Stakeholder Theory and Human Rights

Stakeholder theory has recently emerged as among the most studied frameworks available for understanding the responsible strategic management of business. However, stakeholder theory is said to struggle with important responsibilities involving exploited actors existing beyond an organization’s narrow and direct business relationships. Here we argue that this critique is understandable, but misguided. It arises from the want of explicit reference to stakeholder theory’s deeper foundations in liberal philosophy. This liberal foundation is most easily – and least controversially – expressed in terms of the moral minimums provided by the language of human rights. Helpfully, the language of human rights has itself seen a remarkable increase in attention among business scholars under the aegis of business and human rights (BHR). Here we put these two important ways of understanding responsible business into conversation with one another. Because respect for human rights is both morally and temporally prior to other stakeholder obligations, we elaborate a two-step process in which opportunities are first evaluated through a human rights filter before proceeding to an analysis of the sort of voluntary, reciprocal relationships more typical of contemporary stakeholder theory. We conceptualize a rights-sensitive stakeholder theory that accounts for the prerequisite step of respecting rightsholders in firms’ decision making.