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8/14/2019 In Defence of Stakeholder Pragmatism.pdf
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In Defence of Stakeholder Pragmatism
Tommy Jensen
Johan Sandstrom
Received: 20 September 2011 / Accepted: 30 April 2012
Springer Science+Business Media B.V. 2012
Abstract This article seeks to defend and develop a
stakeholder pragmatism advanced in some of the work byEdward Freeman and colleagues. By positioning stake-
holder pragmatism more in line with the democratic and
ethical base in American pragmatism (as developed by
William James, John Dewey and Richard Rorty), the article
sets forth a fallibilistic stakeholder pragmatism that seeks
to be more useful to companies by expanding the ways in
which value is and can be created in a contingent world. A
dialogue between a defence company and peace and arbi-
tration society is used to illustrate the main plot of this
article.
Keywords Defence industry
Ethics
Separation thesis
Stakeholder theory Pragmatism
Introduction
Edward Freeman and colleagues represent a critical voice
within stakeholder theory (Jensen and Sandstrom 2011). We
should not, they argue, keep ethics out of business, but rather
acknowledge that business always is moral in nature
(Freeman 1994, p. 412). Since the early1990s, this argument
has frequently been referred to as rejecting the Separation
Thesis (Freeman 1994, 1999; Wicks 1996; Wicks and
Freeman1998; Harris and Freeman2008):
Much of business ethics has proceeded under the
influence of the Separation Thesis. Philosophers have
been hesitant to get their hands dirty by understand-
ing the day to day life of value-creation activity.
Business theorists have been loath to enter what they
see as the intellectual morass of moral theory. Hap-
pily this scenario is changing as there is more dia-
logue among philosophers, business academics and
managers. Yet the shadow of the Separation Thesis
looms large. Unless we can reinvent business from
the ground up, we remain open to the charge ofreserving a special place for business ethicists ready
to make it up as we go along. Thus, our task is to
take metaphors like the stakeholder concept and
embed it in a story about how human beings create
and exchange value (Freeman1994, p. 418).
Freeman in particular has been targeting the Separation
Thesis from a pragmatist perspective. Rejecting the Sepa-
ration Thesis then is not a matter of developing a revised
stakeholder theory, but of contributing to what Freeman
sees as a genre of stories about how we could live
(Freeman 1994, p. 413; 2001, pp. 499500), providing
arguments or further narrative which include business and
moral terms to fill in the blanks (2001, pp. 499500). He
sees the future of this genre as one trying to escape fixed
language games by developing a stakeholder pragmatism
that is rich in conversations and in which divergent views
emerge. This will improve the genres usefulness in
showing us better ways to live our lives (Freeman 1999,
especially pp. 235236).
For Freeman and colleagues, the issue at stake is,
therefore, not if stakeholder theory has a moral content or
T. Jensen
Business Administration, Stockholm University, Stockholm,
Sweden
e-mail: [email protected]
J. Sandstrom (&)
Environmental Management, Lulea University of Technology,
Lulea, Sweden
e-mail: [email protected]
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J Bus Ethics
DOI 10.1007/s10551-012-1338-y
8/14/2019 In Defence of Stakeholder Pragmatism.pdf
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not; the issue at stake is the theorys (as a divergent genre)
capability of capturing ethical dilemmas in business and of
coming up with ideas of how to practically solve them
(Freeman 1994). Maintaining the Separation Thesis then
does not only neglect an important part of a theory but is
also at risk of producing detrimental second order effects
(Harris and Freeman 2008, p. 541) by making up sup-
posedly moral neutral theories [] which can be used tojustify a great deal of harm (Freeman1994, p. 412).
This article builds on Freemans stakeholder pragma-
tism; a perspective that needs to be defended and devel-
oped, and that has received its fair share of critique.
Sandberg (2008), for example, concludes that the Separa-
tion Thesis seems to mean a lot of things to Freeman and
colleagues. They have quite different versions in mind in
different contextsranging from semantic, empirical and
reformative to some which are straightforwardly norma-
tive (Sandberg2008, p. 213). Sandbergs analysis reveals
that their previous attempts are carried out within many
different conceptual regimes and without clear justifica-tions about the kind of moral content the theory has.
Sandbergs (2008) analysis, however, fails to grasp
Freemans pragmatism, which to Sandbergs defence is not
always clearly articulated by Freeman. While Sandberg
searches for accuracy and certainty, Freeman, as a prag-
matist, does not rely on such scientific criteria (Harris and
Freeman2008). They are simply not relevant for pragma-
tists, which are better categorized as fuzzyists (Rorty
1991). Pragmatists try to obscure taken for granted
boundaries and dualisms: real/semantic; theoretical/
empirical; neutral/reformative; objective/normative (Rorty
1979/2009). This means that a theory or a theorist does not
have to be consistent or remain truthful to a single uniform
moral content; suggesting that morality has some kind of
inner essence (Rorty1991). A moral account can come in
many different disguises, or stated more pragmatically,
with different styles of narration, plots and purposes
(Czarniawska1999; Rorty1999).
Having different versions of the Separation Thesis in
mind in different contexts is merely a starting point for a
pragmatist seeking to provide useful accounts in a contin-
gent world (Rorty1989). It is not a problem per se that the
Separation Thesis means a lot of things to Freeman and
colleagues, whether semantic, empirical, reformative or
normative, as long as they instill doubts in managers or
researchers own self-images, and about the society to
which they belong (Rorty1999, p. 127); as long as they
provide useful alternatives to the world managers
and researchers have constructed for themselves
(Czarniawska1999, p. 9). Defending stakeholder pragma-
tism is not a matter of crafting a more accurate and certain
response to such criticism put forward by Sandberg. That
would be to surrender to the language of essentialism
(Putnam1981/1997). A more relevant evaluation criterion
is rather: Is this story or metaphoruseful?
Following American pragmatists, such as William
James (1907/2009), John Dewey (1922/1930) and Richard
Rorty (1989, 1991, 1999), the term useful has an ethical
base. Companies are not only seen as acting in society by
being necessarily social (Dewey 1888/1997, p. 203),
exercising democracy in thought and action, acting as awarrant for the existence and endurance of democratic
institutions (Dewey1888/1997, p. 266) but also as acting
forsociety by extending responsibility to people whom we
have previously thought of as they (Rorty1989, p. 192),
regardless if they are nearby or far away. Useful accounts
are those working in the direction of increasing responsi-
bility towards those who are worse off (Rorty1991,1999)
and have an outward direction to include more and more
people.
