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J Bus Ethics (2015) 127:65–85
DOI 10.1007/s10551-013-1792-1
Scandinavian Cooperative Advantage: The Theory and Practice
of Stakeholder Engagement in Scandinavia
Robert Strand • R. Edward Freeman
Received: 17 June 2012 / Accepted: 26 June 2013 / Published online: 7 August 2013
Springer Science+Business Media Dordrecht 2013
Abstract In this article, we first provide evidence that
Scandinavian contributions to stakeholder theory over the
past 50 years play a much larger role in its development
than is presently acknowledged. These contributions
include the first publication and description of the term
‘‘stakeholder’’, the first stakeholder map, and the development of three fundamental tenets of stakeholder theory:
jointness of interests, cooperative strategic posture, and
rejection of a narrowly economic view of the firm. We then
explore the current practices of Scandinavian companies
through which we identify the evidence of relationships to
these historical contributions. Thus, we propose that
Scandinavia offers a particularly promising context from
which to draw inspiration regarding effective companystakeholder cooperation and where ample of examples of
what is more recently referred to as ‘‘creating shared
value’’ can be found. We conclude by endorsing the
expression ‘‘Scandinavian cooperative advantage’’ in an
effort to draw attention to the Scandinavian context and
encourage the field of strategic management to shift its
focus from achieving a competitive advantage toward
achieving a cooperative advantage.
Keywords Cooperative advantage Scandinavia Stakeholder theory Strategic management Sustainability Creating shared value
R. Strand (&)
Copenhagen Business School, Porcelænshaven 18A,
Ground floor, 2000 Frederiksberg, Denmark
e-mail: [email protected]
R. E. Freeman
University of Virginia Darden School of Business, 100 Darden
Boulevard, Office: FOB 164, Charlottesville, VA 22903, USA
e-mail: [email protected]
Introduction
The field of strategic management has been traditionally
dominated by an emphasis on competition and the associated objective to achieve a competitive advantage. This is
exemplified by Porter’s Competitive Strategy (1980) and
Competitive Advantage (1985) where Porter’s ‘‘Five Competitive Forces’’ model is championed in which the company is positioned in direct competition with its
stakeholders. One notable exception is Freeman’s (1984)
Strategic Management: A Stakeholder Approach (hereafter,
Strategic Management) which, instead, emphasizes cooperation between companies and their stakeholders as a more
effective means of value creation. While Strategic Management is widely recognized as a landmark contribution
that has helped to embed considerations toward ‘‘stakeholders’’ in management scholarship and managerial
thinking (Mitchell et al. 1997; Donaldson and Preston 1995;
Walsh 2005; Wood 1991), the discourse on strategic management has remained predominantly focused on competition (Audebrand 2010; Ferraro et al. 2005; Ghoshal 2005;
Pfeffer 2005; Rocha and Ghoshal 2006).
The more recent Creating Shared Value by Porter and
Kramer (2011) represents a significant shift in attention
toward cooperation between companies and their stakeholders. While Porter and Kramer do not provide references,
the concept of creating shared value is an obvious restatement of the longstanding ‘‘jointness of interests’’ tenet of
stakeholder theory. This tenet depicts companies and their
stakeholders as having joint (shared) interests where the role
of managers is to focus on creating more value for a greater
number of stakeholders by promoting and expanding upon
the jointness of interests between the company and its
stakeholders (e.g., Freeman 1984, 2010). Given Porter’s
considerable influence on both strategic management
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scholars and industry practitioners alike (Magretta 2012), his
implied endorsement of this fundamental tenet of stakeholder theory is noteworthy.
In this article, we turn specifically to the important but
underappreciated Scandinavian contributions to stakeholder theory over the past 50 years and their application in
the current practices of Scandinavian companies. We show
that Scandinavia represents a particularly promising context from which to draw inspiration regarding effective
cooperation between companies and their stakeholders.
Such focused attention is merited by the increased recent
interest in stakeholder theory as exemplified by the popularity of Creating Shared Value, and the recognition
articulated within it that cooperation between companies
and their stakeholders is necessary for social and environmental sustainability of the world.
We begin by outlining the important contributions to
stakeholder theory made in the early 1960s and thereafter
by the Scandinavian scholar Eric Rhenman and his Scandinavian contemporaries. These important Scandinavian
contributions are currently labeled as a ‘‘historical trail’’
(Freeman 1984; Freeman et al. 2010) stemming from US
developments to the stakeholder concept at Stanford. We
refute this claim by showing that significant contributions
originated from Scandinavia including the first publication
and description of the expression of the term ‘‘stakeholder’’
in management literature, the first stakeholder map, and the
three fundamental tenets of stakeholder theory: jointness of
interests, cooperative strategic posture, and rejection of a
narrowly economic view of the firm.
We then examine the profiles of six Scandinavian
companies recognized as sustainability leaders to identify
the potential relations between the aforementioned historical Scandinavian contributions and these Scandinavian
firms’ current practices of stakeholder engagement.
Through this, we show that the stakeholder concept as
envisaged by Rhenman and colleagues is clearly evident in
the practices today of Scandinavian companies. We explain
that Rhenman and colleagues’ promotion of the stakeholder concept undoubtedly reflected the cultural norms
and institutional structures experienced at the time—while
also influencing the norms and structures—where the comingled result is experienced as part of the Scandinavian
context of today. We contend this is further reason to delve
more deeply into company-stakeholder cooperation in a
Scandinavian context and through which ample examples
of creating shared value can be found.
In conclusion, we endorse the concept of ‘‘Scandinavian
cooperative advantage’’ (Strand 2009) in an effort to draw
attention to the Scandinavian context and encourage the field
of strategic management to shift its focus from achieving a
competitive advantage toward achieving a cooperative
advantage. We contend that a focus on cooperative
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advantage is a more accurate depiction of value creating
strategies and Scandinavia offers a particularly promising
context from which to draw inspiration.
Terminology
Before entering into these discussions, we must first clarify our
use of two expressions that carry varying degrees of ambiguity:
‘‘Scandinavian’’ and ‘‘cooperative’’. Historically, Scandinavia
is usually meant to refer to Denmark, Norway, and Sweden
(Bondeson 2003; Nordstrom 2000). Hans Christian Andersen
purportedly wrote the poem ‘‘Jeg er en Skandinav’’—which
translates from Danish to English as ‘‘I am a Scandinavian’’—
after a visit to Sweden in 1839 to describe the close relationship
he felt between the Danish, Swedish, and Norwegian people
(Andersen 2012; Andersen and Music 2012; Andersen 2009).
Bondeson (2003, p. 3) states that in more recent usage, Scandinavia commonly includes Finland and is often used interchangeably with the expression ‘‘Nordic’’ (Bondeson 2003,
p. 3; see also Derry 1979). Some may agree with this broadening while others may not. Others may emphasize that the
concept of Scandinavian has more to do with identity and as
such it transcends fixed geographical boundaries. We
acknowledge these ambiguities but do not attempt to resolve
them here. The term ‘‘cooperative’’ also carries multiple
meanings. This includes cooperative as an enterprise or organization that is jointly owned or managed by those who use its
facilities or services (i.e., a ‘‘co-op’’) (Birchall 2003; Michelsen 1994) or the willingness and ability to cooperate. In this
article, we use the term adjectivally to describe a willingness
and ability to cooperate,1 a usage grammatically consistent
with the use of ‘‘competitive’’ in competitive advantage and
thus facilitative of a shift from the expression competitive
advantage toward cooperative advantage.
Stakeholder Theory: Scandinavian Contributions
Stakeholder theory comprises a collection of ideas,
expressions, and metaphors related to the central thesis that
the primary purpose of a company is to create as much
value as possible for its stakeholders. An underlying premise of stakeholder theory is that great companies recognize the intersections of stakeholder interests and
continuously build and reimagine these intersections in an
effort to create more value for more stakeholders. In the
management literature, the concepts of stakeholder theory
and the expression ‘‘stakeholder’’ are most commonly
1
The adjective use of the word cooperative also has application with
respect to cooperative enterprises and organizations, i.e. ‘‘co-ops’’,
given that the formation of a co-op is rooted in a desire for
cooperation to occur between members and the expected benefits to
result.
