Skip to main content

Engaging Ethically: A Discourse Ethics Perspective on Social Shareholder Engagement

  • Jennifer Goodman (a1) and Daniel Arenas (a1)

The primacy of shareholder demands in the traditional theory of the firm has typically excluded marginalised stakeholder voices. However, shareholders involved in social shareholder engagement (SSE) purport to bring these voices into corporate decision-making. In response to ethical concerns about the legitimacy of SSE, we use the lens of discourse ethics to provide a normative analysis at both action and constitutional levels. By specifying three normative questions, we extend the analysis of SSE to identify a political role for shareholders in pursuit of the common good. We demonstrate the desirability for SSE to promote regulatory/institutional change to guarantee marginalised stakeholders a voice in corporate decisions that affect them. The theory of SSE we propose thus calls into question the stark separation of the political and economic spheres and reveals an underlying tension, often overlooked, within the responsible investment literature.

    • Send article to Kindle

      To send this article to your Kindle, first ensure is added to your Approved Personal Document E-mail List under your Personal Document Settings on the Manage Your Content and Devices page of your Amazon account. Then enter the ‘name’ part of your Kindle email address below. Find out more about sending to your Kindle. Find out more about sending to your Kindle.

      Note you can select to send to either the or variations. ‘’ emails are free but can only be sent to your device when it is connected to wi-fi. ‘’ emails can be delivered even when you are not connected to wi-fi, but note that service fees apply.

      Find out more about the Kindle Personal Document Service.

      Engaging Ethically: A Discourse Ethics Perspective on Social Shareholder Engagement
      Available formats
      Send article to Dropbox

      To send this article to your Dropbox account, please select one or more formats and confirm that you agree to abide by our usage policies. If this is the first time you use this feature, you will be asked to authorise Cambridge Core to connect with your <service> account. Find out more about sending content to Dropbox.

      Engaging Ethically: A Discourse Ethics Perspective on Social Shareholder Engagement
      Available formats
      Send article to Google Drive

      To send this article to your Google Drive account, please select one or more formats and confirm that you agree to abide by our usage policies. If this is the first time you use this feature, you will be asked to authorise Cambridge Core to connect with your <service> account. Find out more about sending content to Google Drive.