It is also in the relation to this take on pragmatism that
this article sets out to develop Freeman and colleagues
stakeholder pragmatism. The main weakness in theirattempts that needs to be addressed is the incommensura-
bility between advocating stakeholder capitalism and
stakeholder pragmatism, as it severely complicates the
rejection of the Separation Thesis (see Deetz1995; Stieb
2009; Walsh2005; Wheeler et al.2002).
The main purpose of this article is, therefore, todevelop
a stakeholder pragmatism better capable of crafting more
useful (in a pragmatist sense) stories about corporate
responsibility. In this article, we illustrate our conceptually
driven development of Freeman and colleagues stake-
holder pragmatism by empirically grounding it in a stake-
holder dialogue between a defence company and a peace
association. For the purpose of this article, using this dia-
logue has at least three advantages. First, it allows practise
to provide arguments to why the Separation Thesis ought to
be rejected. Second, by analysing the dialogue, we allow
practitioners to illustrate the constraints introduced through
Freeman and colleagues stakeholder capitalism. Third, the
practitioners involved in the dialogue show ways in which
it is possible to build further on the ethical base in Amer-
ican pragmatism. In other words, they bring us useful
stories, divergent views and undetected possibilities, as
well as additional reasons to reject the Separation Thesis.
Based on this, we suggest a developed form of stakeholder
pragmatism that we refer to as fallibilistic stakeholder
pragmatism. Next, we set the stage for the dialogue.
A Dialogue Between Guns and Doves
Our story is based on a dialogue between a senior manager
from a Swedish subsidiary to the worlds second largest
defence company, BAE Systems Ltd.; two representatives
T. Jensen, J. Sandstrom
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from the Swedish Peace and Arbitration Society (SPAS),
the oldest peace and arbitration society in the world; an
actor invited by SPAS, who at the time was preparing a
theatrical play about the defence industry; and two
researchers (including one of the authors of this article).
The lead-up to the dialogue with SPAS stretches back to
2003, when we initiated our first study of the BAE sub-
sidiarys work with its code of ethics (the senior managerof BAE in the dialogue being our point of contact since
2003). We have since then returned to the subsidiary to
study the implementation of new or revamped codes. The
dialogue reported on in this article is part of a project on
codes and globalization, in which we followed members of
the subsidiary to different countries around the world to
study how the code was used outside the local, Swedish
context. We met SPAS for the first time in 2010 on our
third trip with the subsidiary, the one to New Delhi, India.
The context is a defence fair in New Delhi and the dia-
logue takes place in a hotel conference room. The main
theme of the conversation is the ethics of arms trade in lightof corporate responsibility, politics, human rights and
democracy. The conversation also focuses on the sub-
sidiarys current affairs in India and, predominantly because
of our research interests, on BAEs code of ethics. It also
came to target SPAS work with influencing people in power
(predominantly politicians) to ease tensions, speed up dis-
armament, promote the transfer of military resources to
development and support democratic movements. The dia-
logue lasted for about 3 h. It was taped and later transcribed.
We retell the dialogue chronologically, following the
main conversational turns, but also by using an authors
prerogative to highlight those parts of the dialogue that fit
the purpose of the article (Czarniawska 1999). The main
turns are the following: (1) Meeting the other: mapping the
territory; (2) Negotiating boundary conditions: the role and
responsibilities of companies; (3) Negotiating boundary
conditions: organisational roles and personal ethics; (4)
Weaving into each others experiences; (5) A valuable
exercise: new territory on which to continue the dialogue.
By using the dialogue, we show how people in the
context of business meet and negotiate different boundary
conditions, how they weave into each others experiences,
thoughts and choices of action to find new ground for
continuing the dialogue and to maintain a promise to each
other to find useful solutions to problems. Through the
dialogue, the critique of Freeman and colleagues stake-
holder pragmatism and the emerging fallibilistic stake-
holder pragmatism is empirically articulated. From a
pragmatist point of view, front loading the dialogue in this
article is important; James, Dewey and Rorty had hope in
ordinary people and the ways in which they manage to deal
with their cognitive differences and strategies to handle a
contingent reality in useful ways.
The dialogue should thus not be conceived of as an
accurate, objective and certain account of the world, gen-
erated through scientific rigour and method. It should
neither be taken as proof of our defence and development
of stakeholder pragmatism, but rather as a story from
practise that contains promising re-articulations and sug-
gestions for how what we call fallibilistic stakeholder
pragmatism can become more useful to companies andtheir stakeholders as well as to stakeholder scholars.
Meeting the Other: Mapping the Territory
The dialogue takes its starting point in BAEs code of
ethics. The manager provides the background to why the
company has chosen to intensify their work with a code:
There was so much negative publicity around BAE,
there was Saudi [], Hungary, Czech Republic, and
so on. The top management, the board, asked how
can we get rid of this mark, because this will not be awinning formula in the future. The boards job is to
make money for the company and then they said:
ethics is becoming such an important competitive
tool, so we must ensure that we stay within the law,
regardless of where we are. This was the back-
ground. Indirectly, the boards position on the ques-
tion is it ethical to sell weapons? is that they already
do that by running the company, but they say that the
ground rules for how we do [business], will change
with this Code of Conduct.
A SPAS member picks up on this: If we were to write
an ethics code for the company in question, then the per-
spective would be widened. The other SPAS member fills
in: It would also be a very short code. The manager
anticipates the rest of it and concludes that the code would
simply state: Shut down! We all smile, but this could just
as well be the end of the dialogue. The manager and the top
management of the company see ethics as a tool with
which to enhance the companys competitiveness and the
SPAS members see the whole defence industry as unethi-
cal. There seems to be no common ground from which to
continue the dialogue. The distance between them is too
great; their views are toodivergentto allow them to weave
into each others experience.
Negotiating Boundary Conditions: The Role
and Responsibilities of Companies
A SPAS member then pushes the dialogue forward by
reading out loud from BAEs code that the company
through its operations shall provide social and economic
input to the societies in which it operates and that
employees could act as volunteers at local schools (where
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there are factories connected to BAE in one way or
another). From this, she asks the manager (paraphrased): If
you have staff in India, how much understanding do they
have about the situation in India, about the problems facing
the population, their safety and in what way you affect the
situation here? You sort of need this background in order to
formulate an ethics, do you not?
