aware of these conditions of validity and likewise

bear some level of communicative obligation. Thus

from the very beginning, communicative practices

point to a highly cognitive and ‘‘argumentative’’

form of conflict resolution. In this sense,

‘‘argumentation’’ does not refer to mere rhetorical

debate. On the contrary, ‘‘argumentation’’ marks a

reflective form of communicative action whereby

competent speakers can thematize and dispute

operative validity claims with the aim of achieving

mutual understanding (Habermas, 1984, p. 25). In

other words, Habermas regards the turn towards

argumentation as constituting a rational ‘‘court of

appeal’’ that makes it possible to reestablish com-

municative understanding in spite of participatory

disagreement (Habermas, 1984, p.17–18).

Habermas further explains that efforts to

argumentatively preserve communicative action in

the face of disagreement must meet certain dialogical

conditions. In general, these dialogical conditions

must collectively ensure that validity claims are the

objects of discussion and that discursive outputs

reflect an intersubjective and rationally motivated

agreement. Habermas specifies certain dialogical

conditions within the framework of the discourse

principle (D). In its most basic form, (D) states that

‘‘just those action norms are valid to which all

possibly affected persons could agree as participants

in rational discourses’’ (Habermas, 1996, p. 107). As

such, (D) is the point of view from which norms of

action can be impartially justified. Implied by (D),

the general requirements for rational discourse in-

clude: the exclusion of coercive forces and strategic

influences, truthfulness, freedom of access to infor-

mation, equal participatory rights, and reciprocal

role taking and ‘‘ideal role taking,’’ or the reciprocal

reversal and checking of participatory points of view.

As such, discourse creates the necessary space

whereby competent speakers disengage from probl-

ematized action contexts, isolate validity claims, and

reach a rationally and communicatively motivated

agreement (Habermas, 1996, pp.108–109).

Whereas (D) represents an ‘‘ideal’’ and ‘‘irreduc-

ible’’ order that is ‘‘built into’’ communicatively

structured forms of life in general, actual discourses

take on different forms and require different sorts of

discursive rules. Much of Habermas’ more recent

work in political theory and discourse ethics relies

on distinguishing the separate realms of pragmatic,

ethical, moral, and legitimacy based discourses

(Habermas, 1996; 1993; 1990). While each form of

discourse in some way reflects (D) and thus requires

the same basic sorts of discursive rules, operational-

ized discourses differ with respect to various features:

Stakeholder Management Capability 397

the discursive goals at hand, argumentative criteria,

the required level of preexisting and background

consensus, the scope of the validity claim in ques-

tion, and the status of discursive participants (Reed,

1999). In short, as the nature of the validity claim in

question changes, the contours of rational discourse

likewise change and imply different and more or less

stringent cognitive and procedural demands. In

order to draw out these distinctions, the following

sub-sections briefly explain the different forms of

discourse and clarify that which constitutes and gives

dialogical weight to reasoning from a ‘‘moral point

of view.’’

Pragmatic discourse

Pragmatic discourse centers on collectively deter-

mining the ‘‘best’’ way to achieve predetermined

ends, preferences, and goals. While engaged in

pragmatic discourse, participants advance various

strategic or technical recommendations and evaluate

possible courses of action in light of accepted

decision-making criteria. More often than not,

pragmatic strategies are assessed against a standard of

efficiency and direct participatory attention towards

the critical evaluation of empirical data (Habermas,

1996, p. 160). The selection of the particular

strategy would then provide a rational basis for

implementing certain situational definitions and

norms and providing a context for understanding

and interacting with others. It is critical to note that

a discursive assessment of pragmatic validity claims

requires a high-level of preexisting communicative

consensus relative to that which is determined to be

good, right, and legitimate. So, even as (D) ideally

requires the consideration of all possibly affected

persons, pragmatic discourse must draw on a pre-

viously achieved communicative consensus.

Accordingly, the outputs of pragmatic discourse

constitute ‘‘hypothetical’’ imperatives, ultimately

grounded in particular and historically and culturally

contingent social action situations. When this

shared level of meaning is called into question (i.e.,

the validity claims turn from pragmatic contesta-

tions to questions concerning the good, right, or

legitimate), the application of (D) takes a different

form as do the corresponding features of rational

discourse.

