TY - JOUR
T1 - A Values-based Approach to Understanding Corporate- Stakeholder Interactions
AU - Kleinman, Gary
AU - Palmon, Dan
N1 - Publisher Copyright:
© 2022, The Author(s), under exclusive licence to Springer Nature B.V.
PY - 2023/4
Y1 - 2023/4
N2 - This paper develops a model of focal firm-stakeholder interactions incorporating the values of each party and the possible impact of incomplete contracts between them. The paper offers a values-based analysis of the forces driving the interaction between the parties. Firms exist in a web of perceived obligations and rights. We argue that entities in firm-stakeholder relationships have operational goals supported by terminal and instrumental values that affect the way that the parties behave and interact with others. Since various parties to an interaction may have different values and goals, this model allows for strategic interactions. While some relationships are bound by law or contract, others are not. Thus, the outcome cannot be prescribed with certainty, so an important question is whether the desired outcomes can be enforced. We draw upon contract theory to explore these issues, noting that performance under any contract is problematic since it cannot be assured in advance. We argue that the determinants of outcomes between the focal firm and its stakeholder groups are affected by the values and goals of each entity, while the nature of the contracts between them and the environment within which the interactions occur influence what can be achieved.
AB - This paper develops a model of focal firm-stakeholder interactions incorporating the values of each party and the possible impact of incomplete contracts between them. The paper offers a values-based analysis of the forces driving the interaction between the parties. Firms exist in a web of perceived obligations and rights. We argue that entities in firm-stakeholder relationships have operational goals supported by terminal and instrumental values that affect the way that the parties behave and interact with others. Since various parties to an interaction may have different values and goals, this model allows for strategic interactions. While some relationships are bound by law or contract, others are not. Thus, the outcome cannot be prescribed with certainty, so an important question is whether the desired outcomes can be enforced. We draw upon contract theory to explore these issues, noting that performance under any contract is problematic since it cannot be assured in advance. We argue that the determinants of outcomes between the focal firm and its stakeholder groups are affected by the values and goals of each entity, while the nature of the contracts between them and the environment within which the interactions occur influence what can be achieved.
KW - Evolutionary system design
KW - Incomplete contracts
KW - Inter-organizational relationships
UR - http://www.scopus.com/inward/record.url?scp=85144734462&partnerID=8YFLogxK
U2 - 10.1007/s10726-022-09808-8
DO - 10.1007/s10726-022-09808-8
M3 - Article
AN - SCOPUS:85144734462
SN - 0926-2644
VL - 32
SP - 301
EP - 326
JO - Group Decision and Negotiation
JF - Group Decision and Negotiation
IS - 2
ER -