Scandinavian Cooperative Advantage
linked with Freeman (1984), however, many scholars have
contributed over the years to the ever-growing—and contested (Miles 2012)—concept of stakeholder theory (e.g.,
Atkinson et al. 1997; Barnett 2007; Bosse et al. 2009;
Carroll 1989; Clarkson 1995; Donaldson and Preston 1995;
Freeman et al. 2007; Harrison et al. 2010; Hillman and
Keim 2001; Jensen 2002; Jones and Wicks 1999; Mitchell
et al. 1997; Morsing and Schultz 2006; Philips 2003; Post
et al. 2002). A valuable and comprehensive discussion of
the contributions and debates related to this paradigm is
provided in Freeman et al. (2010) Stakeholder Theory: The
State of the Art (hereafter, Stakeholder Theory).
It is common practice to position stakeholder theory as a
counterbalance to ‘‘shareholder theory’’, as frequently typified by Milton Friedman’s (1962/2002, 1970, 1986) assertion
that the purpose of a company is to maximize wealth for its
shareholders (also referred to as stockholders). For example,
Beauchamp et al. (2009), in their widely used textbook,
Ethical Theory and Business, include a section on ‘‘Stockholder Management versus Stakeholder Management’’ that
sets up its discussion on company purpose by contrasting
texts from Friedman (1970) and Freeman (2009a).Yet,
despite the inferences that could be drawn from such a
comparison, both shareholder theory and stakeholder theory
are intimately concerned with creating wealth for shareholders. In this respect, there is no conflict between shareholder theory and stakeholder theory. Stakeholder theory
embraces the notion that shareholders are vital stakeholders
of the company and as such their interests should be taken
into account. Furthermore, stakeholder theory contends that
long-term profitability is a byproduct of a well-run company
that effectively engages with its stakeholders (Freeman
2009a; Harrison et al. 2010).
A primary distinction between shareholder theory and
stakeholder theory is that stakeholder theory sees value
creation for a broader range of stakeholders as a primary
objective of the firm, and where this goes beyond the
interests of shareholders only. Shareholder theory is often
described as an egoistic perspective that only takes into
account stakeholders beyond shareholders insofar as these
additional stakeholders serve as a means through which to
create wealth for the company’s shareholders. Stakeholder
theory, in contrast, adopts a viewpoint consistent with the
Kantian categorical imperative that human beings should
never be treated solely as a means (i.e., for making a profit)
but rather as an end in and of themselves (Bowie 1999).
Such ethical considerations are deeply embedded in
stakeholder theory where Freeman et al. (2010, p. 196)
state ‘‘values, a sense of purposes that goes beyond profitability, and concern for the well-being of stakeholders
were critical to the origins of stakeholder theory.’’ Thus,
stakeholder theory rejects a narrowly economic view of the
firm and, therefore, it follows that stakeholder theory also
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rejects the so-called ‘‘separation thesis’’ that is often
associated with shareholder theory in which ‘‘business’’
concerns are considered separate from ‘‘ethical’’ concerns
(Freeman et al. 2004, 2010; Harris and Freeman 2008).
In Strategic Management, Freeman (1984) credits the
origination of the stakeholder concept to the Stanford
Research Institute (SRI) chiefly based upon the claim that the
expression stakeholder first appeared in a 1963 internal
Stanford memorandum (Freeman 1984, pp. 31–33, 49n.1,
50n.15). In this text, although he acknowledges the contributions made by Eric Rhenman and his Scandinavian contemporaries to the stakeholder concept, Freeman
characterizes the Scandinavian contributions as a ‘‘historical
trail’’ stemming from ‘‘the original work at SRI’’ (p. 33).
Questions have been raised over the years whether more credit
is due to Scandinavian contributors (Näsi 1995a, b; Carroll
and Näsi 1997, p. 50; Lorange et al. 2003; Vandekerckhove
2009; Mason and Mitroff 1982 [as cited in Freeman 1984,
49n.1, 50n.15]). Freeman also acknowledges this question:
I do not know how much influence Rhenman had on
the original definition of the SRI approach, but many
conversations with the late Juha Näsi convinced me
that Rhenman’s role had been underestimated in the
subsequent development of stakeholder theory.
(Freeman 2009b, p. 97)
In the following sections, we demonstrate that this
depiction of a Scandinavian dependency is misguided,
where instead we show that important contributions to the
stakeholder concept were being made in Scandinavia during the early 1960s and thereafter that are important in their
own right. These important Scandinavian contributions
include the first publication and description of the expression ‘‘stakeholder’’ in management literature accessible to
scholars throughout the world, the introduction of the first
stakeholder map, and the development of three fundamental tenets of stakeholder theory: jointness of interests,
cooperative strategic posture, and rejection of a narrowly
economic view of the firm. We begin by establishing the
timeline of events through consideration regarding the
earliest appearances of the expression ‘‘stakeholder’’ in the
management literature.
Stakeholder Expression
The most widely used definition of stakeholder comes from
Freeman (1984, p. 46) in which stakeholder is defined as
‘‘any group or individual who can affect or is affected by
the achievement of the firm’s objectives.’’ This definition
of stakeholder first appeared within Freeman (1984, p. 25)
at the base of a stakeholder map (Fig. 1) in which examples
of stakeholders of the firm are depicted to include suppliers, owners, governments, customers, local community
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organizations, and employees. Within the Freeman (1984)
text, the SRI is credited as first introducing the expression
‘‘stakeholder’’ to the management literature via its inclusion of the stakeholder expression within an internal
memorandum. Under the heading ‘‘History of ‘Stakeholder’’’ (1984, p. 31), the text states:
The actual word ‘‘stakeholder’’ first appeared in the
management literature in an internal memorandum at
the Stanford Research Institute (now SRI International, Inc.) in 1963.
While questions have been raised about this depiction of
events and how contributions from Scandinavia fit into the
narrative, the central claim of a Scandinavian dependency
for the stakeholder concepts remains within the recent
comprehensive volume Stakeholder Theory: The State of
the Art (Freeman et al. 2010). In this article, we employ
the timeline of instances of ‘‘stakeholder’’ in the management literature to refute the claim of Scandinavian scholars’ dependency on early ideas emanating from Stanford.
Our chronological exploration is primarily grounded in
Mitchell et al.’s (1997) historical narrative of 27 stakeholder definitions that provides a valuable overview of
sources from 1963 to 1995 (see Table 1). After beginning
their chronology with the 1963 Stanford memo, Mitchell
et al. cite Rhenman’s (1964) Företagsdemokrati och
Företagsorganisation in which the Swedish expression
interessent (‘‘somebody having an interest’’) is employed
throughout the 200 page volume. Interessent is described as
equivalent to the English expression ‘‘stakeholder’’ (Carroll
and Näsi 1997, p. 50; Näsi 1995a, p. 98) where the 1968
English translation Industrial Democracy in the Workplace) (hereafter, Industrial Democracy) not only employs
the expression ‘‘stakeholder’’ throughout it2 but also
prominently includes the expression on the first page of the
foreword, accentuated with quotation marks as an indication of its novelty at the time:
The chief ‘‘stakeholders’’ in the company… are
customers, the shareholders, and the employees. But
the state, the local authorities, and the suppliers too—
2
Although, the date of September 1967 given at the close of the 1968
foreword proves that Rhenman was using the English expression
‘‘stakeholder’’ by that date, how the stakeholder expression first
entered Rhenman’s vernacular and how far in advance of September
1967 it did so remain open questions for which we invite further
investigation. The notes preceding this foreword credit Mrs. Nancy
Adler with the translation from Swedish. It is reasonable to conclude
that Rhenman translated ‘‘interessent’’ to ‘‘stakeholder’’ rather than
relying on a translator given the central importance of the expression
‘‘stakeholder’’ in the English version, Rhenman’s clear competencies
in English, and additional evidence presented in the foreword
indicating Rhenman’s lead role in editing the Swedish version to
English.
