Business for Peace: A New Paradigm for the Theory of the Firm

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Abstract

The paper challenges the notion embedded in the mainstream Theory of the Firm (Jensen and Meckling, 1976; Dietrich, and Krafft, 2012) that society benefits when firms collectively pursue profit maximization as their sole, or primary, objective. It departs from extant approaches that follow a limited understanding of the firm according to which profit is the quasi-exclusive raison d’être of business. As corporate social responsibility (CSR) has been treated as a turn towards a more ethically-informed understanding of business (e.g., Mason and Simmons, 2011), this paper recognizes that it lacks conceptual clarity (e.g., Sharin and Zairi, 2007) – particularly in distinguishing between that which is “good” versus that which is merely less harmful, or “responsible.” More importantly, corporate social responsibility lacks a broader repositioning of the true business objective as encompassing a greater good, extending beyond mere profit maximization (Sabadoz, 2011).
The notion of Business for Peace is proposed to provide an overarching framework for the substance of “responsibility,” “sustainability,” and “positive impact,” addressing the shortcomings of the dominant contemporary narrative. In this paper, “Business for Peace” is placed in the center of corporate activity rather than under the umbrella of corporate social responsibility, as promoted by the United Nations Global Compact (Williams, 2008; Guthrie, 2014). Following the argumentation in Donaldson and Preston (1995), this conceptualization aims to be descriptive (ethical business fosters peace), instrumental (how business can foster peace), normative (business should foster peace), and managerial (recommending practices that constitute a peace management philosophy, as business can use tools to evaluate its impact on peace). Business for Peace seeks to address the issues outlined by Donaldson and Dunfee (1995) and potentially provide an adequate pathway towards a hypernorm theory that is capable “of expressing the moral complexity necessary to provide practical normative guidance for many business ethics contexts” (ibid.).
Original languageEnglish
Title of host publicationAlternatives to the Theory of the Firm/ Alternative theories of the firm
EditorsDavid Korten, Michael Pirson, David Wasieleski, Erica Steckler, Ricardo Aguado
PublisherRoutledge
Publication statusAccepted/In press - 2021
MoE publication typeA3 Part of a book or another research book

Publication series

NameHumanistic Management Series

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