The manager temporarily dodges the question, sayingthat the Indian government decided to start a bidding
process for 400 guns in 2002; a process that has not come
any further. In that perspective, he concludes, time is on
your side. He continues:
But if you look at the situation in India. They have
had wars in all directions. It is a relatively young
state, and indeed, as you yourself have defined it, it is
a democratic state. And it would be strangely superior
of us to say that, no, in this case you do not meet the
requirements [for doing business]. We are not those
who decide what they should do with their taxmoney. [] And, anyhow, if we do not do it [deliver
guns], somebody else will.
A SPAS member intervenes; it sounds as if you are not
affecting their decision? The manager responds:
Of course we do! [] But the decision whether they
will buy 400, and maybe as many as 1200, guns is
their decision. It is not something that we are behind
in any way. They make that decision themselves and
that decision will be carried out whether or not BAE
is taking part in it.
The manager seems to assume that there is a (func-
tioning) level above, a political, governmental level, which
the company cannot and should not influence. The com-
panys role is limited in his view. Government and politics
are more or less excluded from the subsidiarys sphere of
influence.
If you do not want to affect anything, a SPAS member
continues, how come you include the normative passages
about social and economic effects, and the voluntary work
at schools? The manager replies that it is only a couple of
months ago that the company defined India as a home-
market; that is why this kind of work has not yet come very
far. But he is convinced of that this will be discussed in the
future and informs SPAS that BAE emphasises the transfer
of technology, the technical skills needed to assemble the
products, and that this will lead to new jobs in India.
However, reflecting on the companys statement about
creating social and economical benefits, he says:
Previously I have received requests if we want to
sponsor hospitals, for example, in India, and I have
said: Impossible. We cannot do this. At one end we
cannot shoot people and at the other end sponsor
hospitals. That is acting according to a double stan-
dard. [] I could not get it into my head how the
moral of that would look like.
Although critical to the managers view of the role of
companies and governments, the SPAS members position
on the basic structure of society is not so radically dif-ferent. One of them states:
We have been focusing on politics, the political
channels. We see export of weapons as primarily a
democratic and a political issue; therein lays the
power. We do not want the power to be located to
the companies. We do not want a situation in which
the companies decide whether to export or not; that
explains our direction. To be honest, I do not see
that changes in how companies act change things that
much; the solution is not there. And I do not think
that we can influence you [the manager] in that
direction. I think that if you chose to work for a gunsmanufacturer then you have thought hard about it,
you have invested a lot of personality and identity,
the whole life, in this decision. It takes a lot to
reconsider. The solution is politics, and political
regulation and guidelines.
She also takes the role of business for granted, but sees
SPASs role as influencing the level above, that is, those
who she thinks should have the power, i.e., governments
and politicians. The other SPAS member, however, jumps
in to modify this view:
I do think that companies can take an increasedresponsibility, but not through starting welfare pro-
jects and so on. Rather to take the full consequence of
the reflections made. We perhaps should not sell to
Indonesia. That is perhaps what we wish to see more
on behalf of the company. We have talked about this
in our previous meetings [referring to the manager].
Companies sometime swiftly state that we do not
interfere in the assessments made, but you have the
power to do this. Just because an authority says that
you are allowed to sell, does not mean that you have
to do it.
This SPAS member emphasises the role and responsi-
bility of the company differently. Evidently, she, who have
met and discussed these issues with the manager several
times before, stresses that companies indeed can make a
difference by going beyond what the law demands. The
manager also responds to her statement that: This is
something I would respect and it is something that is dis-
cussed in Sweden, that we should not sell to non-demo-
cratic countries and to countries that violate human rights.
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The dialogue, that is, has evolved into a discussion on
boundary conditions. SPASs critique of the manager and
the managers own emphasis on BAEs code (which in
some cases clearly have reached beyond laws and regula-
tions) acknowledge that the subsidiary also is a political
actor; not merely an economic actor that speaks only
through its economic power in a context defined by the
laws of the market.The dialogue then zooms in on whether there are too
many rules and legislations surrounding the sales of weap-
ons. The manager emphasises that it is the Swedish state that
decides if guns should be exported and that the subsidiary
should not interfere with these kinds of decisions. They are,
he claims, amateurs when it comes to security policy,
defence policy and judgements about foreign policy. It is
good, the manager continues, that this kind of answer
belongs to an impartial organisation and he concludes that
the current rules are not too difficult to face up to (however,
in recent years, the Swedish Agency for Non-Proliferation
and Export Controls have authorised Swedish defencecompanies to export defence material to countries such as
Egypt, India, Pakistan, Saudi Arabia and Thailand).
Indonesia is then brought up as a case in which BAE
indeed decided to refrain from doing business despite there
being no legal obstacles to stop them from doing so. The
manager states that it is simply not worth risking an
infected debate and that it is not worth the money. In
other words, with reference to its own code, BAE makes a
tougher evaluation than to just remain within boundaries
defined by the level above (as in existing legislation) and
by admitting to this, one of the SPAS members states:
How nice it is to see that our work is worth carrying out.
[] It is evidence to that our work produces results. The
manager agrees, you do achieve results in your work and
you do a good job, you have good arguments.
From the case of Indonesia, the SPAS members target
India. A huge challenge in India, they argue, is the defence
budget. There is a significant lack of transparency regard-
ing what the money is spent on and it is, therefore, difficult
to have a democratic dialogue about alternative ways to
spend the money: The defence budget is called the sacred
cow in India, one of the SPAS members says, and As an
Indian you cannot question it, not even talk about it. The
manager then mentions that BAE has done surveys in India
about the brand name and that he has questioned the
selection of respondents. There were mostly people from
the better off minority: Business leaders, politicians, offi-
cers, journalists and parts of the general public as well.
However, he says, there are at least 300 million people who
cannot read and who are excluded in the selection for the
survey. They were not asked because they have no influ-
ence on anything. They barely exist in the Indian society.
This statement makes SPAS return to a key issue:
SPAS member 2: But how can you then state that
India is a democratic country?