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to take a few examples—can at times be the source of
pressing or awkward demands. (Rhenman 1968)
Thus according to Mitchell et al. (1997), the Stanford
memorandum and Rhenman’s offerings represent the earliest stakeholder sources—and the only sources available
from the 1960s. Some authors also include Ansoff (1965)
as another 1960s stakeholder reference (Friedman and
Miles 2006, pp. 5–8), but the 1963 Stanford memo and
Rhenman (1964) are consistently listed as the first available
stakeholder sources. Hence, as we work to clarify the
historical narrative on the origins of the stakeholder concept—and particularly the introduction of the term
‘‘stakeholder’’ into the management literature—we focus
primarily on Stanford and Rhenman during the 1960s.
The basis for Freeman’s (1984) claim of Scandinavian
dependency on the SRI contribution is a private conversation in the early 1980s between Freeman and Stanford
professor Kirk Hanson, as well as related correspondence
during these same years between Freeman and individuals
associated with SRI during the 1960s (Freeman 1984,
pp. 49n.1, 50n.15). The lynch pin for this claim is a retrospective account by Hanson in which Hanson recalls that
while Rhenman was writing his 1968 book Industrial
Democracy in the Workplace (hereafter, Industrial
Democracy), he was a visiting scholar at Stanford. Freeman
(1984) thus infers that Rhenman drew from the stakeholder
discussions taking place at Stanford during the early 1960s
and imported what he learnt to Scandinavia upon his
return, an assumption reiterated in Stakeholder Theory
(Freeman et al. 2010, pp. 30–31, 42n.18, 45–46n.19).
In the following discussion, however, we show that
Rhenman’s extended stay at Stanford did not in fact take
place until mid-1968, after he had already completed both
the Swedish (Rhenman 1964) and English (Rhenman
1968) versions of Industrial Democracy. We establish this
timeline based on a review of historical publications, in
particular, the Swedish and English forewords and prefaces
of Rhenman’s texts, which provide dates, locations, and
descriptions of his 1960s’ working environments—together
with input from Rolf H. Carlsson, who is working on a
biography of Rhenman at the time we author this article.3
In doing so, we refute the lynch pin for the claim that
Scandinavian contributions are a mere ‘‘historical trail’’
dependent upon previous work at Stanford.
In the preface to his Organization Theory for LongRange Planning (hereafter, Organization Theory), published in Swedish in 1969 and in English in 1973, Rhenman
(1973) reports having ‘‘benefited from many conversations
3
For additional commentary on Rhenman, see Carlsson (2007). We
also extend our gratitude to Rolf H. Carlsson for his contributions to
this article.
Scandinavian Cooperative Advantage
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Fig. 1 Stakeholder map from
Freeman (1984/2010a, p. 25)
Table 1 Stakeholder chronology
Source
Description of stakeholder
Stanford memo (1963)
‘‘those groups without whose support the organization would cease to exist’’
Rhenman (1964)
‘‘are depending on the firm in order to achieve their personal goals and on whom the
firm is depending for its existence’’
Ahlstedt and Jahnukainen (1971)
‘‘driven by their own interests and goals are participants in a firm, and thus
depending on it and whom for its sake the firm is depending’’
Wide: ‘‘can affect the achievement of an organization’s objectives or who is affected
by the achievement of an organization’s objectives’’
Freeman and Heed (1983, p. 91)
Narrow: ‘‘on which the organization is dependent for its continued survival’’
Freeman (1984, p. 46)
‘‘can affect or is affected by the achievement of the organization’s objectives’’
*
* 21 additional definitions offered from 1984–1995
Donaldson and Preston (1995, p. 85)
‘‘persons or groups with legitimate interests in procedural and/or substantive aspects
of corporate activity’’
Source: Mitchell et al. (1997)
with Professor James Howell4’’ at Stanford, who ‘‘for
several months in 1968’’ provided him ‘‘with a stimulating
environment in which I could work undisturbed’’ (p. vi).
4
Professor James E. Howell is the Theodore J. Kreps Professor of
Economics, Emeritus at the Stanford Graduate School of Business
(Stanford Faculty Profile 2012).
The Swedish foreword of Rhenman’s Managing the
Community Hospital (Swedish 1969; English 1973, p. xvii)
offers a collaborating clue as Rhenman pens the date as
July 1968 and Rhenman’s locale as Stanford, California.
Based on this information, we establish that during 1968,
Rhenman visited Stanford for several months including
July. This key piece of information confirms that Rhenman
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had completed both the Swedish and English versions of
Industrial Democracy in advance of his extended stay at
Stanford in 1968. In the forewords to both the Swedish and
English versions, Rhenman records the date as January
1964 and September 1967, respectively, and gives the
locale in both instances as Stockholm. During Rhenman’s
1968 stay at Stanford, he was instead working on primarily
on the Swedish version of Organization Theory (also
published in Swedish and English in 1969 and 1973,
respectively) according to the forwards and prefaces of his
other texts and our discussions with Carlsson.5 He also
penned the preface to the Swedish version of Managing the
Community Hospital.
To fully refute the lynch pin for the claim, however, we
must also consider whether Rhenman may have stayed at
Stanford prior to 1968, a possibility raised by Freeman
et al. (2010, pp. 45–46 n.19) in reference to it being customary at the time for Swedish doctoral students to spend a
year in the US (Stymne 2004). Based on our review of the
forewords and prefaces of Rhenman’s texts and our discussions with Carlsson,6 however, we dispel any such
possibility: Rhenman was at Carnegie Tech during
1959–1960, at the University of Cambridge in 1962, and
had no such earlier stays at Stanford.7 In sum, we refute the
lynchpin of the SRI dependency claim first proposed in
Freeman (1984) and reiterated in Freeman et al. (2010). We
now move on to document major Scandinavian contributions to the stakeholder concept.
The first of these important Scandinavian contributions
is the initial reference to the expression ‘‘stakeholder’’ in
management literature assessable to scholars throughout
world. This originated with the use of interessent in the
1964 Swedish version of Industrial Democracy, which was
available to scholars and practitioners across Scandinavia
(Näsi 1995a, b). Interessent was directly translated as
‘‘stakeholder’’ in the 1968 publication in English and distributed across Europe by Tavistock Publications Limited
5
Personal correspondence with Rolf H. Carlsson during April 2012.
Personal correspondence with Rolf H. Carlsson during April 2012.
7
According to Carlsson, Rhenman was at Carnegie Tech during the
1959–1960 academic year, during which time he studied under the
direction of Herbert Simon, to whom Rhenman refers explicitly in the
foreword to Industrial Democracy: ‘‘I should like to mention three
authors who have particularly influenced me, namely Chester
Barnard, Herbert Simon, and Philip Selznick’’. Carlsson also mentions that Rhenman spent 3 months at the University of Cambridge in
the U.K. in 1962, a claim supported in the preface to Conflict and
Cooperation in Business Organizations, coauthored by Rhenman and
two Scandinavian colleagues, Lennart Strömberg and Gunnar Westerlund and published in Swedish in 1963 and in English in 1970
(Rhenman et al. 1970). Most important, in answer to our direct
question about this timeline, Carlsson stipulated that ‘‘Eric did not
spend time earlier at Stanford’’. We can also place Rhenman in Oslo,
Norway, during July 1963 based on his presentation at a conference
(Rhenman 1963).
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R. Strand, R. E. Freeman
from the U.K. and the U.S. by Barnes and Noble, Inc.—
both of which represented major publication houses
assessable to scholars throughout the world. In this latter,
Rhenman defines stakeholders as:
The stakeholders in an organization are the individuals or groups dependent on the company for the
realization of their personal goals and on whom the
company is dependent for its existence. (1968, p. 36;
see also Fig. 3)
The 1963 Stanford memorandum, in contrast, was in no
way as easily accessible to scholars elsewhere as demonstrated by Mitchell et al.’s citing it only as secondary
source from Freeman (1984) and Freeman and Heed
(1983). In fact, referencing Freeman (1984) has become the
most common means of citing the memorandum8 (e.g.,
Alkhafaji 1989, p. 104; Crane and Matten 2010, p. 61;
Donaldson and Preston 1995, p. 72; Philips 2003, p. 115),
indicating the difficulties associated with accessing the
document itself.