Ethical discourse

Distinct from pragmatic discourse, the goal of ethical

discourse is to collectively determine that which is

‘‘good’’ for an individual, community, or association.

As such, ethical discourse counts as one distinct realm

of normativity (Reed, 1999b). Engaging in ethical

discourse involves proffering arguments in the form of

‘‘clinical advice’’ with the intent of reaching a con-

sensus over guiding values or ‘‘deep preferences.’’ In

other words, ethical discourse engages participants in a

higher form of self-clarification and understanding by

which they become reflectively aware of deeper,

‘‘normative consonances in a common form of life’’

(Habermas, 1996, p. 160–161). Unlike pragmatic

claims, ethical arguments are assessed against a stan-

dard of authenticity and direct participatory attention

towards the critical evaluation of various forms of the

‘‘good’’ life. The selection of an authentic identity

would then provide a rationally motivated and eval-

uative basis for assessing certain pragmatic claims (e.g.,

organizational goals, aims, values, and pragmatic

argumentative criterion), determining situational def-

initions, and interacting and engaging with others.

Similar to strategic determinations regarding the

‘‘best’’ technical recommendations, it is important to

note that conceptions of the ‘‘good’’ are also groun-

ded in particular, non-generalizable life histories, the

validity claims therein constituting hypothetical or

conditional imperatives that are issued from and

evaluated against the backdrop of certain unpro-

blematic meaning structures. Within ethical discourse,

(D) is likewise indirectly applied as appealing to all

members sharing particular ‘‘traditions and strong

evaluations’’ (Habermas, 1996, p.108). Yet, when the

unproblematic meaning structures required for ethical

discourse are called into question, notably, on grounds

that particular ways of life are unjust or illegitimate, an

application of (D) makes additional demands.

Moral discourse

Distinct from both pragmatic and ethical discourse,

moral discourse is geared towards rationally and

collectively determining that which is right. As such,

moral questions constitute a second realm of norm-

ativity. Specifically, moral discourse involves the

redemption of maxims and norms relative to their

398 Abe Zakhem

compatibility with the maxims and norms of others

(Habermas, 1993, p.6). Towing a decidedly Kantian

line, Habermas argues that ‘‘only a maxim that can be

generalized from the perspective of all affected counts

as a norm that can command general assent and to that

extent is worthy of recognition, or, in other words, is

morally binding’’ (Habermas, 1993, p.8). For Hab-

ermas, however, if we expect to find a rationally

motivated and generally binding agreement, then we

must throw into relief those questions ‘‘that can be

resolved by an appeal to a generalizable interest; in

other words, questions of justice’’ (Habermas, 1993,

p.151). Parting with Kantian moral theory, considered

to permit a monological application of universality,

Habermas’ approach rests on the intersubjective and

dialogical determination of that which is just. So,

while moral discourse requires an application of the

principle of universalization (U), it is applied as a rule

of argumentation, stating that a norm is valid only if

all affected can accept the consequences and the side

effects its general observance can be anticipated to

have for the satisfaction of everyone’s interests (and

these consequences are preferred to those of known

alternative possibilities). Correspondingly, (D), as seen

from a ‘‘moral point of view’’, requires that only those

norms can claim to be valid that meet (or could meet)

with the approval of all affected in their capacity as

participants in a practical discourse (Habermas, 1993,

pp.65–66). Within this context, a ‘‘moral point of

view’’ involves separating out questions of justice and

then dialogically testing the validity of social norms

vis-à-vis (U). Distinct from pragmatic and ethical

discourse, the cognitive requirements of moral dis-

course requires an ‘‘idealizing’’ moment of univer-

sality that effectively distances participants from the

contexts of life in which their ‘‘particular identity’’ is

interwoven and as such proffers categorical action

norms (Habermas, 1993, p.12). Despite the possibility

of moral convergence, there remains the distinct

reality that in our complex, pluralistic, and fragmented

society conflict between that which is efficacious,

good, and are inevitable.

