Confucian Stakeholder Theory: An Exploration

• Date: 01 March 2015
• DOI: http://doi.org/10.1111/basr.12046
• Published date: 01 March 2015

Confucian Stakeholder Theory:

An Exploration

JIYUN WU AND RICHARD E. WOKUTCH

ABSTRACT

Originated in the West, stakeholder theory is normatively

anchored in Western value systems. Differences in value

orientations and ethical systems in this global age call

for culturally pertinent stakeholder theory. In this article,

we argue that Confucianism forms an additional norma-

tive basis for stakeholder theory, appropriate for a Con-

fucian context. We demonstrate it through application of

Confucianism in major stakeholder relationships. The

Confucian stakeholder theory provides a meaningful

addition to the corpus of stakeholder literature.

Stakeholder management, which was introduced in the

United States in the 1980s as a systematic approach for a

business entity to deal with its different constituencies in

an ethical and effective manner (see Freeman 1984), has taken a

firm hold in the corporate world in the United States and Western

European countries. The stakeholder management model provides

a valuable theoretical perspective and its application has often

proven to be instrumental in achieving organizational goals

Jiyun Wu is an assistant professor at Management and Marketing Department, School of

Management, Rhode Island College, Providence, RI. E-mail: jwu@ric.edu. Richard E. Wokutch

is Pamplin professor at Department of Management, Pamplin College of Business, Virginia

Tech, Blacksburg, VA. E-mail: wokutch@vt.edu.

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Business and Society Review 120:1 1–21

© 2015 Center for Business Ethics at Bentley University. Published by Wiley Periodicals, Inc.,

350 Main Street, Malden, MA 02148, USA, and 9600 Garsington Road, Oxford OX4 2DQ, UK.

(see Bartkus et al. 2006; Berman et al. 1999; Donaldson and

Preston 1995; Freeman 1984; Hillman and Keim 2001; Moneva et

al. 2007; Ogden and Watson 1999). Even if managers do not

always get the execution right, the need for effective stakeholder

management is widely recognized in the West.

In the past few decades, many Western corporations have

moved some of their operations to emerging economies such as

China and India to expand their markets and/or to take advan-

tage of the discrepancies in the costs of labor and raw materials.

Relocating business activities often results in subtle (and some-

times not-so-subtle) changes in stakeholder relationships. For

example, stakeholder relationships mostly governed by an egali-

tarian ethical system in the United States can become vertical in

a Confucian society. These differences call for cultural adaptation

of stakeholder management in a host country.

In this article, we argue that Confucianism forms another valid

normative basis of stakeholder theory to go along with Western

normative perspectives such as utilitarianism, duty-based ethics,

and rights-based ethics. Confucian stakeholder theory will provide

appropriate moral guidance for corporations managing stake-

holder relationships in a Confucian setting. Although contempo-

rary Chinese values derive from a combination of Confucianism,

Daoism, Buddhism, and socialist values, Confucianism has been

the predominant value system that, with some interruptions in

the history, has governed the practical affairs in China for thou-

sands of years. The vast effort to revive Confucianism in China in

the past few decades indicates the Chinese people’s identification

with the value system, as well as their acknowledgement of its

merits. In fact, in recent years, academics in the field of business

have also shown an interest in Confucianism. For instance, Chan

and Romar both argue for the relevance of Confucianism in busi-

ness ethics (Chan 2008; Romar 2002); Ip constructs a Confucian

firm using Confucian concepts (Ip 2009). Miles and Goo make a

case for the necessity and pertinence of applying Confucianism in

corporate governance in Confucian societies (Miles and Goo

2013). Kit-Chun goes a step further to explore an interaction

between a Confucianism-based culture and the economy

(Kit-Chun 2003). This article attempts to further contribute to the

stream of inquiries by establishing a link between Confucianism

and stakeholder theory.

2 BUSINESS AND SOCIETY REVIEW