Corporate Social Responsibility and the Legitimacy of the Shareholder Primacy Norm: A Rawlsian Analysis
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Abstract
| The shareholder primacy norm (SPN) is considered a major impediment to corporate social responsibility. We argue that although the SPN is not legally enforceable, it is a powerful social norm among managers. Applying Rawls’ social contract theory, we evaluate the legitimacy of the SPN, concluding that it would endorse a principle of governance in line with shareholder primacy rather than stakeholder theory. Nonetheless, we also argue that justice considerations of Rawls’ theory impose exogenous constraints on shareholder primacy, primarily through legislation. |
| David Ronnegard is a post-doctoral fellow at the INSEAD Centre for Executive Education and Research in Abu Dhabi. |
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| Yolanda Jahier |