Legitimacy

Discourse regarding legitimacy constitutes a third

realm of normativity quite distinct from ethical and

moral orientations. Playing a largely integrative role,

legitimacy-based discourse aims at ensuring that

pragmatic, ethical, and moral discourses are supported

and that the outputs of which are reflected in larger

political and legislative institutions. Although a

complete explication and defense of Habermas’

political theory is well beyond the scope and intent of

this paper, the central argument is that legitimacy

ultimately derives from the communicative power of

citizens (Habermas, 1996, 151). As Darryl Reed

explains, ‘‘It is the exercise of communicative action

in public discourses (involving moral, ethical, and

pragmatic concerns) carried out through a web of

political institutions which generates the basis for

legitimate law’’ (Reed, 1999b, p.26). Understanding

legitimacy in this way, Habermas reconfigures (D) in

terms of a principle of democracy: ‘‘only those statues

may claim legitimacy that can meet with the assent of

all citizens in a discursive process of legislation.’’

(Habermas, 1996, p.110) This move carries with it

two general implications. First, there must be a system

of rights to ensure that (D) can take the shape of a

principle of democracy through the medium of law.

Primarily, these rights include various guarantees

(e.g., freedom of opinion and equal entitlement for

influencing political will formation) for securing and

balancing private and public autonomy. (Habermas,

1996, pp.128–129) Second, there must be defined

principles that serve to ‘‘steer administrative processes

and transform communicative power into adminis-

trative power’’ (Habermas, 1996, pp.168–176). These

principles include ensuring popular sovereignty,

political pluralism, equal protection under the law,

and the separation of state and society (Habermas,

1996, pp. 122–123). Whereas the previous forms of

rational discourse elicit either hypothetical or uni-

versal imperatives, the outputs of legitimacy-based

discourse reflect a dual nature. The dual faced nature

of legal validity is expressed in the fact that legal

norms enable the pursuit of self-interest while at the

same time stem from a discursive process that carries

the mark of communicative legitimacy (Habermas,

1996, p.31).

The priority of the right

As we have seen, Habermas’ discursive account aims

to elaborate communicative means for achieving

social solidarity and order, resolving conflict, and

Stakeholder Management Capability 399

regulating egoistic pursuits. Success in this endeavor

accordingly requires a rather complex array of

discourses situated at each of the previously

differentiated and operationalized levels. Despite the

importance of fostering all forms of discourses,

Habermas grants dialogical priority to moral issues.

Earlier noted, a ‘‘moral point of view’’ constitutes

the privileged and idealized perspective from which

questions of justice can be rationally and impartially

tested. On what grounds does Habermas support a

theory of the right over the good? Well stated in

other more detailed commentaries (Rehg, 1994),

Habermas accepts as a ‘‘contemporary social fact’’

that our post-traditional world is marked by

numerous, fragmented, and conflicting conceptions

of the good life. Although perhaps compelling for a

particular form of life, ethical and other hypothetical

imperatives lack the intersubjective force necessary

for communicatively bridging the normative gap

between competing forms of life. For Habermas,

only norms that find universal assent can serve as a

foundation for normatively and communicatively

structured social interactions (Rehg, 1994, pp.94–

100). The dialogical priority of the right over the

good is explained as follows. If we want to build

solidarity and avoid the ill consequences of instru-

mental reasoning and strategic action, then we must

give first priority to rationally and communicatively

resolving questions of justice.

While moral discourse provides a fundamental

basis for universal agreement, the cognitive force

behind dialogically motivated moral validity claims is

weak and suffers from ‘‘unprecedented’’ cognitive,

motivational, and organizational demands (Haber-

mas, 1996, pp.114–118). Simply put, moral dis-

course requires complementary processes and

institutional forms for spreading ‘‘decontextualized’’