Manager: I have asked myself this question. But
apparently all have the right to vote. And somehow
they [the Indian state] know where all [people] live.
But then the village leader tells them how to vote
SPAS member 2: That is not that democratic.
Manager: No, not at all, but they still have the right tovote. If they then choose to listen to the village lea-
der, because they discover that he is the wisest, or if
they listen to a politician, I do not know which is
better.
One of the SPAS members then tells about a trip they
made to a slum land in Bangalore the year before, talking
to labour union movement and to a variety of low-status
workers, and asked them whether they have any possibility
to exert democratic influence at all. The answer was no.
They felt that no political party or politician in India rep-
resented their voice. Their right to vote was meaningless tothem. The manager responds that There are people in
Sweden who would say the same. A SPAS member
counters Yes, but the question then is not if you are to die
of diarrhoea or not; the stake is on another level.
Negotiating Boundary Conditions: Organisational
Roles and Personal Ethics
This prompts the issue of experiencing India first hand to
be able to formulate a personal ethics in relation to
dilemmas facing the Indian population. It is an issue
brought up previously in the dialogue, but this time it ismade more personal.
Manager: We have no program that allows for our
staff to visit, for example, slums, or to arrange lec-
tures about it, or anything like that. I admit to that.
There is not enough time. It cost too much, of course,
to have people staying here for these reasons. But,
most of the staff here [at the fair] has been here many
times. I have been here about 2025 times and I have
learned a lot about this society, travelled the country
[]. I have been to Mumbai, to Bangalore. I have not
been to Calcutta, and after reading about the condi-
tions there I am not sure I want to go there, because
then I fear that my consciousness could be really,
really corroded.
SPAS member 2: What would happen then, if it was
corroded?
Manager: It is evident that I in this situation would
start to think about why India buys guns. Why do
they not spend their money on other things? Why do
they spend huge sums of money on defence and
defence material and the manufacturing of it? And it
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is not only that, they also have an army of a million
men down here. What does it cost?
SPAS member 2: But you do not see any possibilities
for you, with your position, to have influence?
Manager: No, then I have to quit my job.
SPAS member 2: Have you considered that?
Manager: No, well, sometimes, but not in connection
to this, then something concrete has occurred, you aremad at somebody. But, firstly, there will be someone
else [a competitor] who enters, because the Indians
will not change their mind and I feel that I have no
influence. So leaving [the company] is out of the
question. However, I believe that we can do a better
job than others. If [competitor A] and [competitor B]
enter, then I believe that they will do a worse job with
transfer of technology and social responsibility than
we do.
SPAS member 2: So you think that out of two evils,
you contribute by being a little better [than the
others]?Manager: Yes, that is right.
SPAS member 2: What about your personal ethics,
your moral?
Manager: It got a crack once. [In a discussion with an
Indian PR-agent] I said that why do we not do as they
do in the USA? We support our guys. That is, our
boys and girls should have the best equipment when
they are in warzones because we would not like our
boys and girls to return in black bodybags. Then he
went quiet for a while and said; you know what,
[name], we have a lot of people in India. I thought
that was scary.
The manager seems to find it difficult to grasp the
glaring social disparities in India. It escapes his imagina-
tion; enormous luxury co-existing with extreme poverty.
And again he refers to the fact that changes in the country
does not gain the large majority of people (who cannot
read, who have no influence). A SPAS member says:
SPAS member 2: Then it seems relevant to question
where the democratic aspect lays?
Manager: I agree.
SPAS member 2: Then it must be possible to question
whether India is a democracy?
The dialogue has opened up a core assumption, which
the manager handles by turning the dialogue around.
Manager: But is India a democracy according to you?
SPAS member 1: Both yes and no. [] The foun-
dation of democracy is that it is possible to raise a
voice. And there is no final end where we can say
now it is a democracy. It is not enough to state that
everyone has a right to vote.
SPAS member 2: It is also about if all sectors of
society are represented. Do they feel that they are
represented? Is there a possibility to question all
sectors? [] I think that there is a risk that in Sweden
the arms trade is justified by saying: India is the
largest democracy.
There seem to be something more to the relationsbetween the subsidiary and SPAS than what at first was
acknowledged. They do affect each other to some extent
and the subsidiary comes across as more political than what
first seemed the case. SPAS acknowledges that BAE actu-
ally had taken responsible action by withdrawing from
Indonesia and the manager acknowledges the work of SPAS
as important, even though this might lead to lost business
opportunities for the subsidiary, opportunities that some
other, less responsible, defence company might pick up on.
As the dialogue zooms in on personal ethics in relation
to the organizational role, the manager also shows doubts
about what is right and wrong in relation to the subsidiarysrole and responsibility in society. He challenges some of
his previous statements about the context for business;
aboutwho is included and excludedas a stakeholder to the
company (the survey on brand name awareness); and about
what kind of stakes we are talking about (to die of diar-
rhoea, the glaring social disparities, we have a lot of
people in India, the conditions in Calcutta). He reflects on
Indian democracy and thereby also on whether it is
appropriate to do business in India (although his company
will do a better job than the competitors). The level above
might not be in good condition after all.
As this main turnto also include tensions betweenorganizational roles and personal ethicsis taken, the
character of the dialogue changes. From here and onwards,
the discussion on boundaries is also explicitly personal.
Weaving into Each Others Experiences
A SPAS member returns to the question of economic and
social benefits, highlighted in BAEs code of ethics: What
kind of welfareprojects do youhave? Themanager answers:
We sponsor [elite sports] clubs in Sweden. The other SPAS
member reacts: It does not affect the societies to which you
sell arms? [] I interpreted your voluntary work that way.
The manager states that it is the country of origin in which the
work is done. One SPAS member then concludes that the
code seems to be more about creatinglegitimacythan taking
responsibilityand we pick upon this. We state that in BAEs
work with ethics, the so-called Woolf Committee Report
(2008) has become a central document and one of the most
frequentlyused words in thereport is reputation (224 times;
see Jensen and Sandstrom2010). The manager is baffled by
this: Does it say reputation, does it?
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SPAS member 1: But you have defined India as your
home market [] who will act as sponsor here?
Manager: It is currently under investigation, the
whole thing is so new [], but I am pretty sure that
this kind of practise will be implemented here. There
will be goodwill projects here; not because they
[BAEs management] want to be nice. Look at the
other companies doing this, they are careful to tell[others] about it.
