scandinavian cooperative advantage: the theory and practice of stakeholder engagement in scandinavia

Scandinavian Cooperative Advantage: The Theory and Practiceof Stakeholder Engagement in Scandinavia

Robert Strand • R. Edward Freeman

Received: 17 June 2012 / Accepted: 26 June 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 devel-

opment 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 company-

stakeholder 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

Introduction

The field of strategic management has been traditionally

dominated by an emphasis on competition and the associ-

ated objective to achieve a competitive advantage. This is

exemplified by Porter’s Competitive Strategy (1980) and

Competitive Advantage (1985) where Porter’s ‘‘Five Com-

petitive Forces’’ model is championed in which the com-

pany 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 coop-

eration between companies and their stakeholders as a more

effective means of value creation. While Strategic Man-

agement is widely recognized as a landmark contribution

that has helped to embed considerations toward ‘‘stake-

holders’’ in management scholarship and managerial

thinking (Mitchell et al. 1997; Donaldson and Preston 1995;

Walsh 2005; Wood 1991), the discourse on strategic man-

agement has remained predominantly focused on competi-

tion (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 stake-

holders. While Porter and Kramer do not provide references,

the concept of creating shared value is an obvious restate-

ment 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

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]

123

J Bus Ethics

DOI 10.1007/s10551-013-1792-1

scholars and industry practitioners alike (Magretta 2012), his

implied endorsement of this fundamental tenet of stake-

holder theory is noteworthy.

In this article, we turn specifically to the important but

underappreciated Scandinavian contributions to stake-

holder theory over the past 50 years and their application in

the current practices of Scandinavian companies. We show

that Scandinavia represents a particularly promising con-

text 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 popu-

larity of Creating Shared Value, and the recognition

articulated within it that cooperation between companies

and their stakeholders is necessary for social and envi-

ronmental 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 Scan-

dinavian 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 histor-

ical 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 stake-

holder concept undoubtedly reflected the cultural norms

and institutional structures experienced at the time—while

also influencing the norms and structures—where the co-

mingled 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

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, Scan-

dinavia commonly includes Finland and is often used inter-

changeably with the expression ‘‘Nordic’’ (Bondeson 2003,

p. 3; see also Derry 1979). Some may agree with this broad-

ening 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 orga-

nization that is jointly owned or managed by those who use its

facilities or services (i.e., a ‘‘co-op’’) (Birchall 2003; Michel-

sen 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 pre-

mise of stakeholder theory is that great companies recog-

nize 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.

R. Strand, R. E. Freeman

123

linked with Freeman (1984), however, many scholars have

contributed over the years to the ever-growing—and con-

tested (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 typi-

fied 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 ‘‘Stock-

holder 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 share-

holders. In this respect, there is no conflict between share-

holder 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 prof-

itability, 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

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 contri-

butions made by Eric Rhenman and his Scandinavian con-

temporaries 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 (Nasi 1995a, b; Carroll

and Nasi 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 Nasi 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 dur-

ing the early 1960s and thereafter that are important in their

own right. These important Scandinavian contributions

include the first publication and description of the expres-

sion ‘‘stakeholder’’ in management literature accessible to

scholars throughout the world, the introduction of the first

stakeholder map, and the development of three funda-

mental 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 suppli-

ers, owners, governments, customers, local community

Scandinavian Cooperative Advantage

123

organizations, and employees. Within the Freeman (1984)

text, the SRI is credited as first introducing the expression

‘‘stakeholder’’ to the management literature via its inclu-

sion of the stakeholder expression within an internal

memorandum. Under the heading ‘‘History of ‘Stake-

holder’’’ (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 Interna-

tional, 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 manage-

ment literature to refute the claim of Scandinavian schol-

ars’ dependency on early ideas emanating from Stanford.

Our chronological exploration is primarily grounded in

Mitchell et al.’s (1997) historical narrative of 27 stake-

holder 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) Foretagsdemokrati och

Foretagsorganisation 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 Nasi 1997, p. 50; Nasi 1995a, p. 98) where the 1968

English translation Industrial Democracy in the Work-

place) (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 indica-

tion 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—

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 ear-

liest 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 con-

cept—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 conver-

sation 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 ret-

rospective 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 Long-

Range Planning (hereafter, Organization Theory), pub-

lished in Swedish in 1969 and in English in 1973, Rhenman

(1973) reports having ‘‘benefited from many conversations

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.