moral insight through complex, strategically driven,

and pluralistic forms of life. Habermas explains that

‘‘only those forms of life that meet universalist

moralities halfway...fulfill the conditions necessary to

reverse the abstractive achievements of decontextu-

alization and demotivation’’ (Habermas, 1990,

p.109). As we have seen, the formulation of legiti-

mate law and institutions represents a crucial com-

ponent in achieving this end. We must remember,

however, that Habermas understands legitimacy as

ultimately deriving its force from the communicative

power of citizens. Further, that this communicative

power must first be developed vis-à-vis robust public

discourses concerning that which is pragmatic, good,

and just. How exactly can we expect to meet

universalistic moralities half way? Following Rehg,

one should seek incorporate discourse–theoretical

intuitions in the decision-making procedures and

organizational processes of various types of institu-

tions (Rehg, 1994, 230). Accordingly, Section 2

attempts to meet this demand by drawing out dis-

course–theoretical implications for SMC rational,

process, and transactional analysis.

Implications for stakeholder management

capability

At the beginning of this paper we identified a per-

sistent and unresolved problem with the transactional

and largely instrumental foundation of SMC. In short,

treating all stakeholder interests as balanceable com-

modities was found to be morally objectionable and

thus unable to capture the complex nature of nor-

mative conflict. We now know that stakeholder

claims come in different varieties and carry with them

distinct cognitive demands. In many cases, stake-

holders and business organizations share similar values

(e.g., economic efficiency, return on investment, cost

minimization) and norms (e.g., principles of meri-

tocracy) sufficient for resolving disputes through

traditional, economic means (e.g., transactional bar-

gaining, negotiation, and exchange). At other times,

however, stakeholder claims are aimed at criticizing

the dominant perspective through which interests are

commonly understood and valuated. Such is the case

with the example of sweatshop labor presented in the

introduction. Stakeholder claims of this kind are

decidedly more ‘‘radical’’ in that they serve to chal-

lenge prevailing economic and exchange-based hori-

zons of understanding. How are managers to capture

and resolve these more radical normative contestations

without immediate recourse to transactional decision-

making models? Unfortunately, SMC fails to provide

managers with a coherent framework for answering

such questions. Attempts to address this concern by

simply asserting that managers ought to in some way

‘‘balance’’ competing conceptions of the good and the

right (Evan and Freeman, 1993) are at best left

wanting of further explanation and at worst guilty of

begging the question.

400 Abe Zakhem

A discourse–theoretical approach provides some

critical insight as to how to understand and move

beyond these difficulties. Essentially, in the face of

more radical normative conflict managers may

choose to adopt one of two general orientations.

Option 1: managers can take a strategic orientation

and endeavor to influence stakeholder relationships

in ways that advance ‘‘private’’ organizational

interests. Although at some level necessary for

conducting business, we found that when left

unchecked strategic action tends to denigrate into

the use of morally questionable means of influence

(e.g., coercion, inducement, or even violence).

Additionally, relationships that are largely strategic in

nature fail to produce the communicative ‘‘glue’’

necessary for a more robust form of mutual under-

standing and solidarity. Given that both of the

problems associated with strategic responses under-

cut the normative acceptability and practical utility

of SMC, we require another approach. Therefore,

Option 2: prior to applying strategic standards of

evaluation, managers ought to seek a communica-

tively driven normative consensus between stake-

holders regarding generalizable and shared interests.

In short, strategic interactions must first be based on

and in someway reflect an intersubjective and dia-

logical recognition of that which is good, right, and

legitimate, with special priority given to moral

issues.

Although there is ongoing philosophical debate

over many aspects of Habermas’ theory of commu-

nicative action and discourse, a brief review of the

business ethics literature suggests that theorists are

beginning to note distinct discourse–theoretical

advantages over more traditional management

approaches. On empirical grounds, a discourse–

theoretical approach is said to better describe the

nature of stakeholder relationships and draw out a

more accurate picture of pluralistic and seemingly

divergent stakeholder claims (Waxenberger and

Spence, 2003). On economic grounds, the com-

municative model is proving to be a compelling

model for determining and advancing organizational

aims and goals (Smith, 2004) and serving as a

mechanism for economic coordination (Kesting,

1998). Finally, normative advantages include the

ability for a discourse-theoretical approach to

systematically incorporate various forms of nor-

mative reasoning (e.g., virtue, deontological, and

consequentialist approaches), provide a more robust

account of social consent (Reed, 1999a), and gain a

deeper understanding of human rights and corporate

legitimacy (Van de Ven, 2005). Contributing to

these ends, the following sub-sections will advance

previous attempts to integrate Habermasian critical

theory with SMC (Jonker and Foster, 2002) and

rethink the traditional categories of rational, process,

and transactional analysis in light of central dis-

course–theoretical principles.