Rhenman’s contributions, in contrast, were cited
throughout the early years of stakeholder theory development. This includes Ahlstedt and Jahnukainen (1971)
which is listed in Table 1 immediately after the 1964
Stanford memorandum and Rhenman (1964). Not only do
these authors acknowledge in their opening paragraph that
their development was ‘‘mainly influenced by the Swedish
organization researcher Eric Rhenman’’9 but their Finnish
volume omits any reference to the 1963 Stanford memorandum. Instead, they repeatedly cite texts by Rhenman
and colleagues, including Rhenman (1964) and Rhenman
and Stymne (1965).
Stakeholder Maps
The second important Scandinavian contribution to the
stakeholder concept is the first stakeholder map published
in the academic literature (see Fig. 2), which appeared in
Rhenman (1964) original Swedish version of Industrial
Democracy some two decades before Freeman (1984)
assembled the stakeholder map reproduced in Fig. 1. In
Rhenman’s original, the company (företaget) and its
stakeholders are represented by a series of overlapping
ellipses, which visually accentuates stakeholder theory’s
fundamental tenet that the company and its stakeholders
share a jointness of interests.
8
The difficulties of tracking down the Stanford memorandum are
discussed in Freeman (1984, pp. 31–33, 49n.1, 50n.15) and further
elaborated in Freeman et al. (2010, pp. 31n.4, 42n.18, 45–46n.19).
9
Translated from the Finnish. The original text reads ‘‘Näkemyksemme kehittämisessä olemme saaneet vaikutteita erityisesti ruotsalaisen organisaatiotutkijan Eric Rhenmanin tuotannosta’’.
Scandinavian Cooperative Advantage
Rhenman’s (1964) stakeholder map can thus legitimately lay claim to being the first stakeholder map published in the world. While Rhenman’s (1964) book was a
major publication in Scandinavia (Näsi 1995a, b) and care
should be taken to avoid a more recent privileging of
English-language publications (Carroll and Näsi 1997,
p. 50; Näsi 1995a, p. 98), the English version of the
stakeholder map within the 1968 English publication of
Industrial Democracy represents the first stakeholder map
published in the management literature assessable to
scholars throughout the world. As emphasized before, this
book by Rhenman (1968) was distributed by two major
book distributors represented in Europe by Tavistock
Publications Limited and in the U.S. by Barnes and Noble,
Inc. Rhenman’s stakeholder map depicts the jointness of
interests between the company and multiple stakeholders,
including suppliers, owners, the state, customers, and
employees (see Fig. 3).
Given the importance and ubiquity of the expression
‘‘stakeholder’’ and the widespread adoption of stakeholder
maps, these Scandinavian contributions to the stakeholder
concept are most significant. In addition to these offerings,
during the early years of developing the stakeholder concept, the literature from Scandinavia also contributed three
fundamental tenets of stakeholder theory—(i) jointness of
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interests, (ii) cooperative strategic posture, and (iii) rejection of a narrowly economic view of the firm—which are
discussed in more detail below.
Jointness of Interests
Stakeholder theory has long promoted the fundamental
tenet that the company and its stakeholder share a jointness
of interests (Freeman 2010b), meaning that instead of
seeing stakeholders as competitors in a zero-sum game, the
company should first consider how stakeholder interests are
joint with its own and focus its efforts on expanding value
creation accordingly. Freeman (2009a, p. 65) contends that
encouraging managers to consider the jointness of interests
between stakeholders is likely to,
produce better consequences for all stakeholders
because it recognizes that stakeholder interests are
joint. If one stakeholder pursues its interests at the
expense of others, then the others with either withdraw their support, or look to create another network
of stakeholder value creation.
Likewise, although Freeman et al. (2010, p. 9 note 13)
acknowledge that stakeholder interests may sometimes be
in partial conflict, they also contend that ‘‘if the possibility
Fig. 2 Stakeholder map
(Swedish) from Rhenman
(1964, p. 36)
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R. Strand, R. E. Freeman
Fig. 3 Stakeholder map
(English) from Rhenman (1968,
p. 25)
of innovation and the redefinition of interests is always
present, then we can more profitably focus on the jointness
of interests rather than on the conflict’’. Therefore, while it
is naı̈ve to assume that so-called ‘‘win-win’’ scenarios are
always readily possible where trade-offs can always be
avoided (particularly in the short-run), nonetheless, over
the long-run more value creation for more stakeholders is
likely when the company and its managers focus on the
jointness of interests between the firm and its stakeholders.
The historical contributions from Scandinavia to this fundamental tenet are readily apparent. Rhenman (1968), for
example, argues that the survival of the organization ‘‘is a
common goal of all stakeholders’’, one that ‘‘creates interdependence between the stakeholders.’’(p. 54). Rhenman’s
stakeholder maps (see Figs. 2, 3) also serve as conspicuous
evidence of an embracement of the jointness of interests
between a company and its stakeholders through the deployment of overlapping ellipses. The more recent creating shared
value by Porter and Kramer (2011) is an obvious restatement
of the long-standing jointness of interests tenet of stakeholder
theory. For example, within it, creating shared value is
described as ‘‘joint company and community value creation’’
that is ‘‘well connected to the goals of all stakeholders’’ (p. 76).
Cooperative Strategic Posture
The notion of a ‘‘strategic posture’’ was first introduced by
Covin and Slevin (1989) in reference to a company’s
inclination to embrace strategies along a particular
dimension, which in their own investigation ranges from
123
entrepreneurial to conservative. The construct of a strategic
posture dimension, although a deliberate oversimplification, is useful for highlighting general tendencies.
We introduce the notion of a competitive-cooperative
dimension as a useful description of a fundamental tenet of
stakeholder theory to embrace cooperation between the
company and its stakeholders. The adoption of a ‘‘cooperative strategic posture’’ entails when a company demonstrates a tendency to first consider its stakeholders as
potential partners in cooperation. Conversely, a ‘‘competitive strategic posture’’ entails when a company demonstrates a tendency to first consider its stakeholders as
potential adversaries in competition. As illustrated in the
following passage from Freeman et al. (2010), by these
definitions, the embracement of a cooperative strategic
posture is a fundamental tenet of stakeholder theory:
By pitting individuals against one another within the
survival-of-the-fittest atmosphere, narrators of the
traditional approach to capitalism foster the notion of
competition as a prerequisite to capitalist society…
The focus on competition rather than cooperation is
mistaken… [F]ocusing on how to beat stakeholders
and retain power in any relationship leaves out those
many instances where collaboration is necessary in
order to survive… Using their imagination to create
sustainable collaborative relationships can lead
managers to be more effective even within highly
competitive markets. Large gains in prosperity
throughout history are associated more with mutually
beneficial trade (which creates value) than with
Scandinavian Cooperative Advantage
73
dominance (which tries to capture value). (pp.
275–276)
The adoption of a cooperative strategic posture by both
company and management is heavily promoted in Rhenman (1964); Rhenman and Stymne (1965); Rhenman et al.
(1970), and the other associated contributions from Scandinavia during this early period of stakeholder theory
development. The rationale for its adoption, as explicitly
indicated by Rhenman’s title Industrial Democracy in the
Workplace, is firmly rooted in the promotion of democratization in business whereby the company cooperatively
engages with its stakeholder and partakes in ongoing
negotiations in order to more effectively consider the
interests of the company’s stakeholders. In urging this
approach, Rhenman (1968) soundly rejects what he calls a
‘‘traditional view of business’’ in which stakeholders are
assumed to be in competition with the company and its
management like opponents in a snowball (or rock) fight
(see Fig. 4).10 Rhenman argues that, instead, a cooperative
approach is more likely to produce favorable results.
Rhenman describes that this tendency by managers to
embrace cooperation is likely to bring two major benefits:
Many arguments [for industrial democracy] revolve
around the dream of higher productivity and greater
efficiency. We can discern two trains of thought.
First, it is expected that democratic measures will
arouse employee’s interest and cooperation. Secondly, it is hoped that if employees have a greater
part in running the business, it will be easier to tap
their resources of experience, knowledge and ideas.
In the long run this should provide the employees
themselves with greater opportunities for personal
development and education. (Rhenman 1968, p. 5)
Even though much of Rhenman’s writing from this period
focuses on cooperation between company management and
employees, he extends this concept to stakeholders beyond
the company walls including suppliers, customers, owners,
local authorities, and the state (see Fig. 3). Rhenman considers the maintenance of cooperation to be at the heart of
managerial responsibilities, with management being a special group that ‘‘devotes itself professionally to resolving the
conflicts and maintaining cooperation’’ (p. 36).
