What is the purpose of a corporation? In 2019, the Business Roundtable, which represents almost 200 of America’s leading CEOs, published an answer to this question, committing to lead their companies “for the benefit of all stakeholders,” by which they meant customers, employees, suppliers, communities, and shareholders. The media jumped on this idea, and it made headlines around the world for its contrast to the traditional view of corporations as existing solely to serve shareholders. But in truth, it wasn’t a new idea at all. The notion of “stakeholder theory” or “stakeholder capitalism” has been around since the 1970s, slowly gaining traction and cultural mindshare. And one of the key proponents and developers of the theory has been Ed Freeman, a professor at the University of Virginia’s Darden School of Business and author of numerous books and papers on the topic, including most recently The Power of And: Responsible Business Without Trade-Offs. In a culture that is too quick to condemn business as the root of all evils, Ed is a refreshingly positive voice for the transformative power of entrepreneurism. In our conversation, we reflected on how to improve access to opportunity, how to encourage innovation, and why—almost fifty years after its emergence—the notion of stakeholder capitalism is finally getting a moment in the sun.
More about Ed Freeman
R. Edward “Ed” Freeman is a prolific educator, consultant, and speaker, best known for his work on the topics of Stakeholder Management and Business Ethics. He also teaches Leading with Meaning, helping organizations create a culture that brings out the best in everyone. He is University Professor and Olsson Professor of Business Administration, and an academic director of the Institute for Business in Society at the University of Virginia Darden School of Business. Freeman is co-author of The Power of And: Responsible Business Without Trade-Offs (Columbia, 2020), Bridging the Values Gap (Berrett-Koehler, 2015) Stakeholder Theory: The State of the Art (Cambridge, 2010) and Managing for Stakeholders (Yale, 2007). He is author or editor of more than 30 volumes and 150 articles in the areas of stakeholder management, business strategy and business ethics, and perhaps best known for his award-winning book: Strategic Management: A Stakeholder Approach (Cambridge, 2010), originally published in 1984, in which he traced the origins of the stakeholder idea to a number of others and suggested that businesses build their strategy around their relationships with key stakeholders. Freeman has a Ph.D. in philosophy from Washington University and a B.A. in mathematics and philosophy from Duke University. He is a lifelong student of philosophy, martial arts and the blues.