SPAS member 1: From our perspective it seems a bit
unnecessary to do these types of projects, better to
shut down the whole company instead, better effects.
We have perhaps returned to where we started (Shut
down!), but SPAS, one of the researchers states, is to some
extent in the same position as BAE. It also has to create
legitimacy to survive and to succeed with its mission. In
relation to BAEs code, one of the researchers states that if
you take away this companys name and put another name
in its place it would be the same. All texts look the same.There is a best practise so to speak. [] It could be SPAS!
The SPAS members are not amused by this, but one of
them says: Yeah, maybe.
The manager then brings up an activist group called
Ofog that SPAS has connections to. Ofog (2011) describes
itself as an antimilitaristic network working with nonvio-
lent direct action against the arms trade, NATO, military
exercises and other parts of militarism in Sweden and
abroad. The name Ofog literally translates into mischief.
The manager asks what SPAS thinks of this organisation
and its methods:
SPAS member 1: They are needed to reveal socialshortcomings and for them to be able to make these
shortcomings visible they need to take this kind of
action. This risks becoming a pseudo-discussion. But
we have chosen to not work in this way.
SPAS member 2: Same goal, different means.
[]
SPAS member 1: We definitely support civil dis-
obedience, but we cannot do it based on ad hoc
decisions, we need to consider the right things. []
For example, we have supported conscientious
objectors and that is a form of civil disobedience that
we have chosen to back up, because it only affects
that individual, but I can sympathize with those who
get so pissed off that they choose to use force to
destroy weapons.
SPAS member 2: But we support them with infor-
mation, because if they choose to do this kind of
operations, then it should be based upon correct
information, on a correct analysis. If their actions
are based upon wrong information we would also
suffer.
Given its relation to Ofog (and that Ofog previously has
destroyed defence equipment on the subsidiarys property),
SPAS could just as well fall into the category of stake-
holders that the subsidiary would never enter into a dia-
logue with. However, the manager sees enough value in
SPAS to continue the dialogue, but there is also an element
of seeing oneself in the other. As one of the SPAS members
again emphasises that it is a strategic decision [to useparliamentary methods] based on what action causes best
effects in the long term, one of us intervenes:
Researcher: Then [] it seems as if your consider-
ations bare similarities with BAEs view.
SPAS member 2: Pragmatic.
Researcher: How you [SPAS] gain most influence,
how you [BAE] make most money [].
SPAS member 1: In this case, absolutely.
Similarities are also triggered by a question asked by the
actor to the manager:
Actor: How did you think about taking this kind of
job [for a defence company]? You, your family,
relatives?
Manager: There was a lot of discussion. I thought
hard about this, but it is a company that runs opera-
tions that are supported by 7580 % of the Swedish
population, yes, we should have a defence. It
depends of course on how you measure it but
SPAS member 2: Defence yes [but what about export
of weapons?]
SPAS member 1: And what about [Swedens] policy
of non-alignment?Actor: But did you never hear, I mean weapons
Manager: Yes, there were debates with relatives, are
you going to start working for a defence company,
the defence industry? But I said, yes, it is a kind of
business that the Swedish government has approved
and thereby it is not illegal. []
[]
Actor: Do you still have to defend your position.
Manager: No, not any more.
SPAS member 2: You learn how to deal with it, or,
I do not know. I sometime do not tell what I [do for a
living].
A Valuable Exercise: New Territory on Which
to Continue the Dialogue
There are, that is, not only similarities between BAE and
SPAS but also between the manager (as a manager at a
defence company) and one of the SPAS members (as a
peace activist). In their experiences from working for their
respective organisation, they are not as radically different
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from each other as they perhaps thought they were and the
dialogue reveals this. In this spirit, the manager and one of
the SPAS members emphasise the value of dialogues such
as this one. In the words of SPAS member 2:
Ethics is something that takes shape and form through
conversations. And to be able to develop an ethical
position you must be confronted by others views andbe allowed to bend and discuss these matters with
people. Part of our job is to debate exports of
weapons, which we do with you [the manager], and to
have an open, social conversation about what it is,
not only from the perspective on how many jobs that
are created, how much it costs, but also from a moral
point of view; how reasonable is it that our tax-
money is spent on weapons, even if it has good
effects for us, when it causes so much damage when
it is exported.
The manager nods approvingly and continues:
One of my purposes with meeting you like this is to
solve issues where we believe we disagree, where we
have different opinions, because of misunderstand-
ings. We shall talk about issues in which we genu-
inely have different opinions and try to discuss these
matters. But to have a pseudo-discussion, based upon
what we believe the other thinks of us, should be
eliminated, which is achieved best by meetings like
this.
The Dialogue as Critique
During the dialogue, we can see how the role and
responsibility of the company changes as different
boundary conditions are revealed and challenged. At the
outset, the company is constructed as a rather apolitical
actor, but during the dialogue, it becomes an actor that
through its actions and non-actions is political by nature.
The company has discretion; it has the power to contribute
to the creation of a better world in which to live, or at least
to reduce harm caused by its operations and the use of its
products. The dialogue highlights the fact that how it uses
this power is up for grabs; it is not carved in stone.
The dialogue also initiates a negotiation of boundaries in
which both parties share interests, actions and values, and
see the dialogue as a value creating exercise. The manager,
for example, challenges his initial divide of those who are
stakeholders and those who are not; opening up for what
was first not considered as a stakeholder (particularly poor
Indians) to later on in the dialogue become one. The dia-
logue triggers questions on: What are the right methods to
rely on when achieving goals, what is value for the
manager and for the SPAS members, respectively, and with
which actors is value created?
The dialogue also challenges the role separation
between being an organisational member (manager at
BAE, activist at SPAS) from other roles (family member,
relative, friend, etc.) making up the personal identity (as in
the threat of the corrosion of individual character). Tar-
geting the ethical content of the positions taken, it seems,leads to a negotiation of not only the subsidiarys and
SPASs stance on companies role and responsibility in
society but also of the individuals personal ethics in
relation to what the role as a member of an organization
demand. Within this personalized framework, it seems as
if the participants in the dialogue manage to weave into
each others experiences, to find similarity between them-
selves and the other.