Consistent with stakeholder theory, creating shared value
also advocates a cooperative strategic posture. This becomes
evident when creating shared value is compared to the ‘‘Five
Competitive Forces’’ model (Porter 1979, 1980, 1985) in
which a competitive strategic posture is promoted. The
10
One could readily that this sort of adversarial view of the firm
resembles Porter’s ‘‘Five Competitive Forces’’ model in which
customers and suppliers are pitted in direct competition with the
company.
Fig. 4 Rhenman’s (1968, p. 34) view that stakeholders are inappropriately assumed as competitors
creating shared value concept advocates cooperation between
the company and its stakeholders. This can even include
considerations for cooperation between the company and its
‘‘major competitors’’ as exemplified in the following excerpt:
Shared value creation will involve new and heightened forms of collaboration. While some shared
value opportunities are possible for a company to
seize on its own, others will benefit from insights,
skills, and resources that cut across profit/nonprofit
and private/public boundaries. Here, companies will
be less successful if they attempt to tackle societal
problems on their own… Major competitors may also
need to work together on precompetitive framework
conditions… Successful collaboration will be… well
connected to the goals of all stakeholders… (Porter
and Kramer 2011, pp. 76–77).
Rejection of a Narrowly Economic View of the Firm
Stakeholder theory rejects a narrowly economic view of the
firm in favor of the belief that a company’s purpose is to
create as much value as possible for its stakeholders. This
is not to say that economic success is irrelevant in stakeholder theory; rather, stakeholder theory, instead of
focusing only on the interests of shareholders, is concerned
with the adoption of value creation for a broader range of
stakeholders as a primary firm objective. This broadened
view of company purpose is clearly signaled throughout
the contributions of Rhenman and his Scandinavian contemporaries, particularly Rhenman (1968), which raises a
point of contention with the neoclassical economics perspective within which shareholder theory is rooted:
One of the most common subjects of dispute in any
discussion of company goals is whether the only, or
at any rate the main, goal of all private companies is
to maximize profits. Classical economic theory
assumes this to be true and many people still claim
that it is so—even in fact that it should be so.
Rhenman (1968) illustrates his theory of company purpose
using the graphic titled ‘‘Summary of the theory of the
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74
R. Strand, R. E. Freeman
Fig. 5 Rhenman’s (1968, p. 31)
summary of his theory of
company goals
company’s goals and policy’’ reproduced in Fig. 5, in
which he depicts company goal as a product of co-mingled
efforts to satisfy the interests of stakeholders that extends
beyond shareholders only. By including management’s
personal goals—and by inference, managers’ own aspirations, ethics, and personal values—as an important input
into the overall goal of the company, the figure also
represents a rejection of the separation thesis.
He expands upon this paradigm in the following
commentary:
The classical theorists regarded the company’s goal
as a given factor [(i.e. narrowly economic)]. We have
seen that this view is unrealistic. Instead it is probably
management’s most important task to formulate goals
that are adapted to the opportunities offered by the
company’s situation, goals that will satisfy the
demands of the stakeholders. (Rhenman 1968, p. 99)
A Modified History of the Stakeholder Concept
By showing that in the early 1960s and thereafter, Eric
Rhenman and his Scandinavian contemporaries were
making important contributions to the stakeholder concept,
we significantly modify the historical narrative first presented by Freeman (1984) in his Strategic Management,
which sees Scandinavian contributions as merely a ‘‘historical trail’’. More specifically, with Fig. 6 we modify
Freeman’s (1984) history of the stakeholder concept
(Exhibit 2.1, p. 32) to include not only the SRI memorandum but also both editions of Rhenman’s Industrial
Democracy (1964, 1968) and the many other Scandinavian
contributions to the stakeholder concept during that period
as foundational contributions to the stakeholder concept.
These latter include work by Bengt Stymne who, together
with Rhenman, authored the influential 1965 book Företagsledning i en Föranderlig Varld (Management in a
Changing World), which explicitly outlines the stakeholder
approach (Rhenman and Stymne 1965). In fact, Näsi
(1995a) makes a point of emphasizing that during this
123
Fig. 6 Modified* version of Freeman’s history of the stakeholder
concept adapted from Freeman (1984/2010, p. 32)
period, Rhenman and Stymne were explicitly employing
the expression ‘‘stakeholder theory’’ (p. 20).
Rhenman and Stymne were also among a number of key
contributors to the Scandinavian Institute for Administrative Research11 (SIAR), founded in the mid-1960s (Lind
and Rhenman 1989; Mintzberg et al. 2009, pp. 286–288),
whose influence reached well beyond Scandinavia.
According to Carlsson: ‘‘from early on SIAR had distinguished visiting researchers such as Larry Greiner, Jay
Lorsch, and a very young Henry Mintzberg’’.12 Likewise,
speaking of SIAR and the contributions by Rhenman and
his colleagues, Mintzberg (2001) observes:
11
12
Also known as the Swedish Institute for Administrative Research.
Personal correspondence with Rolf H. Carlsson during April 2012.
Scandinavian Cooperative Advantage
SIAR led to a kind of golden age in Swedish management writing, to my mind one of the richest we
have ever seen in the field. It stands in especially
stark contrast to the pedantic nature of so much of the
academic writing on one side today and the breeziness of so much popular writing on the other. (p. ix)
Scandinavian Industry and Stakeholder Theory
in Practice
We now consider the potential relations between early
Scandinavian contributions to the stakeholder concept and
the current practices of several well-known Scandinavian
companies. In doing so, we do not intend to imply that
Scandinavian companies today are solely influenced by the
historical offerings of Rhenman and his Scandinavian
colleagues. Rather, we contend that it is reasonable to
assume that current practices reflect such input given that
stakeholder theory is described as having achieved hegemonic status in Scandinavian management academe
throughout the 1960s, 1970s, and 1980s (Näsi 1995a, b)
and that Rhenman and his Scandinavian colleagues were
closely engaged with Scandinavian industry. Furthermore,
we do not imply that Rhenman and colleagues’ offerings
were independent of cultural norms and institutional
structures in Scandinavia. In the following, we first address
the latter point and then move to the former.
Connections Between Scandinavian Cultural
and Institutional Considerations and Stakeholder
Theory
The offerings by Rhenman and colleagues could be considered mere reflections of the dominant cultural norms and
institutional structures that encourage engagement between
companies and their stakeholders in a Scandinavian context
(Gjølberg 2010). These norms and structures include a
general tendency to embrace and promote participatory
leadership (Bjerke 1999; Dorfman et al. 2004; Grennes
2003); rejection of self-protective (i.e., ‘‘face-saving’’)
leadership (Dorfman et al. 2004) that entails engagement
with critical voices (Alvesson 2003); reflection by practitioners (Schön 1983); flatter organizational hierarchies and
corresponding high degree of employee involvement
(Morsing et al. 2007); egalitarianism (Bondeson 2003);
democratic principles (Andersen and Hoff 2001; The
Economist 2013); peace (Archer and Joenniemi 2003);
high levels of trust (Bondeson), consensus-building and
cooperation (Lorange et al. 2003; Strand 2009; Vallentin
and Murillo 2010); embeddedness of economic interests
within broader societal interests (Maccoby 1991; Midttun
75
et al. 2006); strong regulatory bodies and active nongovernmental organizations (NGOs) (Campbell 2007);
employee representation on boards of directors (Randøy
et al. 2006; Sinani et al. 2008) and a general stakeholder
orientation to corporate governance (Thomsen and Conyon
2012); and concentrated company ownership (Carlsson
2002; Financial Times 2013) with comparatively high
levels of ownership of public companies by the state (Porta
et al. 1999; Norsk Hydro 2012; Statoil 2011), by foundations (Thomsen and Hansmann 2009; Herlin and Pedersen
forthcoming), and by families (Carlsson 2007) whereby
shareholders are less likely to behave as a disparate
assemblage of faceless entities with a lone objective of
short-term share price maximization.
