Stakeholder Interests from Behind the Veil: A Rawlsian Approach to Ethical Corporate Governance

Abstract

Every corporation and organization has stakeholders: individuals and groups to whom they owe consideration ingovernance decisions and who, in turn, can exert influence on the corporation and other stakeholders. Legitimatestakeholders include the owners, managers, employees, consumers, taxpayers, community members, supply chainmembers and society as a whole. The problem is that the interests of these stakeholders are often in conflict with oneanother. Although the legitimacy of stakeholder interests is well established, how to unravel the morass ofconflicting stakeholder interests is not so clear due to the fact that stakeholders often argue from positions of theirown self-interest. We propose an approach inspired by John Rawls’ idea of fairness that proposes an original positionbehind a veil of ignorance. Stakeholder interests can be assessed and weighted more fairly if we begin with theassumption that we do not know which stakeholder group we will ultimately occupy. Thus, when specificgovernance decisions are being considered, the relative weight of stakeholder interests can be established withfairness without the confounding influence of arguments based on self-interest.