Rational level of analysis

The first step in enhancing stakeholder management

capability is to rationally ‘‘map’’ organization stake-

holder groups and define stakes of each. Regardless

of the specific analytical techniques involved,

applying a discourse–theoretical approach to stake-

holder mapping yields two primary conclusions.

First, the determination of who and what really

counts ought to be the result of operationalized

forms of discursive reasoning. Although this requires

a rather complex array of multi-leveled discourses,

some general suggestions are as follows. At an ethical

level, we could expect that managers rationally

appraise an organization’s mission, values, and cul-

ture and ultimately pose the question, ‘‘Who are we

and what would we like to become?’’ Since the

determination of organizational identity will neces-

sary cut across and impact various conceptions of the

good life, ethical discourses should be structured to

include participation from all stakeholders that are

part of larger business communities (e.g., employees,

shareholders, subcontractors, and local communi-

ties). At a moral level, discursive participants will

likely extend beyond the traditionally defined busi-

ness community (e.g., across industries and down

supply chains) and consist of all those groups im-

pacted by operative principles of justice, which may

include competitors. Within today’s business envi-

ronment, moral questions will likely focus on issues

of economic opportunity, fair trade and competi-

tion, fair labor practices and compensation, and fair

global development strategies, to name a few.

Regarding questions of legitimacy, organizations are

minimally required to support the formulation of

legitimate law, and where appropriate, actively

contribute to the communicative resolution of

Stakeholder Management Capability 401

competing pragmatic, ethical, and moral claims.

Given the globalized nature of business, organiza-

tions should also seek to structure or otherwise

reform governmental and non-governmental inter-

national institutions based on the discursive principle

of democracy. As scholars have already noted, this

may be accomplished by modeling international

governance bodies and organizational standards in

accordance with communicative principles (Steffek,

2003).

Second, a rational stakeholder map must represent

discursive outputs in their categorically differentiated

forms. By treating all stakeholder claims in the same

way, we noted that SMC arbitrary elides logical

differences between the types of validity claims and

thus misses opportunities for rational discourse and

mutual understanding. Accordingly, stakeholder

maps should now clearly lay out the various types of

pragmatic, ethical, moral, and legitimacy-based

claims and likewise specify the values, moral norms,

and legal norms upon which such claims are foun-

ded. In short, managers must understand stake-

holders as discursive claimants who leverage various

types of normative claims qua community member,

natural person, and citizen. This may make stake-

holder mapping a more complex and difficult

activity. Stakeholders claims, however, can no

longer be simply represented as extant interests that

are fully captured and strategically understood

through the lens of transactional exchange. On the

contrary, to reduce all stakeholder’s interests to

balanceable commodities myopically reduces mana-

gerial vision and analysis to only one, largely stra-

tegic, aspect of rational analysis. Additionally,

stakeholder salience must reflect rational analysis

from a moral point of view. Given the dialogical

priority of moral questions, managers should high-

light those claims that can be resolved in relation to a

universalizable interest. Accomplishing this task,

rational stakeholder maps should be structured to

throw into relief questions of justice, perhaps as

‘‘special characteristics,’’ or those features of stake-

holder interaction that indicate a requirement of

particular and continued attention.

This analysis only points in the direction of some

general applications of a discourse–theoretical

approach to rational stakeholder mapping. Indeed,

much work is still needed to develop specific

strategies that support discursive arrangements and

analytic techniques for mapping the complex world

of stakeholder interaction. This, of course, is no

small task. That which should become clear, how-

ever, is the determination of stakeholder identity and

salience is a now regarded as a dynamic and

discursive process that is ultimately driven towards

mutual understanding and participatory solidarity.