The dialogue, it seems, is useful in both challenging key
assumptions in Freeman and colleagues stakeholder
pragmatism and in developing it in the direction of falli-
bilistic stakeholder pragmatism.
Challenging Key Assumptions in Previous Stakeholder
Pragmatism
Turning to the attempts to re-negotiate stakeholder theory
by Freeman and colleagues, there is potential for the
stakeholder genre to recognize the dialogue between the
BAE subsidiary and SPAS as useful. But, following Free-
man and colleagues, there are in some key writings a set of
core assumptions at work; a stakeholder capitalism that
hinder a stakeholder pragmatism capable of re-negotiating
boundary conditions as practised by the manager and the
SPAS members in the dialogue. This set of core assump-
tions is perhaps most clearly articulated by Freeman and
Phillips (2002), which explicitly situate the stakeholder
genre in a libertarian ideology, embracing liberty, personal
freedom, individual property rights, apolitical corporate
activity and the minimal night-watchman state. They
basically outline a libertarian stakeholder capitalism
(Freeman and Phillips2002; see also Phillips et al.2003;
Freeman2008) that limits how boundary conditions for the
role and responsibility of companies can be re-negotiated;
limits that to some extent were challenged and transgressed
in the dialogue.
More specifically, from their libertarian standpoint,
companies are voluntary associations rather than a part of
the basic structure of society (Phillips1997; Phillips et al.
2003; see also Freeman and Phillips2002; Phillips2003).
This is for Phillips et al. (2003, pp. 493494) a natural
boundary condition. Joining Milton Friedman, Freeman
and colleagues claim that there is another level of analysis
operative in Friedmans system and that this is also the
case with stakeholder theory (Phillips et al. 2003,
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pp. 493494; see also Freeman 2008, on the Friedman
Freeman issue).
Freeman and colleagues would essentially agree with
parts of the dialogue, but the dialogue also reveals that
neither the SPAS members nor the manager are as one-
dimensional as Freeman and colleagues, both regarding the
level above (which needs support from the levels below so
as to maintain certain political privileges and autonomy)and the level below (which needs support from the level
above in terms of granting individual rights and duties).
That is, the two spheres of society share responsibilities to
protect and develop democracy (Dewey1888/1997,1922/
1930) and in taking responsible action (Rorty1991,1999).
From the libertarian standpoint, viewing the company as
a distinct entity, with clear-cut boundaries around it, and in
which its counterparts are assumed to be autonomous, free
agents, it also makes sense to infuse moral inclusions and
exclusions by dividing stakeholders into morally distinct
categories. Phillips (1997) and Phillips et al. (2003) cate-
gorize stakeholders into normative and derivative stake-holders. They argue that the company is not morally
responsible for derivative stakeholders, that is, those that
do not directly contribute to the companys value creation
processes, but only for normative stakeholders, that is,
those that directly contribute to the companys value cre-
ation processes. Consequently, the others, who can only
harm or benefit the company outside the value creation
process, are not considered to be part of the companys
moral sphere.
Dunham et al. (2006) seem less categorical when dis-
tinguishing between a collaborative and a cooperative
approach. They argue that companies should collaborate
with stakeholders that they rely on for support (all the first-
tier, normative stakeholders, such as customers, employees
and suppliers, are included). Collaboration implies sharing
interests, actions and values. Stakeholders, such as SPAS,
that are affected by the company but that it does not rely on
for survival should, however, only be cooperated with.
Cooperation implies understanding perspectives, listening
to preferences and evaluating the inflicted impact on the
stakeholder.
Following Dunham et al. (2006), there is an opportunity
for a company, such as the subsidiary to establish a relation
with non first-tier stakeholders such as SPAS, but the
question is what kind of relation this would be and what
kind of core that would guide such a relation. Even though
the subsidiary would try to understand SPASs perspec-
tives, listen to its preferences and attempt to evaluate the
inflicted impact, in Dunham et al.s framework, it would be
a relation without a mutual sharing of interests, actions and
values. Defining the company as an autonomous, free agent
that engages only through free and voluntary economic
transactions with other autonomous actors on the market,
Freeman and colleagues construct inclusions and exclu-
sions of stakeholders that deny them the opportunity to
engage with non first-tier stakeholders in a collaborative
mode.
Alas, following the writings quoted above, Freeman and
colleagues would prompt a relation basically drained from
the pragmatic meaning of useful engagement. They are in a
sense moving away from a stakeholder pragmatism inspiredby James, Dewey and Rorty; a pragmatism that would
dismiss such attempts to reject the Separation Thesis for
being based on a too narrow moral sphere and on a too weak
responsibility to others causally connected to the company.
This narrow moral setting is not, however, conceptually
considered a problem and often poses no problem to nor-
mative strategically important first-tier stakeholders,
because stakeholders that are essential to value creation are
assumed to engage in relations with known self-interests,
representational conceptions of language, and free speech
(Deetz1995, p. 101). But, it is within this core that moral
responsibility takes its shape and form, which means thatmoral responsibility, even if it to some extent exceeds the
libertarian standpoint, is severely restricted also in strate-
gically relevant stakeholder relations.
Following Freeman and colleagues stakeholder capi-
talism makes it difficult to acknowledge that there is not
always a functioning level above and that the so-called
voluntary associations are, after all, not always that vol-
untarily for other actors. In this sense, there seem to be
stricter boundary conditions operating here than in case of
the BAE manager, which means that a senior manager at a
defence company provides a stronger challenge to the
Separation Thesis then Freeman and colleagues do. The
somewhat one-dimensional view of the role and responsi-
bility of companies (and states and NGOs) is in the dia-
logue opened up and negotiated.
It is further assumed that even though the world is
depicted as a turmoil in which companies and managers
need to navigate (Freeman and McVae 2001; Freeman
et al.2007, p. 172), the hegemony of the current order is
natural and is generally seen as non-problematic (it is the
best system that exists and it works despite shortcomings
within the system). Consequently, the interaction between
the company and society is seen as harmonious and well
integrated rather than full of friction and disintegration
(Deetz1996). The theorys, and the theorists, task to reject
the Separation Thesis is, therefore, basically about recog-
nizing the common sense practical world of global busi-
ness today (Freeman and Phillips 2002, p. 345) and to
find out what actually works in the world of value creation
and trade (p. 334) given the core assumptions of stake-
holder capitalism.