3 For additional commentary on Rhenman, see Carlsson (2007). We

also extend our gratitude to Rolf H. Carlsson for his contributions to

this article.


123

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).

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

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’’

Freeman and Heed (1983, p. 91) Wide: ‘‘can affect the achievement of an organization’s objectives or who is affected

by the achievement of an organization’s objectives’’

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)

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).


123

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 cus-

tomary 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 dis-

cussions 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 contribu-

tions 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

(Nasi 1995a, b). Interessent was directly translated as

‘‘stakeholder’’ in the 1968 publication in English and dis-

tributed across Europe by Tavistock Publications Limited

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 individ-

uals 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 demon-

strated 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 develop-

ment. 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 memo-

randum. 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 (foretaget) 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.

5 Personal correspondence with Rolf H. Carlsson during April 2012.6 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 men-

tions 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 Stromberg and Gunnar West-

erlund 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).

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 ‘‘Nakemyk-

semme kehittamisessa olemme saaneet vaikutteita erityisesti ruotsal-

aisen organisaatiotutkijan Eric Rhenmanin tuotannosta’’.


123

Rhenman’s (1964) stakeholder map can thus legiti-

mately lay claim to being the first stakeholder map pub-

lished in the world. While Rhenman’s (1964) book was a

major publication in Scandinavia (Nasi 1995a, b) and care

should be taken to avoid a more recent privileging of

English-language publications (Carroll and Nasi 1997,

p. 50; Nasi 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 con-

cept, the literature from Scandinavia also contributed three

fundamental tenets of stakeholder theory—(i) jointness of

interests, (ii) cooperative strategic posture, and (iii) rejec-

tion 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 with-

draw 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)


123

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 naıve 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 fun-

damental 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 interde-

pendence 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 deploy-

ment 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

entrepreneurial to conservative. The construct of a strategic

posture dimension, although a deliberate oversimplifica-

tion, 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 ‘‘coop-

erative strategic posture’’ entails when a company dem-

onstrates a tendency to first consider its stakeholders as

potential partners in cooperation. Conversely, a ‘‘compet-

itive strategic posture’’ entails when a company demon-

strates 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

Fig. 3 Stakeholder map

(English) from Rhenman (1968,

p. 25)


123

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 Rhen-

man (1964); Rhenman and Stymne (1965); Rhenman et al.

(1970), and the other associated contributions from Scan-

dinavia 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 democra-

tization 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. Sec-

ondly, 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 con-

siders the maintenance of cooperation to be at the heart of

managerial responsibilities, with management being a spe-

cial 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

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 height-

ened 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 stake-

holder 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 con-

temporaries, particularly Rhenman (1968), which raises a

point of contention with the neoclassical economics per-

spective 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

Fig. 4 Rhenman’s (1968, p. 34) view that stakeholders are inappro-

priately assumed as competitors

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.


123

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 aspira-

tions, 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 pre-

sented by Freeman (1984) in his Strategic Management,

which sees Scandinavian contributions as merely a ‘‘his-

torical 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 memo-

randum 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 Fore-

tagsledning i en Foranderlig Varld (Management in a

Changing World), which explicitly outlines the stakeholder

approach (Rhenman and Stymne 1965). In fact, Nasi

(1995a) makes a point of emphasizing that during this

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 Administra-

tive 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 distin-

guished 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:

Fig. 5 Rhenman’s (1968, p. 31)

summary of his theory of

company goals

Fig. 6 Modified* version of Freeman’s history of the stakeholder

concept adapted from Freeman (1984/2010, p. 32)

11 Also known as the Swedish Institute for Administrative Research.12 Personal correspondence with Rolf H. Carlsson during April 2012.


123

SIAR led to a kind of golden age in Swedish man-

agement 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 breezi-

ness 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 hege-

monic status in Scandinavian management academe

throughout the 1960s, 1970s, and 1980s (Nasi 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 con-

sidered 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 practi-

tioners (Schon 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

et al. 2006); strong regulatory bodies and active nongov-

ernmental 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 founda-

tions (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 docu-

mented (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 stra-

tegic 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.