Further, this process will be narrowly or broadly

construed depending on the nature of the validity

claim in question and the level of required discursive

participation. In any event, rational mapping must

be designed to effectively move organizations out

from cloistered positions of strategic analysis and into

a more engaged and normatively structured societal

dialogues. This requirement seems perfectly consis-

tent with the spirit and intent of stakeholder man-

agement and the goals of rational mapping.

Process level of analysis

The second step in enhancing an organization’s

stakeholder management capability is to align busi-

ness processes with the normative outputs derived.

In line with a discourse-theoretical analysis, organi-

zational processes ought to be evaluated and

accordingly restructured in line with shared con-

ceptions of that which is good, right, and legitimate.

On the practical front, managers can certainly expect

that there will be definitive gaps between discur-

sively determined values, moral norms, and legal

norms and actual practice. A particular challenge for

bridging the gap between discourse and practice is

the fact that business organizations often reflect

deep-seated propensities for strategic action and re-

sist evening out unequal distributions of power. In

light of this apparent difficulty, pressing questions

come to the fore. How can managers effectively

integrate communicative and strategic actions? What

sorts of organizational process are required to meet

normative discourses half way? How can a moral

point of view take root in environments hostile to

universalistic moralities? Overcoming these chal-

lenges requires reconfiguring organizational process

at two complementary levels.

First, managers ought to bring stakeholders into

strategic decision-making processes. Freeman rec-

ognizes early on that a primary means for effec-

tively aligning interests is to include stakeholder

402 Abe Zakhem

participation at various levels of strategic planning.

(Freeman, 1983; Freeman, 1984, p.69). In this

way, stakeholders will set the strategic tone for a

business organization from the top down. In dis-

course–theoretical terms this implies that bridging

the gap between rational analysis and practice

requires stakeholder representation in a variety of

executive and operationalized forms of pragmatic

discourse. To this point, there has been a con-

siderable amount of research suggesting how this

can actually be accomplished. Jeffery Smith, for

example, cites several examples (e.g., at Saturn

Corporation) where organizations successfully link

the pursuit of strategic ends and communicatively

oriented actions (Smith, 2004). Other scholars

have developed communicative means for effective

environmental analysis, screening, and reporting

(Wiklund, 2005; Dayton, 2002), enterprise plan-

ning (Dillard and Yuthas, 2006), and strategic

development efforts in developing countries

(Reed, 2002). Bringing stakeholders into higher-

level strategic and pragmatic discourses, however,

is but one piece of the puzzle. Bridging the gap

between discourse and practice requires additional

process analysis.

Second, managers ought to analyze and design

management systems to ensure that an organization’s

day-to-day operations reflect and meet stakeholder

claims. Complementing efforts at the strategic plan-

ning level, stakeholders will also need to set the

operational tone of an organization from the bottom

up, so to speak. Unfortunately, as others have pointed

out, this aspect of process analysis, once prominent in

Freeman’s earlier writings, has since been unduly

neglected (Jonker and Foster 2002, p.190). Turning

our attention to this level of analysis from a discourse–

theoretical perspective yields valuable insight. In

particular, it means that management systems should

be in place to ensure that shared conceptions of the

good, right, and legitimate are communicatively re-

flected in an organization’s everyday operations.

Although there are many types of management

systems that could fit the bill, there are good reasons

for suggesting that modeling organizational ethics

programs along discourse–theoretical lines is a good

starting place. First, ethical programs have proven to

be effective and systematic means for positively

influencing organizational-ethical culture (Izraeli and

Schwartz, 1998). Second, the key components for an

effective ethics program are well defined in US fed-

eral law and flexible enough to apply to all types of

business organizations (Palmer and Zakhem, 2001).

Finally, there is a growing movement that suggests

that ethical programs should be designed and ulti-

mately evaluated from a ‘‘moral point of view’’

(Reynolds and Bowie, 2004).