The promotion of the stakeholder concept by Rhenman
and his colleagues thus undoubtedly reflects the norms and
structures of the time, while simultaneously influencing
them. The co-mingled result is experienced as part of the
Scandinavian context of today, which we contend is further
reason to delve more deeply into company-stakeholder
cooperation in a Scandinavian context. Given the inherent
limitations of what can be explored within a lone article,
here we consider the potential relations between the early
Scandinavian contributions to the stakeholder concept and
the current practices of Scandinavian companies.
Connections Between Scandinavian Academics
and Practitioners and Stakeholder Theory
The tight connections between Scandinavian academics
and industry during these three decades are well documented (Lind and Rhenman 1989; Engwall et al. 2002;
Stymne 2004; Mintzberg et al. 2009, pp. 286–288) and
serve as evidence that in Scandinavia, the stakeholder
concept was not developed in an academic ivory tower
with little relationship to practice. On the contrary, Lorange
et al. (2003) describe the tightness of the engagement as
follows:
…we have been struck by the impression that strategic issues and thoughts have developed early in
Scandinavia, often long before such topics entered
the main stream of international academic writing.
The main reason seems to be the close connection
between theory and practice…in terms of access to
empirical cases and data. Tight cooperation between
the academic world and business firms has assured
that research issues have been both relevant and
timely.
Näsi (1995a, b) also refers to the pervasiveness of the
stakeholder approach across Scandinavia and, like Kakabadse et al. (2005, p. 290), emphasizes its hegemonic status
in Scandinavian management academia and industry in the
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R. Strand, R. E. Freeman
1960s and 1970s and into the 1980s.13 Specifically, he
claims that the stakeholder approach ‘‘enjoyed an almost
dominant role in university management teaching’’ and
‘‘was frequently used as a framework for both academic
research and for practical company planning’’ across the
region (1995b, p. 20). Lorange et al. (2003) further support
this claim by pointing out that
[t]he stakeholder model, informally called ‘‘Rhenman’s rose’’ (e.g., Bruzelius and Skärvad 1974;
Rholin 1972; Sjöstrand 1974), was formalized and
incorporated into Nordic textbooks long before the
publication of classic U.S. books on stakeholder
perspectives. (p. 138)
Current Practices of Scandinavian Companies
To explore the potential relations between early Scandinavian contributions to the stakeholder concept and the current
practices of Scandinavian companies, we select six companies whose origins are from across Scandinavia—H&M,
IKEA, Novo Nordisk, Novozymes, Norsk Hydro, and Statoil—that are recognized as sustainability leaders [e.g.,
included in the Dow Jones Sustainability Index (DJSI)]. The
first, the major Swedish retailer H&M (2012a), explicitly
employs stakeholder language exemplified in its ‘‘Engaging
With Our Stakeholders’’. Here, H&M outlines issues of
common interest to both company and stakeholders and
summarizes the firm’s engagement with customers, communities, employees, suppliers, industry peers, policymakers, NGOs, and investors (see Fig. 7).
H&M’s description of its relationship with suppliers and
industry peers not only reflects its concern with the jointness of H&M and its stakeholders’ interests, but is also
clearly indicative of a cooperative strategic posture in
which H&M cooperatively describes its suppliers and
industry peers as ‘‘partners’’ and refers to ‘‘shared challenges’’. The use of the phrase ‘‘industry peers’’ instead of
the more commonly used expression ‘‘competitors’’ also
hints at a more cooperative strategic posture:
Suppliers: Our suppliers are our valued business partners.
Stable and long-term relations are keys to mutual growth.
Strengthening their ownership over their sustainability
issues and involving their employees is important in
enabling long-term sustainable development.
Industry Peers: Some challenges are best addressed
collectively. We work with industry peers and even
13
Näsi (1995a, b) does not offer commentary regarding Denmark.
Discussions of industrial democracy were widespread in Denmark
during this era (Westenholz 2006), but it is not well understood the
degree to which Rhenman’s offerings were utilized. This remains an
open area of interest to the authors.
123
companies operating in other sectors to define industry
standards and common responses to shared challenges.
H&M also appears to reject a narrowly economic view of the
firm with its addressing of issues related to the human rights
of children. H&M’s approach is similar to that of another
major Swedish retailer IKEA. Both H&M, and IKEA partner
with the NGO Save the Children and the governmental
organization UNICEF to cooperatively address the incredibly complex challenges related to respecting the human
rights of children and other issues related to child labor. Such
cooperation is particularly noteworthy in the face of Yaziji’s
(2004, p. 111) claim of the tendency that ‘‘[c]ompanies view
nongovernmental organizations as pests, or worse’’.
In their partnership with Save the Children and UNICEF,
both IKEA (2012) and H&M (2012b) have agreed that all
decisions will be guided by ‘‘the best interest of the child’’, an
unlikely approach had they adopted a narrowly economic
view of the firm. This arrangement simultaneously furthers
the long-term interests of Save the Children and UNICEF by
giving them greater access to children for their missions and
IKEA and H&M also reap the benefits of a more stable
supply. These companies differ greatly from the many firms
that claim to reject child labor and develop supplier codes of
conduct that state they will cease doing business with a
supplier if they learn child labor exists but do little to actively
engage with the tremendously challenging issues associated
with child labor. In fact, Boyden et al. (1998), in the report
‘‘What Works for Working Children’’, point out that a hasty
pull-out by a company (e.g., one prompted by concern over
possible consumer boycott) can inflict even greater harm on
the affected children. Given that child labor is but a symptom
of the even greater challenge of poverty, these children may
be forced into alternative means of generating money,
including prostitution.
The approach taken by H&M and IKEA exemplifies
stakeholder engagement in which jointness of interests,
cooperative strategic posture, and rejection of a narrowly
economic view of the firm are clearly co-mingled. By
rejecting a narrowly economic view of the firm, IKEA and
H&M have expanded their considerations beyond the traditional supply chain issues associated with price, quality,
and serviceability. These remain important issues, of course,
but the field of considerations is broadened to consider ethical concerns about those affected by supply chain operations, including children (Strand forthcoming). This
cooperative strategic posture also ensures that suppliers and
NGOs are more engaged as partners than as competitors, an
approach the online Financial Times (2004) describes as a
‘‘grown up plan to tackle child labor’’.
Another firm recognized for its competencies in strong
stakeholder engagement is the large Danish pharmaceutical
company Novo Nordisk (e.g., Mirvis and Googines 2006;
Scandinavian Cooperative Advantage
77
Fig. 7 H&M’s stakeholder engagement overview
Morsing and Oswald 2009; Strand 2009), recently described by Forbes (2012) as ‘‘the most sustainable company on
earth’’. That Novo Nordisk (2012) widely employs the
stakeholder language is evidenced on its corporate website
‘‘Stakeholder engagement’’, which describes how the
company’s cooperative strategic posture has helped it
achieve a greater realization of the jointness of interests
among its stakeholders:
The rationale for Novo Nordisk’s stakeholder
engagement is that collaborative efforts are the best
way to co-create innovative solutions for the benefit
of both parties involved. For instance, products and
services are developed to satisfy customer and societal needs. Throughout the value chain, from discovery to distribution, engagement with stakeholders
informs goal-setting and decision-making.
According to Vice President of Corporate Sustainability
Susanne Stormer, the company’s stakeholder engagement
approach has evolved over decades to the point that Novo
Nordisk now considers itself as only one part of an
interdependent and dynamic stakeholder constellation
(Novo Nordisk 2011), a self-image depicted in the firm’s
stakeholder map (see Fig. 8).
In particular, Novo Nordisk’s stakeholder map does not
place the company conspicuously at the center of the stakeholder constellation, a point made even more emphatically in
the latest map (Stormer 2013), which is reproduced in Fig. 9.
This more recent stakeholder map accentuates the interdependence, as well as the mutual influence, between Novo
Nordisk and its stakeholders as parts of a dynamic and interconnected stakeholder constellation. This shift may be considered evidence of a progression beyond a company-centric
approach and thus an even more progressive acknowledgement and embracement of the stakeholder tenet of the jointness of firm and stakeholder interests.
