Jose Luis Retolaza

Dignity at the Level of the Firm: Beyond the Stakeholder Approach

After the financial crisis that took place in 2008, many scholars proposed a new position for the firm inside society; one in which the generation of value for all stakeholders and the environmental responsibility were basic points (Porter and Kramer 2011). However, the dominant economic anthropology (the neoclassical theory of the firm) still proposes that the objective of the firm is short-term profit maximization (Jensen 2002). On the other hand, other academics have used the stakeholder approach to direct the objectives of the firm not only to maximize shareholders’ interest, but also the interests of all economic actors that interact inside or with the firm. The main objective of this chapter is to present a model that could facilitate firms to deal with the issue of morality directed to the preservation and development of human dignity. In short, the paper’s intention is to go beyond the stakeholder approach and propose the ISCT as a valid approach to integrate the discussion about human dignity at the level of the firm in an attempt to reconnect firms’ objectives with the interest of society.

Single case research methodology: a tool for moral imagination in business ethics

Purpose Although there are several often-used case research methods for teaching purposes, these cannot be used to conduct scientific research into business ethics, perhaps owing to criticism levelled against it. The precise aim of this work is to expound and argue for its use within the framework of scientific hypothetical-deductive methodology. Design/methodology/approach The opportunities offered by this methodological approach, both from an inductive (Eisenhardt, 1989; Dyer and Wilkins, 1991) and a deductive perspective (Yin, 1993; Carson et al., 2000), have been wasted, creating a need for scientific contributions within this area; hence, this study. It was carried on a theoretical approach of the use of single case applied to corporate management based on religion and spirituality inclusion. Findings The results obtained indicate that the single-case research method makes it possible to put forward alternative hypotheses to the dominant hypothesis, making contributions to the theory. Concretely, the scientific legitimacy of its use is justified by what it has been called “possibilistic hypothesis” for what it is not necessary to collect a large data or make an empiric research. Practical implications In the field of business ethics, these hypotheses (possibilistics) make alternatives stand out that widen the moral responsibility of decision-makers. It implies an open mind for decision-makers and rigorous arguments using just a single case. Reinforce and make them easier based on moral imagination improvement. Originality/value The decision process is complex, but in this rich method, the single-case study could permit establishing rigorous and robust decisions easily. The case study is not used widely for management, but this perspective could enrich and increase its use.

The Role of Shapeholders as a Link between a Firm and Non-Stakeholders: The Pursuit of an Economy for the Common Good Based on Stakeholder Theory

Abstract Stakeholder theory may be the Archimedes lever that allows defining a possible Economy for the Common Good; however, the theory’s current level of development does not enable it to escape the criticism that considers it nothing more than shared egoism. The expansion of the concept of stakeholder, including not only groups that collaborate in the creation of value or which are actively impacted by the organisation, but also incorporating those affected by omission – non-stakeholders – would lead to the reconciliation of stakeholder theory and the common good. Nevertheless, to set it within corporate practice, besides having selfish and altruist incentives, would be of interest for the conceptual development of shapeholders, understood as the link between non-stakeholders’ interests and needs, and firms.

Jesuit Business Education Model: In Search of a New Role for the Firm Based on Sustainability and Dignity

Abstract: Jesuit Universities have been training responsible professionals since the 16th century. Given this educational tradition, and in the face of the new challenges posed by the present-day social and economic situation, the Society of Jesus has started to implement the “Ledesma-Kol-venbach” educational paradigm in its higher education institutions. Instead of short-term profit maximization, the Ledesma-Kolvenbach model considers sustainability, human dignity and social well-being as key elements in business strategies. The objective of this paper is to propose a method capable of measuring the economic and social value generated by a firm managed in accordance with the four dimensions of the Ledes-ma-Kolvenbach model. The methodology is developed in three steps. In the first place, the authors explore the existing literature on the Ledes-ma-Kolvenbach model and its roots in Jesuit education. Secondly, they analyze the literature that studies the role of the firm from a neoclassical perspective, as well as other complementary or alternative approaches. In the third place, they present an empirical model that has already been tested in different organizations, designed to measure the social and economic value generated by firms. The main result of the paper is a method that can be used to measure the social and the economic value generated by firms, such that society, managers and public administrations have an operational tool to present and evaluate the economic and social performance of firms.

