From imagination to realization: A legal foundation for stakeholder theory

Abstract

Stakeholder theory has often been placed in opposition to law, primarily because of misconceptions about fiduciary law. If managers are forced to choose between law and stakeholder theory, then there is no choice, for managers must obey the law. Bringing the two disciplines together, then, strengthens the appeal of both. In addition, it assists managers in bridging the gap between theory and practice. It enables business ethicists and lawyers to frame issues according to what managers already know, and what good managers already do.It is possible to argue for the advocacy of legal imagination. Such a notion encompasses the process of challenging accepted legal interpretations in order to motivate dynamic, evolving legal analysis. The gap between business law and business practices underscores the problem that legal imagination endeavors to attack. It encourages the search for creative solutions to ongoing dilemmas.Legal imagination is not a new term within law, but it has not yet been well developed. Using legal imagination could reveal potential within the law for a legal theory of stakeholder management. Traces of such a theory exist within current scholarship. This paper explores how legal principles from contracts, torts, and property can be integrated to help develop a legal foundation for stakeholder theory.

Citation

Radin, T.J. (2002), "From imagination to realization: A legal foundation for stakeholder theory", Re-Imaging Business Ethics: Meaningful Solutions for a Global Economy (Research in Ethical Issues in Organizations, Vol. 4), Emerald Group Publishing Limited, Leeds, pp. 31-49. https://doi.org/10.1016/S1529-2096(02)04004-X