      Engaging Ethically: A Discourse Ethics Perspective on Social Shareholder Engagement
      Available formats
Hide All
Admati, A. R. & Pfleiderer, P. C. 2009. The ‘Wall Street Walk’ and shareholder activism: Exit as a form of voice. The Review of Financial Studies, 22(7): 24452485.
Allen, F., Carletti, E., & Marquez, R. 2009. Stakeholder capitalism, corporate governance and firm value, Working paper: University of Pennsylvania.
Anabtawi, I. 2007. Some skepticism about increasing shareholder power. Journal of Scholarly Perspectives, 3(1): 124.
Anabtawi, I. & Stout, L. 2008. Fiduciary duties for activist shareholders. Stanford Law Review, 60(5): 12551308.
Arenas, D., Lozano, J. M., & Albareda, L. 2009. The role of NGOs in CSR: Mutual perceptions among stakeholders. Journal of Business Ethics, 88(1): 175197.
Arjaliès, D. 2010. A social movement perspective on finance: How socially responsible investment mattered. Journal of Business Ethics, 92(Supplement 1): 5778.
Arnold, D. G. 2013. Global justice and international business. Business Ethics Quarterly, 23(1): 125143.
Barnea, A. & Rubin, A. 2010. Corporate social responsibility as a conflict between shareholders. Journal of Business Ethics, 97: 7186.
Baur, D. & Arenas, D. 2014. The value of unregulated business-NGO interaction: A deliberative perspective. Business and Society, 53(2): 157186.
Bebbington, J., Brown, J., Frame, B., & Thomson, I. 2007. Theorizing engagement: The potential of a critical dialogic approach. Accounting, Auditing & Accountability Journal, 20(3): 356381.
Bebchuk, L. 2014. The million-comment-letter petition: The rulemaking petition on disclosure of political spending attracts more than 1,000,000 SEC comment letters., accessed 7th October 2014.
Bebchuk, L. A. 2005. The case for increasing shareholder power. Harvard Law Review, 118(3): 835914.
Becht, M., Franks, J., Mayer, C., & Rossi, S. 2009. Returns to shareholder activism: Evidence from a clinical study of the Hermes UK Focus Fund. The Review of Financial Studies, 22(8): 30933129.
Beck, U. 1994. Reflexive modernization: Politics, tradition and aesthetics in the modern social order. Stanford, CA: Stanford University Press.
Beschorner, T. 2006. Ethical theory and business practices: The case of discourse ethics. Journal of Business Ethics, 66(1): 127139.
Brenkert, G. G. 1992. Freedom, participation and corporations: The issue of corporate (economic) democracy. Business Ethics Quarterly, 2(3): 251269.
Campbell, C. J., Gillan, S. L., & Niden, C. M. 1999. Current perspectives on shareholder proposals: Lessons from the 1997 proxy season. Financial Management, 28(1): 8998.
Chung, H. & Talaulicar, T. 2010. Forms and effects of shareholder activism. Corporate Governance: An International Review, 18(4): 253257.
Clark, G. L., Salo, J., & Hebb, T. 2008. Social and environmental shareholder activism in the public spotlight: US corporate annual meetings, campaign strategies, and environmental performance. Environment and Planning A, 40(6): 13701390.
Cohen, J. 1997. Deliberation and democratic legitimacy. In Bohman, J. & Rehg, W. (Eds.), Deliberative democracy: Essays on reason and politics: 6792. Cambridge, Massachusetts: MIT Press.
Copland, J. R. & O’Keefe, M. M. 2013. Proxy Monitor 2013: A report on corporate governance and shareholder activism. accessed 13th June 2014.
Coumans, C. 2012. Mining, human rights and the socially responsible investment industry: Considering community opposition to shareholder resolutions and implications of collaboration. Journal of Sustainable Finance and Investment, 2(1): 4463.
Davis, J. H., Schoorman, F. D., & Donaldson, L. 1997. Toward a stewardship theory of management. Academy of Management Review, 22(1): 2047.
den Hond, F. & de Bakker, F. G. A. 2007. Ideologically motivated activism: How activist groups influence corporate social change activities. Academy of Management Review, 32(3): 901924.
Dhir, A. A. 2006. Realigning the corporate building blocks: Shareholder proposals as a vehicle for achieving corporate social and human rights accountability. American Business Law Journal, 43(2): 365412.
Dhir, A. A. 2012. Shareholder engagement in the embedded business corporation: Investment activism, human rights, and TWAIL discourse. Business Ethics Quarterly, 22(1): 99118.
Donaldson, T. & Preston, L. E. 1995. The stakeholder theory of the corporation: Concepts, evidence, and implications. Academy of Management Review, 20(1): 6591.