Stakeholder Engagement at Extanobe: A Case Study of the New Story of Business

This article has used the case of the Etxanobe restaurant in Bilbao (Spain) to illustrate value creation for stakeholders according to the principles of the new story of business: value creation, purpose, interconnection, simultaneous creation of value, cooperation, and human complexity. This work seeks to contribute to the analysis of value creation for stakeholders, and illustrate in a single case the effectiveness of these six principles, which can be validated in small businesses at least. Likewise, the results of this study have significant implications concerning value creation for stakeholders in business; cooperation, the power of relationships, and the interconnections among stakeholders are of greater importance, reinforcing stakeholder engagement.

Process Model Analysis and Calculation: Spoly

This chapter develops the process of calculating the monetary value of social value based on the “Polyhedral Model”, which consists of six steps. In step one the process begins with the identification of the working team and the setting of the timetable. Step two involves work on the strategic and management documents of the organization, ending with the preparation of a consensus-based stakeholder map. Step three focuses on identifying the value variables perceived by stakeholders, mainly through phenomenological interviews, and ends with the preparation of the Value Variables Matrix (VVM) for the organization. Step four identifies the outputs generated by the organization for each value variable and seeks potential proxies which, after a process of fuzzy calculation, enable reference values to be identified for the respective outputs. Step five entails the quantification of the calculations as per the “Polyhedral Model”, making it possible to see the value generated for each stakeholder, the shared value and the consolidated value in numerical and graphic forms. The sixth and final step is a review of the whole process and the proposal of improvements for the next calculation cycle, which generally coincides with the next financial year.

Literature Review: Previous Methodologies

This chapter classifies and analyzes the main methods currently in use for quantifying the social value generated by organizations. As an aid in classification, they are grouped under five main headings: Impact Analysis, Assessment of externalities, Monetary Valuation, Management Improvements, and Rating Systems. An in-depth analysis is then conducted of the techniques of monetary valuation, and specifically of its common basis in the form of cost-benefit analysis. Two main groups are distinguished: one centered on the reduction of inputs and the other on the maximizing of outputs. In the latter a distinction is drawn between those that refer to past outputs (trading) and to future outputs (investment). Part two examines the differences between SROI as a method for analyzing return on investment and the synchronous methods of monetization of value. The essential difference is that the former operates on a set of years in which returns on investment take place and the latter focuses on the data for a past period, normally the financial year. An in-depth examination is also made of the limitations of using SROI to quantify social value generated in the past.

Main Problem in Displaying the Social Value Generated by Organizations

The main problem is that we only look systematically at the financial value created or destroyed by firms, since conventional accounting is only concerned with reflecting value for shareholders. We do not currently have instruments that provide us with an intersubjective view of the value generated or subtracted by organizations for their stakeholders as a whole; that value is not just financial but also social, environmental and emotional at least. Any proposed solution must be based on a new discourse of business as a community of stakeholders who share resources and risks to generate value, and must therefore distribute the resulting value among themselves in a balanced fashion. To that end it is necessary to develop social accounting for stakeholders and to properly standardize it so that progress can be made towards a comprehensive, intersubjective framework or value generated and distributed.

Background: Social Role of Companies and Success Indicators

The basic function of any organization, i.e. that which legitimizes it socially, is to create value for society as a whole; however concern for the economic and financial factors involved in all trading activities has resulted in the development of accounting focused on these instrumental issues. The successful development of this accounting has led to results concerned with the actual purpose of organizations being relegated or overshadowed. This chapter analyses the different theories that make economic results a good indicator or social value: transaction cost theory, contract theory, agency theory, etc. These are contrasted with a system-based outlook taken from stakeholder theory, seen as a more suitable paradigm for understanding the inherent nature of organizations and their consequent function in society. Finally, the main indicators being developed are reviewed in an attempt to visualize the social value generated fundamentally by companies.

Polyhedral Model: Social Value Model for Stakeholders

Based on the previous analysis of the different methods for quantifying social value and the fours prior assumptions established above—Action Research, Stakeholder Theory, the phenomenological perspective and fuzzy logic—a comprehensive, holistic model is developed that we call the “Polyhedral Model”. This model makes it possible to identify and then quantify the distribution of value between the various stakeholders of an organization. The consolidation of the value generated for the full set of stakeholders reflects the overall value generated by the organization. This model differs from the conventional conflict-of-interest-based approach normally associated with income distribution in that it introduces a holistic concept of value that includes at least financial value, so-called social value and emotional value, though we have been unable to draw up a model for quantifying this last type. Stakeholders do not oppose one another or necessarily converge fully in terms of perceived value; rather there is some degree of value shared between some or all stakeholders, and some degree of specific value for individual stakeholders. The more closely aligned the interests of stakeholders are, the greater the shared value and therefore the joint appropriation of value become. The less closely aligned they are, the more conflict there will be for the specific appropriation of value.