ABSTRACT
The primary impetus behind the development of stakeholder theory has been the addition of ethics to the traditional concentration of the theory of the firm on issues of efficiency and effectiveness directed towards the maximization of shareowner wealth. This chapter discusses the impoverishment of economic theory due to the abandonment of its roots in moral philosophy. One main reason why ethical issues are so neglected in the economic literature is that many leading scholars consider themselves to be conducting “positivistic” or “scientific” research which is, therefore, amoral. Ronald Coase writes: When an economist is comparing alternative social arrangements, the proper procedure is to compare the total social product yielded by these different arrangements. However, Coase's treatment of property rights also provides an exceptional example of how economic theory could be strengthened by examination through the lens of moral theory. Strategic stakeholder considerations are those which concern stakeholders only to the extent that they may have an impact on the firm's traditionally measured economic performance.