Dryzek, J. S. 2000. Deliberative democracy and beyond. Oxford, UK: Oxford University Press.
Elster, J. 1998. Deliberative democracy. Cambridge, UK: Cambridge University Press.
Engle, E. A. 2006. What you don’t know can hurt you: Human rights, shareholder activism and SEC reporting requirements. Syracuse Law Review, 57: 6396.
Eurosif. 2006. European SRI Study., retrieved 29th July 2012.
Eurosif. 2012. European SRI Study., retrieved 1st December 2012.
Eurosif. 2013. Shareholder Stewardship: European ESG Engagement Practices., retrieved 20th October 2014.
Eurosif. 2014. European SRI Study., retrieved 18th October 2014.
Ferraro, F. & Beunza, D. 2014. Why talk? A process of model of dialogue in shareholder engagement, Working Paper Series, SSRN. London: London School of Economics.
FRC. 2012. The UK Stewardship Code. London: Financial Reporting Council Ltd.
Freeman, R. E. & Reed, D. L. 1983. Stockholders and stakeholders: A new perspective on corporate governance. California Management Review, 25(3): 88106.
Freeman, R. E. 1984. Strategic management: A stakeholder approach. Boston: Pitman.
Freshfields, . 2005. A legal framework for the integration of environmental, social, and governance issues into institutional investment: Freshfields Bruckhaus Deringer, UNEP FI.
Garriga, E. & Mele, D. 2004. Corporate social responsibility theories: Mapping the territory. Journal of Business Ethics, 53(1-2): 5171.
Gilbert, D. U. & Rasche, A. 2007. Discourse ethics and social accountability: The ethics of SA 8000. Business Ethics Quarterly, 17(2): 187216.
Gillan, S. L. & Starks, L. T. 2007. The evolution of shareholder activism in the United States. Journal of Applied Corporate Finance, 19(1): 5573.
Glac, K. 2010. The influence of shareholders on corporate social responsibility. History of Corporate Responsibility Project. Working Paper No. 2. Center for Ethical Business Cultures located at the Opus College of Business, University of St. Thomas - Minnesota: 1–38.
Goldstein, M. 2011. The state of engagement between US corporations and shareholders: 1–30: IRRC Institute.
Goodman, J., Louche, C., van Cranenburgh, , , K. C., & Arenas, D. 2014. Social shareholder engagement: The dynamics of voice and exit. Journal of Business Ethics, 125(2): 193210.
Goranova, M. & Ryan, L. V. 2014. Shareholder activism: A multidisciplinary review. Journal of Management, 40(5): 12301268.
Gorton, G. & Schmid, F. A. 2004. Capital, labor, and the firm: A study of German codetermination. Journal of the European Economic Association, 2(5): 863905.
Graves, S., Rehbein, K., & Waddock, S. 2001. Fad and fashion in shareholder activism: The landscape of shareholder resolutions, 1988-1998. Business and Society Review, 106(4): 293314.
Guay, T., Doh, J., & Sinclair, G. 2004. Non-governmental organizations, shareholder activism, and socially responsible investments: Ethical, strategic, and governance implications. Journal of Business Ethics, 52: 125139.
Gutmann, A. & Thompson, D. 2004. Why deliberative democracy? Princeton: Princeton University Press.
Habermas, J. 1984. The theory of communicative action vol. 1: Reason and the rationalization of society. (McCarthy, T., Trans.). Boston: Beacon Press.
Habermas, J. 1987. The theory of communicative action vol. 2: Lifeworld and system: A critique of functionalist reason. (McCarthy, T., Trans.). Boston: Beacon Press.
Habermas, J. 1992. Moral consciousness and communicative action. (C. N. Lenhardt, S. W. (trans). Trans.). Cambridge: Polity Press.
Habermas, J. 1996. Between facts and norms: Contributions to a discourse theory of law and democracy (Rehg, W., Trans.). Cambridge, MA: MIT Press.
Hebb, T., Hoepner, A., Rodionova, T., & Sanchez, I. 2014. Power and shareholder saliency, Working paper WP#14-01: 125. Ottawa: Carleton Centre for Community Innovation.
Hendry, J. 2001. Missing the target: Normative stakeholder theory and the corporate governance debate. Business Ethics Quarterly, 11(1): 159176.
Hennchen, E. forthcoming. Royal Dutch Shell in Nigeria: Where do responsibilities end? Journal of Business Ethics: 125.
Hernandez, M. 2008. Promoting stewardship behavior in organizations: A leadership model. Journal of Business Ethics, 80(1): 121128.
Hernandez, M. 2012. Toward an understanding of the psychology of stewardship. Academy of Management Review, 37(2): 172193.
Hirschman, A. O. 1970. Exit, voice, and loyalty: Responses to decline in firms, organizations, and states. Cambridge: Harvard University Press.