Although we cannot apply discourse–theoretical

principles to all components of a robust ethical

program, several implications seem obvious. Ethical

codes of conduct, mission statements, and proce-

dures should appropriately reflect shared values,

moral norms, and legal norms. Such documentation

should be communicatively transmitted, understood

at all levels of the organization, and be open to

rational criticism and change. Ethical training pro-

grams should include means to develop communi-

cative competence and moral reasoning. Perhaps

most importantly, ethical audits should be conducted

to both monitor system performance and serve as a

catalyst for introducing a moral point of view into

company operations and routine processes (Garcı́a-

Marzá, 2005). In other words, ethical program

effectiveness and process capability should be audited

and evaluated, in large part, against the level of

communicatively and discursively achieved agree-

ment and solidarity. Furthermore, the results of

ethical audits should be publicly reported in a

manner consistent with communicative principles

(Yuthas et al., 2002).

Again, this analysis only points in the general

direction of how to analyze and structure organiza-

tional processes from a discourse–theoretical per-

spective. We should, however, come to the

realization that overcoming gaps between discourse

and practice requires continued process analysis at all

levels of the organization.

Transactional level of analysis

The final step in enhancing and organization’s stake-

holder management capability is for managers to

establish and execute ‘‘win–win’’ transactional

exchanges with stakeholders. It is through transac-

tional processes that managers must, at some level,

engage stakeholders in an effort to surface discontent

and ‘‘balance’’ competing claims. In this arena it can

also be expected that both managers and stakeholders

Stakeholder Management Capability 403

will, and perhaps must, exert some level of strategic

influence. While transactional negotiation and ex-

change should continue to play a central role, it can no

longer be regarded as the ‘‘bottom line’’ for stake-

holder management. As Robert Phillips recognizes,

stakeholder relationships should have moral restric-

tions rather than being merely strategic in nature

(Phillips, 2003, p.38). From a discourse–theoretical

perspective, this means that transactional relationships

ought to be ultimately judged from a moral point of

view. In other words, transactional interactions must

first be based on and in someway reflect an intersub-

jective and dialogical recognition of that which is

right.

In the complex world of business, however,

establishing shared normative convictions through

discourse is likely to be an ongoing, fragile, and often

open-ended task of argumentation, learning, and

continual improvement. Accordingly, managers will

potentially need to conduct business and engage

stakeholders as transactional partners without nec-

essarily fully realizing moral consensus. In the

absence of communicatively established moral

norms, however, bargaining can still occur and at

least indirectly reflect a moral point of view. As

Habermas recognizes, bargaining processes are

appropriately tailed for situations in which social

power relations cannot be neutralized in the way

rational discourses presuppose. Whereas a rationally

motivated consensus rests on reasons that convince

all parties in the same way, compromised bargains

can be accepted by the different parties each for its

own different reasons. While transactional bargain-

ing cannot replace moral discourse, it can be regu-

lated from the standpoint of fairness. At a minimum,

this requires that all negotiating parties be provided

with ‘‘an equal opportunity to influence one another

during the actual bargaining, so that all the affected

interests can come into play and have equal changes

of prevailing.’’ (Habermas, 1996, pp. 165–167)

Whether directly or indirectly, the ‘‘bottom line’’

for stakeholder management must be determined

from a moral point of view.

Concluding remarks

In this paper we have articulated and analyzed a

persistent problem with SMC transactional analysis

and balancing. Recognizing the need to comple-

ment SMC analysis with a ‘‘moral point of view,’’

we parted company with traditional normative ap-

proaches and recast morality in terms of Habermas’

discourse–theoretical and ultimately communicative

perspective. This exegesis leads to several important

implications for SMC. First, that stakeholder map-

ping should be regarded as a dynamic and discursive

process and one that is ultimately driven towards

achieving mutual understanding. Second, that

overcoming gaps between discourse and practice

requires continued process analysis at both strategic

and operational levels. Lastly, that the ‘‘bottom line’’

for transactional involvement with stakeholders must

be determined from a moral point of view. While

this paper only provides a general framework for

adapting discourse–theoretical principles to SMC

analysis, the conclusions drawn will hopefully inform

more detailed research.

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Department of Philosophy,

Seton Hall University,

400 South Orange Avenue, Fahy Hall, South Orange,

NJ, 07042, U.S.A

E-mail: [email protected]

Stakeholder Management Capability 405