Previous criticisms of Freeman and colleagues have
emphasised this. Stieb (2009) states that their approach
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seems to appeal to self-interest and to be advocating []
business as usual (p. 405). Walsh (2005) argues that
Freeman and colleagues excel a version that will not
contribute to any societal interest that exceeds the reach of
its business model (p. 436; see also Orts and Strudler
2002). However, Freeman and colleagues efforts to outline
a stakeholder pragmatism do target the axiom-like condi-
tion of ethics and business (the Separation Thesis) byemphasising ethics in business; business as something
carried out within society, but that have to develop its own,
appropriate yet bounded ethics. Phrased differently, their
stakeholder pragmatism takes us further than treating
business as merely something distinct from society
business and societyallowing us to start viewing busi-
ness as in society. Freeman and colleagues have also been
successful in developing attractive suggestions for man-
agers on how to face up to this from-and-to-in transition.
The stakeholder capitalism underpinning their stake-
holder pragmatism, however, makes their pragmatism
restricted. The core and the boundary conditions it gives riseto do not take us beyond the assumption of an outside and a
level above when framing ethics in business. Following
James (1907/2009), Dewey (1922/1930, 1888/1997) and
Rorty (1989,1991,1999) makes it difficult to be satisfied
with this from-and-to-in transition, prompting us to go
further; to strive for a society in which all of its components
are not only accepted but also involved in the everyday
challenge of weaving new togetherness so as to better deal
with contemporary societal challenges. They ask of us, as
Dewey (1888/1997) states, to start from the assumption that
the economic and industrial life is initselfethical [], this
is what we do not recognize; but such is the meaning of the
statement that democracy must become industrial (p. 204).
In other words, business is not only wholly in society but
inevitably for society, implying a transition from-and-
to-in-to-for. James, Dewey and Rorty would also urge
stakeholder pragmatism to widen the term society so as to
include more people and places that are affected by the
companies operations. John Rawls, an important reference
for Freeman and Phillips (Phillips1997; Phillips et al.2003;
Freeman and Phillips2002) when they outline stakeholder
capitalism, would in his later works (e.g., Rawls1999) also
prompt us in such a direction.
Harris and Freeman (2008), in their reply to Sandbergs
(2008) criticism, also seem to open up for following James,
Dewey and Rorty when they point out that rejecting the
Separation Thesis is basically a mission impossible
because it is not really there; doing business has ethical
implications right from the start. All would of course be
well if stakeholder researchers rejecting the Separation
Thesis simply would not have to relate to it, but as it is, the
thesis is part and parcel of the language on stakeholders as
well as of the normal view in stakeholder theory. This is
also where Freeman and colleagues greatest pragmatic
achievements and contributions to stakeholder theory lie;
the acknowledgement that there is no ethically neutral
territory between business and society, and that it is not
really useful to continue to reify the Separation Thesis.
So far, stakeholder pragmatism has released itself from
taking the from-and-to-in-to-for step through what
resembles a circular argumentation; anything that spoilsthe order, the harmony, the design, and thus refuses pur-
pose and meaning of stakeholder capitalism is ethics and
once it is ethics it is to be treated as such and, hence, it is
ethics because it is so treated (Bauman1991, p. 41). To
be able to break out of this circular argumentation, the
stakeholder capitalism has to be challenged, although not
completely abandoned. Pragmatism is not a revolutionary
movement as it is highly sensitive to history; old parts
might prove useful in the new language, even though we do
not a priori know which parts (Rorty 1991, 1999). By
revealing (some of) the core assumptions and boundary
conditions of Freeman and colleagues writings, a devel-opment of stakeholder pragmatism is opened up for. In the
following, we seize this opportunity to suggest what we
refer to as fallibilistic stakeholder pragmatism.
Towards Fallibilistic Stakeholder Pragmatism
A pragmatist attempt to debunk the social conditions that
prevent a better society is a pluralistic one. Pluralism,
however, is a fluid word. Bernstein (1988/1997,
pp. 396397) teases out different versions of pluralism that
differ from the pragmatic use of the word. A first common
meaning of pluralism, which Bernstein calls flabby,
expresses itself when our borrowings from different ori-
entations are little more than glib superficial poaching. A
second one, called polemical pluralism, expresses itself
where the appeal to pluralism doesnt signify a genuine
willingness to listen and learn from others, but becomes
rather an ideological weapon to advance ones own ori-
entation. A third one,defensivepluralism, expresses itself
as a form of tokenism, where we pay lip service to others
doing their own thing but are already convinced that there
is nothing important to be learned from them.
Our reading of Freeman and colleagues suggest that they
go beyond these versions of pluralism. They would dismiss
them as not useful, as acting as barriers to produce useful
stories about divergent ways of creating value. Their
attempts rather come across as fragmenting pluralism
where the centrifugal forces become so strong that we are
only able to communicate with the small group that already
shares our own biases, and no longer even experience the
need to talk with others outside of this circle (Bernstein
1988/1997, p. 397). Assuming that the company is the
unity from which things considered relevant (or value
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creating) is attached to implies that Freeman and col-
leagues proceed from the self rather than from the other.
Within such a framework, permeated by stakeholder
capitalism, a stakeholder outside the boundaries (be they
derivative or cooperative, or on the level above or level
below), if able to mobilize any resources at all, has to choose
between either misrepresenting itself by adapting to the
stakeholder formula dictated by corporate management orby representing itself well but by being considered obscure
and radical (Deetz1995; Wheeler et al.2002). In the first
case, they might acquire some degree of autonomy as a
stakeholder, but only in a language/conceptual game not of
their own choosing and when accepting the state of
other they have little self-definition (Deetz1995, p.192).
In the latter case, they will fail to have a voice. Fragmenting
pluralism implies that privilege is given to certain stake-
holders on the expense of comparative others and that
alternative ways of understanding the role and responsibility
of the company are lost (see Deetz 1996).It putsthe finger on
a key problem inherent in stakeholder capitalism.Freeman and colleagues may have as their intention to
increase involvement with different types of stakeholders,
but such involvement is limited by the essence of mean-
ingwhat value creation is, how problems and solutions
are definedalready being defined. Stakeholders are only
allowed to engage in how an already defined common
enterprise should be developed (Deetz1995).