Holzer, B. 2008. Turning stakeseekers into stakeholders: A political coalition perspective on the politics of stakeholder influence. Business and Society, 47(1): 5067.
ICCR. 2014a. Roundtables., accessed 26th April 2014.
ICCR. 2014b. One million comments urge the SEC to stop secret corporate political spending., accessed 7th October 2014.
ICCR. 2014c. Our approach., accessed 20th October 2014.
Jamali, D. 2008. A stakeholder approach to corporate social responsibility: A fresh perspective into theory and practice. Journal of Business Ethics, 82: 213231.
Jensen, M. C. & Meckling, W., H. 1976. Theory of the firm: Managerial behavior, agency costs and ownership structure. Journal of Financial Economics, 3(4): 305360.
Jones, T. M. & Felps, W. 2013. Stakeholder happiness enhancement: A neo-utilitarian objective for the modern corporation. Business Ethics Quarterly, 23(3): 349379.
Kang, N. & Moon, J. 2012. Institutional complementarity between corporate governance and Corporate Social Responsibility: A comparative institutional analysis of three capitalisms. Socio-Economic Review, 10(1): 85108.
Kraemer, R., Whiteman, G., & Banerjee, B. 2013. Conflict and astroturfing in Niyamgiri: The importance of national advocacy networks in anti-corporate social movements. Organization Studies, 34(5-6): 823852.
Lee, M.-D. P. & Lounsbury, M. 2011. Domesticating radical rant and rage: An exploration of the consequences of environmental shareholder resolutions on corporate environmental performance. Business and Society, 50(1): 155188.
Levit, D. & Malenko, N. 2011. Nonbinding voting for shareholder proposals. The Journal of Finance, 66(5): 15791614.
Logsdon, J. & Van Buren, H. 2009. Beyond the proxy vote: Dialogues between shareholder activists and corporations. Journal of Business Ethics, 87: 353365.
Lozano, J. F. 2001. Proposal for a model for the elaboration of ethical codes based on discourse ethics. Business Ethics: A European Review, 10(2): 157162.
Lydenberg, S. 2007. Universal investors and socially responsible investors: A tale of emerging affinities. Corporate Governance: An International Review, 15(3): 467477.
Mäkinen, J. & Kourula, A. 2012. Pluralism in political corporate social responsibility. Business Ethics Quarterly, 22(4): 649678.
Matten, D. & Crane, A. 2005. What is stakeholder democracy? Perspectives and issues. Business Ethics: A European Review, 14(1): 613.
McCarthy, T. 1992. Introduction, Moral consciousness and communicative action. Cambridge: Polity Press.
McLaren, D. 2004. Global stakeholders: Corporate accountability and investor engagement. Corporate Governance: An International Review, 12(2): 191201.
Monks, R., Miller, A., & Cook, J. 2004. Shareholder activism on environmental issues: A study of proposals at large US corporations (2000-2003). Natural Resources Forum, 28(4): 317330.
Moon, J., Crane, A., & Matten, D. 2005. Can corporations be citizens? Corporate citizenship as a metaphor for business participation in society. Business Ethics Quarterly, 15(3): 429453.
Moriarty, J. 2014. The connection between stakeholder theory and stakeholder democracy an excavation and defense. Business and Society, 53(6): 820852.
Murphy, M. & Arenas, D. 2010. Through indigenous lenses: Cross-sector collaborations with fringe stakeholders. Journal of Business Ethics, 94(1): 103121.
North, D. C. 1990. Institutions, institutional change and economic performance. Cambridge, UK: Cambridge University Press.
NortonRose. 2011. Stock Corporation Act: Translation as at 1 December 2011., retrieved 11th March 2015.
O’Dwyer, B. 2005. Stakeholder democracy: challenges and contributions from social accounting. Business Ethics: A European Review, 14(1): 2841.
O’Rourke, A. 2003. A new politics of engagement: shareholder activism for corporate social responsibility. Business Strategy and the Environment, 12: 227239.
Palazzo, G. & Scherer, A. G. 2006. Corporate legitimacy as deliberation: A communicative framework. Journal of Business Ethics, 66(1): 7188.
Phillips, R. A. 1997. Stakeholder theory and a principle of fairness. Business Ethics Quarterly, 7(1): 5166.
Proffitt, W. T. & Spicer, A. 2006. Shaping the shareholder activism agenda: institutional investors and global social issues. Strategic Organization, 4(2): 165190.
Reed, D. 1999. Stakeholder management theory: A critical theory perspective. Business Ethics Quarterly, 9(3): 453483.