The large Danish industrial biotechnology company
Novozymes (once part of the same company as Novo
Nordisk) also demonstrates a mature state of stakeholder
engagement by employing stakeholder language, adopting
a cooperative strategic posture, and referring to the jointness of interests between company and stakeholders on its
corporate web page on stakeholder engagement:
Novozymes has a long tradition of engaging with
stakeholders and incorporating their key concerns
into our core business practices… What we learn
from engaging with our stakeholders is important
input to our strategy development, thereby ensuring
that our future activities are conducted in a responsible manner and that key stakeholder care-abouts are
addressed. This in turn helps us to set direction in our
business units and in geographical regions, and can
drive formalized partnerships with customers,
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R. Strand, R. E. Freeman
Fig. 8 Evolution of stakeholder engagement at Novo Nordisk
Fig. 9 Novo Nordisk and its stakeholders
suppliers, technology partners, and NGOs (Novozymes 2012).
The company whose policy shows perhaps the closest
explicit connection to Rhenman (1968) is the major Norwegian extractives company Norsk Hydro, which, in
describing its cooperative strategic posture, offers a timeline of events rooted in the promotion of greater democratization in business that could have come straight from
the pages of Rhenman’s Industrial Democracy:
123
In order to secure stable access to raw materials and
energy for our fertilizer operations, we investigated
opportunities to participate in oil and gas production
in the middle of the 1960s. After several years, Hydro
and its partners discovered oil and gas in the Ekofisk
and Frigg fields on the Norwegian Continental
Shelf… In 1978, we commenced production of ethylene and vinyl chloride monomer. During this time,
we also pioneered new labor relations practices
Scandinavian Cooperative Advantage
aimed at democratizing the workplace and increasing
the cooperation between management and employees, leading to a spirit of collaboration which continues to define the company today. (Norsk Hydro
2011, p. 23)
Norsk Hydro prominently depicts a cooperative strategic
posture as a primary component of ‘‘The Hydro Way’’ as
depicted in Fig. 10. This cooperative strategic posture is
evidenced by Norsk Hydro’s longstanding partnership with
Amnesty International to cooperatively address human
rights issues in the firm’s theatres of operation, which
include countries recognized as presenting major human
rights challenges. Recognizing that it did not possess the
competencies necessary to address the complex challenges
associated with human rights and indicative of its cooperative strategic posture—in 2002, Norsk Hydro formed a
partnership with Amnesty International to address the
human rights issue, in which both organizations shared a
jointness of interests. As the company (2002c) explains it,
Norsk Hydro and Amnesty International have signed
a cooperation agreement to bolster human rights
work… Amnesty will offer Hydro its expertise in
connection with the company’s internal training of
managers and employees on the handling of human
rights in the various countries Hydro operates in.
Hydro has extensive management development programs, for which Amnesty will provide training on
general human rights questions, in addition to supporting the company in the study of concrete cases.
Training programs directed to particular countries
and problem areas will also be developed. The
79
agreement stipulates that this cooperation is intended
to strengthen focus and work on human rights…
The major architect of the partnership with Amnesty
International was then Vice President of Corporate Social
Responsibility, Rolf Lunheim, whose own remarks reflect
Norsk Norsk Hydro’s (2002) rejection of a narrowly
economic view of the firm:
We in Hydro want to support the countries we
operate in not only through the results from our
business operations, but also in other ways. We have
decided to invest in three social areas—education,
human rights and health. These are essential factors
in social development with the aim of improving
living standards for the majority of people. We invest
through cooperation agreements with NGOs that
operate within these areas.
Another major extractive company from Norway, the
petroleum company Statoil, has also demonstrated a
cooperative strategic posture and considerations for stakeholder interests beyond shareholders. Touted as having
developed competency in cooperatively engaging with
local communities to explore the jointness of interests
between it and its stakeholders (Strand 2009); Statoil
(2012) describes its approach as an effort
… to make sustainable investments that benefit the
communities and countries in which we operate. We
do this by creating local content and generating
positive spin-offs from our core business in support
of development ambitions wherever we are present…
We support education and skills building in the local
community and among our suppliers and contractors
in order to build lasting capacity and to help them
develop the skills standards and certifications
required to work in the oil and gas industry. (p. 84)
The above profiles of these well-known Scandinavian
companies, although they represent only a small sample,
illustrate how Scandinavian companies demonstrate their
embracement of the stakeholder expression, stakeholder
maps, and the three major stakeholder tenets, to which
Scandinavian thinkers have themselves made significant
contributions.
From Competitive Advantage to Cooperative
Advantage
Fig. 10 The Norsk Hydro Way
In closing, we endorse the expression ‘‘Scandinavian
cooperative advantage’’ (Strand 2009) to draw attention to
the Scandinavian context and encourage a shift in strategic
management from a focus on achieving a competitive
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R. Strand, R. E. Freeman
advantage toward achieving a cooperative advantage. In
doing so, we contend that language matters where the
language and metaphors of strategic management associated with achieving a competitive advantage are likely to
hamper cooperation between companies and their stakeholders (Audebrand 2010; Ferraro et al. 2005; Ghoshal
2005; Pfeffer 2005; Rocha and Ghoshal 2006; Wang et al.
2011). We thus encourage a concerted move toward a focus
on achieving a cooperative advantage and a corresponding
use of more cooperation-based language and metaphors in
the strategic management field.
Competitive Advantage
A company is said to have a competitive advantage when it
implements a value creating strategy that is not being simultaneously implemented by any current or potential competitors
(Porter 1985; Barney 1991). Major pillars of the competitive
advantage camp in strategic management are Porter’s (1985)
Competitive Advantage and his well-known ‘‘Five Competitive Forces’’ model (Porter 1979, 1980). Magretta (2012, p. 63)
remarks that ‘‘no term is more closely related to Michael Porter
than competitive advantage’’ and states:
Managers often think about competition as a form of
warfare, a zero-sum battle for dominance in which
only the alphas prevail. This… is a deeply flawed and
destructive way of thinking. The key to competitive
success for businesses and nonprofits alike - lies in an
organization’s ability to create unique value…. Creating value, not beating rivals, is at the heart of
competition. (p. 17)
In the sense that achieving a competitive advantage is
about creating value, stakeholder theory is very much about
achieving competitive advantage. Yet the actual term
‘‘competitive advantage’’ is seldom deployed in stakeholder dialog because, as Freeman et al. (2010) point out,
the initial focus on competition tends to subordinate the
notion that value is more likely to be created when
stakeholders first consider how to effectively cooperate
with one another (pp. 275–276). Yet, as Magretta’s
remarks indicate, the terminology and discourse associated
with the strategic management field are predominantly
competitive. These expressions, drawn primarily from
zero-sum games in the competitive realms of the military,
sports, and chess (Audebrand 2010; Cardon et al. 2005;
Oliver 1999; von Ghyczy 2003) clearly imply that for there
to be winners, there must also be losers.
depicts how companies implement strategies for creating
value. The expression cooperative advantage is not new
(Lei et al. 1997; Ketelhöhn 1993; Skrabec 1999; Cooke
2002; Dagnino and Padula 2002; Strand 2009) but it has
not yet been widely adopted. By ‘‘cooperative advantage’’,
we mean when a company implements a value creating
strategy based on cooperating with its stakeholders that
results in superior value creation for the company and its
stakeholders.
However, the likelihood for cooperation between companies and their stakeholders is reduced given that competitive-based language currently dominates the field of
strategic management. Ferraro et al. (2005) and others
(e.g., Ghoshal 2005; Pfeffer 2005; Rocha and Ghoshal
2006; Wang et al. 2011) argue that the language employed
in social sciences amounts to a self-fulfilling prophecy of
the social activities to follow. It follows that because
competitive language dominates management—such as
achieving a competitive advantage as the primary objective
of strategic management (Porter 1985) and the pervasiveness of competitive-based expressions like ‘‘survival of the
fittest’’ in management14—competitive behavior is the
more likely to follow. In the same vein, Audebrand (2010)
argues that the dominance of war metaphors encourages a
competitive posturing and zero-sum game mentality that
prevents cooperation and the pursuit of sustainability
objectives that demands cooperation across tradition lines.
Relatedly, in the Evolution of Cooperation, Axelrod (2006)
suggests that in hypercompetitive environments, individuals that adopt an egoist perspective are often blinded by
their own short-term self-interest to see that it is often in
their own long-term best interest to cooperate.