But, as raised by SPAS in the dialogue and as
acknowledged by the manager, relying on a stakeholder
capitalism that stops at a certain level, at a certain outer
border, can have devastating effects, or be used to justify a
great deal of harm (Freeman1994, p. 412). Both parties in
the dialogue acknowledge that the world is interdependent
and complex and that with this comes new dimensions of
responsibility. To some extent, the dialogue has opened up
for a re-articulation of Freeman and colleagues stake-
holder capitalism that enables a development of a stake-
holder pragmatism in which the Separation Thesis is
rejected by engaging with the other through what Bernstein
(1988/1997) calls fallibilistic pluralism:
Such a pluralistic ethos places new responsibilities
upon each of us. For it means taking our own falli-
bility seriouslyresolving that however much we are
committed to our own styles of thinking, we are
willing to listen to others without denying or sup-
pressing the otherness of the other. It means being
vigilant against the dual temptations of simply dis-
missing what others are saying by falling back on one
of those standard defensive ploys where we condemn
it as obscure, woolly, or trivial, or thinking we can
always easily translate what is alien into our own
entrenched vocabularies. (p. 397)
The dialogue contains moments in which the partici-
pants are willing to listen to the other without denying or
suppressing their arguments. There is a willingness to share
information and correct eventual misunderstandings,
and the flow of arguments from different perspectives (the
researchers included) is taken into serious consideration by
the participants (e.g., to be able to develop an ethical
position you must be confronted by others views, [w]eshall talk about issues in which we genuinely have different
opinions, to be able to develop an ethical position you
must be confronted by others views and be allowed to
bend and discuss these matters, you do a good job, you
have good arguments, [y]ou learn how to deal with it, or,
I do not know. I sometime do not tell what I [do for a
living]). This is important when arguing for fallibilistic
stakeholder pragmatism because dialogues containing
trustworthy information, allowing for different perspec-
tives to emerge and in which voice to difference, negoti-
ation of values and decisional premises (Deetz 1995,
p. 100) are respected and considered, have beneficialeffects on participants capability to break out of his or her
previous position (Bernstein 1988/1997; Fishkin 2009;
Taylor 1994; Rorty 1989, 1999). Deetz (1995) refers to
such efforts as the production of new integrative positions
(p. 100).
It has also been shown that dialogues characterized by
fallibilistic pluralism increase the participants capabilities
to acknowledge that issues expandingor crossing established
boundariesin our case related to what is at stake and who
the holders of stakes areare in their own interest as well as
their responsibility. Through the dialogue, participants better
understand how and why others interests are connected to
their specific interests (Fishkin2009), and that these con-
nections have implications on the relation between personal
ethics and organizational roles (Benhabib2002).
Assessing dialogues such as the one between SPAS and
BAE through the lens of fallibilistic pluralism focuses on
whether the participants have developed a readiness to re-
position himself or herself. This is crucial, because if a
readiness to re-position does not develop, the other will be
judged along a certain canon, with certain norms, rules and
values and not assessed on its own terms. Consequently,
fallibilistic pluralism implies a readiness to emerge as
different after dialogues have taken place (Bernstein1988/
1997; Dewey 1922/1930; James 1907/2009; Rorty 1991,
1999; Taylor1994). As the dialogue unfolds in our case,
such readiness gradually emerges as the participants
manage to weave into each others experiences in such a
way that they see themselves in the other. An important
explanation to why the participants seem to achieve this is
that they negotiate boundary conditions that are close to
them as individuals (private self); they share personal
beliefs and standpoints with each other, and discuss the
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relation between their personal ethics and their organiza-
tional roles.
Freeman and colleagues walk this ground when they
offer a feminist re-reading of stakeholder theory, an ethics
of care (Wicks et al. 1994). They state that such a
re-reading implies that the theory now can seek to
acknowledge that the individual and the community, the
self and the other are two sides of the same coin and mustbe understood in terms of each other (p. 483). Wicks et al.
(1994, p. 484), in our view, set the stage for a useful (in a
pragmatist sense) rejection of the Separation Thesis con-
cerning who/what should be included in the companys
moral sphere by acknowledging that to distance, or to
other, an actor, is to distance, or to other, something that
are an integral part of yourself. The divisions between
derivative and normative stakeholders, collaborative and
cooperative modes, level above and level below and
between private ethics and organizational roles are in
Wicks et al.s view not possible. As far as we know, this
article is among the most useful (yet its stakeholder prag-matism is not outspoken), but least used articles existing in
the backlog of Freeman and colleagues.
Dialogues characterized by fallibilistic pluralism are
important in moving towards a more useful stakeholder
pragmatism. Such dialogues negotiate private and corpo-
rate boundary conditions and a readiness to emerge as a
different person after the dialogue exist. Such dialogues are
important organizational stories in the sense that they
challenge dominant boundary conditions, such as those
inherent in stakeholder capitalism concerning the role and
responsibility of companies and the relation between per-
sonal ethics and organizational role. Although a dialogue
such as the one reported on in this article may not lead to
any changes relevant to the themes discussed, the partici-
pants may re-tell the story in other contexts, in other sit-
uations, that may trigger dialogues on useful ways of
engaging with stakeholders. Storytelling in organizations
is, after all, an important, even crucial, aspect of organi-
zational learning (see Czarniawska1999).
Implications for Research
To develop a fallibilistic turn within stakeholder pragma-
tism, stakeholder scholars must seek to tell stories that
re-articulate the language on stakeholders in a way that
increases sensitivity to the ways in which value is created,
what it means and can mean, and to how companies and
stakeholders are expanding, and in the future can expand,
moral responsibility so as to include more of those actors
that companies have effect on. Such stories would be stories
that embrace the liberal society as envisioned by Bernstein,
James, Dewey and Rorty, resting on fallibilistic pluralism
and unforced arguments (Dewey1888/1997; Rorty1999).
They would embrace a liberal society that comes close to
left-wing Kuhnianism, as Rorty would have it (1991,
p. 38). This might come across as a harsh reformist sug-
gestion, but accounts that address ethical issues are bound to
cause friction because they bring forth the need for new
and controversial custom (Rorty1999, p. 76).
Acknowledgments This research was financed by the Swedish
Council for Working Life and Social Research. Our thanks go to our
colleague Sven Helin and to the anonymous reviewers.
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