Rehbein, K., Waddock, S., & Graves, S. 2004. Understanding shareholder activism: Which corporations are targeted? Business and Society, 43(3): 239267.
Rehbein, K., Logsdon, J. M., & Van Buren, H., J. 2013. Corporate responses to shareholder activists: Considering the dialogue alternative. Journal of Business Ethics, 112(1): 137154.
Richardson, B. J. 2008. Socially responsible investment law: Regulating the unseen polluters. New York: Oxford University Press.
Richardson, B. J. & Cragg, W. 2010. Being virtuous and prosperous: SRI’s conflicting goals. Journal of Business Ethics, 92(1 Supplement): 2139.
Richardson, B. J. 2013. Fiduciary responsibility in retail funds: Clarifying the prospects for SRI. Journal of Sustainable Finance and Investment, 3(1): 116.
Rojas, M., M’Zali, B., Turcotte, M.-F., & Merrigan, P. 2009. Bringing about changes to corporate social policy through shareholder activism: Filers, issues, targets, and success. Business and Society Review, 114(2): 217252.
Ryan, L. V. 2000. Shareholders and the atom of property: Fission or fusion? Business and Society, 39(1): 4975.
Scherer, A. G. & Palazzo, G. 2007. Toward A political conception of corporate responsibility: Business and society seen from a Habermasian perspective. Academy of Management Review, 32(4): 10961120.
Scherer, A. G., Palazzo, G., & Matten, D. 2014. The business firm as a political actor: A new theory of the firm for a globalized world. Business and Society, 53(2): 143156.
Schreck, P., van Aaken, D., & Donaldson, T. 2013. Positive economics and the normativistic fallacy: Bridging the two sides of CSR. Business Ethics Quarterly, 23(2): 297329.
Sjöström, E. 2008. Shareholder activism for corporate social responsibility: What do we know? Sustainable Development, 16: 141154.
Sjöström, E. 2010. Shareholders as norm entrepreneurs for corporate social responsibility. Journal of Business Ethics, 94: 177191.
Smith, J. D. 2004. A précis of a communicative theory of the firm. Business Ethics: A European Review, 13(4): 317331.
Soskice, D. 1997. Stakeholding yes; the German model no. In Kelly, G. & Kelly, D. & Gamble, A. (Eds.), Stakeholder capitalism: 219225. London: Macmillan Press.
Stansbury, J. 2009. Reasoned moral agreement: Applying discourse ethics within organizations. Business Ethics Quarterly, 19(1): 3356.
Stout, L. 2012. The shareholder value myth: How putting shareholders first harms investors, corporations, and the public. San Francisco: Berrett-Koehler Publishers, Inc.
Tkac, P. 2006. One proxy at a time: Pursuing social change through shareholder proposals. Economic Review, Federal Reserve Bank of Atlanta (Third Quarter): 120.
Unerman, J. & Bennett, M. 2004. Increased stakeholder dialogue and the internet: Towards greater corporate accountability or reinforcing capitalist hegemony? Accounting, Organizations and Society, 29(7): 685707.
USSIF. 2012. Report on sustainable and responsible investment trends in the United States., retrieved 1st December 2012.
Van Cranenburgh, K. C., Goodman, J., Louche, C., & Arenas, D. 2012. Believers in the boardroom: Religious organisations and their shareholder engagement practices. International Interfaith Investment Group (3iG).
Vandekerckhove, W., Leys, J., & Van Braeckel, D. 2007. That’s not what happened and it’s not my fault anyway! An exploration of managament attitudes towards SRI-shareholder engagement. Business Ethics: A European Review, 16(4): 403418.
Welcomer, S. A., Gioia, D. A., & Kilduff, M. 2000. Resisting the discourse of modernity: Rationality versus emotion in hazardous waste siting. Human Relations, 53(9): 11751205.
Whelan, G. 2012. The political perspective of corporate social responsibility: A critical research agenda. Business Ethics Quarterly, 22(4): 709737.
Williams, C. C. & Ryan, L. V. 2007. Courting shareholders: The ethical implications of altering corporate ownership structures. Business Ethics Quarterly, 17(4): 669688.
Woods, C. & Urwin, R. 2012. Putting sustainable investing into practice: A governance framework for pension funds. In Hebb, T. (Ed.), The Next Generation of Responsible Investing. Dordrecht: Springer.
Recommend this journal

Email your librarian or administrator to recommend adding this journal to your organisation's collection.

Business Ethics Quarterly
  • ISSN: 1052-150X
  • EISSN: 2153-3326
  • URL: /core/journals/business-ethics-quarterly
Please enter your name
Please enter a valid email address
Who would you like to send this to? *