Seeking to achieve a cooperative advantage in the
manner defined here is consistent with stakeholder theory
and its closely related concepts including Davis et al.’s
(1997) stewardship theory of management, Dyer and
Singh’s (1998) relational view of the firm, and Dahan
et al.’s (2010) value creation through corporate-NGO
collaboration.
The concept of cooperative advantage is also generally
consistent with the concept of creating shared value as
articulated by Porter and Kramer (2011) given that creating
shared value is basically a restatement of stakeholder theory’s ‘‘jointness of interests’’ tenet and it promotes a
cooperative strategic posture. Nonetheless, creating shared
value differs in one essentially important aspect: it still
promotes a view that is more consistent with a narrowly
economic view of the firm. This distinction is typified by
the following statement found Creating Shared Value:
Cooperative Advantage
14
Therefore, we encourage a shift in focus toward achieving
a cooperative advantage that we contend more accurately
123
‘‘Survival of the fittest’’ was first coined by the economist Hubert
Spencer (Werhane 2000; Stucke 2008, p. 973; Nowak and Highfield
2011, p. 14).
Scandinavian Cooperative Advantage
‘‘Perhaps most important of all, learning how to create
shared value is our best chance to legitimize business
again’’ [italics added] (Porter and Kramer 2011, p. 64). By
claiming that the legitimization of business is the most
important objective of creating shared value, Porter and
Kramer indicate their belief that company interests should
be prioritized above all else. Such an assumption represents
an egoistic perspective of the firm that is more consistent
with shareholder theory’s narrowly economic view of the
firm than it is with stakeholder theory’s belief that the most
important objective—or at least one on a par with the
company interests—should be creating value for society.
Additionally, as indicated by the claim that creating shared
value ‘‘is not about personal values’’, Porter and Kramer
(2011, p. 65) also seem to promote the so-called separation
thesis (Freeman et al. 2004, 2010; Harris and Freeman
2008) in which the managers’ ethical considerations and
personal values are intentionally muted. A dictum consistent with stakeholder theory, in contrast, would not only
treat managerial ethics and personal values as inseparable
from managerial decision making, but would embrace them
as a means through which managers can more effectively
identify opportunities for value creation that are in tune
with the real needs of society. These differences aside,
however, the language of creating shared value is more
cooperative than previous offerings like Porter’s ‘‘Five
Competitive Forces’’ model and given Porter’s significant
influence across the strategic management field, is far more
likely to encourage company-stakeholder cooperation.
Thus, overall, we consider the promotion of creating shared
value to be a useful means to further advance the stakeholder concept.
81
recent address to the Nordic Chapter of the UN Global
Compact by Deputy Director General of the Danish Business Authority Victor Kjær (2012) who remarked:
When I am speaking with others from around the
world, I am frequently surprised at what I take for
granted in terms of stakeholder dialog and cooperation here in the Nordic countries. Others ask me ‘‘Can
you really just cooperate on different challenges
between government, business, and other stakeholders?’’ I have come to see that cooperation and
stakeholder dialog is just something I am used to in
the Nordic countries.
The collection of these offerings of the Scandinavian
context could be characterized as ‘‘Scandinavian stakeholder capitalism’’ (Ax and Bjørnenak 2005; Grennes
2003) in that it ‘‘promotes long-term ties between owners,
managers, workers, and society, where the role of the
company includes promotion of goals of society at large’’
(Grennes 2003, p. 13). Comparing ‘‘Scandinavian stakeholder capitalism’’ to other systems and contexts throughout the world may prove a useful line of inquiry. This gives
rise to further lines of questions such as does Scandinavian
stakeholder capitalism encourage sustainable practice more
effectively than the forms of capitalism experienced in a
U.S. context? It would seem that Scandinavian stakeholder
capitalism is a closer model to ‘‘conscious capitalism’’
(xxxx) than is experienced elsewhere, such as the U.S.
where we propose this may serve as a promising realm of
further research.
Conclusion
Scandinavian Cooperative Advantage
By ‘‘Scandinavian cooperative advantage’’, we mean the
general tendency for companies in a Scandinavian context
to implement a value creating strategy based on cooperating with their stakeholders that results in superior value
creation for the companies and their stakeholders. In sum,
we contend that the Scandinavian context offer invaluable
evidence and inspiration into the shift from a focus on
competitive advantage toward cooperative advantage and
thus merits further investigative consideration. In particular, we call for robust cross-regional studies that compare
Scandinavian companies with those from other world
regions. Comparative research using Scandinavian and
U.S. datasets, for example, could elucidate useful comparisons. The U.S. business context is characterized as
having a romance with competition in commerce (Rosenau
2003). In contrast, the Scandinavian business context is
characterized as promoting cooperation as exemplified at a
In this article, we draw three interrelated conclusions
related to Scandinavian companies’ longstanding promotion of cooperation between themselves and their stakeholders. First, by clarifying the historical roots of the
stakeholder concept, we show that the role played by the
Scandinavian scholar Eric Rhenman and his Scandinavian
contemporaries in its theoretical development is much
larger than presently acknowledged. We demonstrate that
Scandinavia contributors can lay claim to the first publication and description of the term ‘‘stakeholder’’ in management literature accessible to scholars throughout the
world, as well as to the first stakeholder map and development of three fundamental tenets of stakeholder theory:
jointness of interests, cooperative strategic posture, and
rejection of a narrowly economic view of the firm. This is
particularly noteworthy given the creating shared value
concept (Porter and Kramer 2011) is basically a restatement of the long-standing ‘‘jointness of interests’’ tenet of
123
82
stakeholder theory. As such, creating shared value is
arguably a concept of Scandinavian origins.
Second, by exploring the potential relations between
these historical contributions and the current practices of
six Scandinavian companies recognized as leaders in sustainability, we show that the stakeholder concept as
envisaged by Rhenman and colleagues is clearly evident in
the practices today of Scandinavian companies. We explain
that Rhenman and colleagues’ promotion of the stakeholder concept undoubtedly reflected the cultural norms
and institutional structures experienced at the time—while
also influencing the norms and structures—where the comingled result is experienced as part of the Scandinavian
context of today. We contend this is further reason to delve
more deeply into company-stakeholder cooperation in a
Scandinavian context today and from which ample examples of creating shared value can be found. Furthermore,
Scandinavian-based companies are disproportionately
well-represented at the top of such major performance
indicators as the Dow Jones Sustainability Index (McCallin
and Webb 2004; Midttun et al. 2006; Morsing et al. 2007;
Gjølberg 2009; Strand 2013, p. 726) and Scandinavian
nations themselves have also realized strong and balanced
macro-level economic, social, and environmental performances (Strand 2011; World Economic Forum 2013;
Global Sustainability Competitiveness Index 2013; Social
Progress Index 2013). Such balanced performances, we
propose, stem from a willingness and ability of Scandinavian companies and their stakeholders to cooperate with
one another.
Finally, we endorse the notion of a ‘‘Scandinavian
cooperative advantage’’. We contend that a focus on
cooperative advantage is a more accurate depiction of
value creating strategies than with a focus on competitive
advantage. This point is particularly important in that, as
pointed out in Creating Shared Value, company-stakeholder cooperation is necessary for both long-term firm
profitability of companies and the social and environmental
sustainability of the world. We propose that Scandinavia
offers a particularly promising context from which to draw
inspiration regarding effective company-stakeholder
cooperation and to encourage a shift in the field of strategic
management from a focus on competition toward
cooperation.
Acknowledgments We thank the students of the University of
Minnesota’s IBUS 6315: ‘‘CSR: A Scandinavian Approach’’ and
IBUS 6316: ‘‘Sustainability and Cooperative Advantage in Scandinavia’’, the students of the Copenhagen Business School’s BLC
3CSR: ‘‘Sustainability and CSR in Scandinavia’’, Rolf H. Carlsson,
Marianne Barner, Susanne Stormer, Mette Morsing, and the three
anonymous reviewers for their most helpful input. Support was provided in part by the University of Minnesota Center for International
Business Education and Research (CIBER).
123
R. Strand, R. E. Freeman
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