Nasi (1995a, b) also refers to the pervasiveness of the

stakeholder approach across Scandinavia and, like Kakab-

adse et al. (2005, p. 290), emphasizes its hegemonic status

in Scandinavian management academia and industry in the


123

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 ‘‘Rhen-

man’s rose’’ (e.g., Bruzelius and Skarvad 1974;

Rholin 1972; Sjostrand 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 Scandina-

vian contributions to the stakeholder concept and the current

practices of Scandinavian companies, we select six compa-

nies whose origins are from across Scandinavia—H&M,

IKEA, Novo Nordisk, Novozymes, Norsk Hydro, and Sta-

toil—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, com-

munities, employees, suppliers, industry peers, policy-

makers, 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 joint-

ness 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 chal-

lenges’’. 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

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 incred-

ibly 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 tra-

ditional supply chain issues associated with price, quality,

and serviceability. These remain important issues, of course,

but the field of considerations is broadened to consider eth-

ical concerns about those affected by supply chain opera-

tions, 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;

13 Nasi (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

Morsing and Oswald 2009; Strand 2009), recently descri-

bed 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 soci-

etal needs. Throughout the value chain, from dis-

covery 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 stake-

holder 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 interde-

pendence, as well as the mutual influence, between Novo

Nordisk and its stakeholders as parts of a dynamic and inter-

connected stakeholder constellation. This shift may be con-

sidered evidence of a progression beyond a company-centric

approach and thus an even more progressive acknowledge-

ment and embracement of the stakeholder tenet of the joint-

ness 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 joint-

ness 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 respon-

sible 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,

Fig. 7 H&M’s stakeholder engagement overview


123

suppliers, technology partners, and NGOs (Novo-

zymes 2012).

The company whose policy shows perhaps the closest

explicit connection to Rhenman (1968) is the major Nor-

wegian extractives company Norsk Hydro, which, in

describing its cooperative strategic posture, offers a time-

line of events rooted in the promotion of greater democ-

ratization in business that could have come straight from

the pages of Rhenman’s Industrial Democracy:

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 eth-

ylene and vinyl chloride monomer. During this time,

we also pioneered new labor relations practices

Fig. 8 Evolution of stakeholder engagement at Novo Nordisk

Fig. 9 Novo Nordisk and its stakeholders


123

aimed at democratizing the workplace and increasing

the cooperation between management and employ-

ees, leading to a spirit of collaboration which con-

tinues 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 cooper-

ative 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 pro-

grams, for which Amnesty will provide training on

general human rights questions, in addition to sup-

porting the company in the study of concrete cases.

Training programs directed to particular countries

and problem areas will also be developed. The

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 stake-

holder 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

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 competitiveFig. 10 The Norsk Hydro Way


123

advantage toward achieving a cooperative advantage. In

doing so, we contend that language matters where the

language and metaphors of strategic management associ-

ated with achieving a competitive advantage are likely to

hamper cooperation between companies and their stake-

holders (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 simul-

taneously 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 Competi-

tive 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…. Cre-

ating 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 stake-

holder 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.

Cooperative Advantage

Therefore, we encourage a shift in focus toward achieving

a cooperative advantage that we contend more accurately

depicts how companies implement strategies for creating

value. The expression cooperative advantage is not new

(Lei et al. 1997; Ketelhohn 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 com-

panies and their stakeholders is reduced given that com-

petitive-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 pervasive-

ness 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, individu-

als 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 the-

ory’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:

14 ‘‘Survival of the fittest’’ was first coined by the economist Hubert

Spencer (Werhane 2000; Stucke 2008, p. 973; Nowak and Highfield

2011, p. 14).


123

‘‘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 consis-

tent 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 stake-

holder concept.


By ‘‘Scandinavian cooperative advantage’’, we mean the

general tendency for companies in a Scandinavian context

to implement a value creating strategy based on cooper-

ating 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 particu-

lar, 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 com-

parisons. 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

recent address to the Nordic Chapter of the UN Global

Compact by Deputy Director General of the Danish Busi-

ness 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 coopera-

tion here in the Nordic countries. Others ask me ‘‘Can

you really just cooperate on different challenges

between government, business, and other stakehold-

ers?’’ 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 stake-

holder 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 stake-

holder capitalism’’ to other systems and contexts through-

out 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

In this article, we draw three interrelated conclusions

related to Scandinavian companies’ longstanding promo-

tion of cooperation between themselves and their stake-

holders. 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 publi-

cation and description of the term ‘‘stakeholder’’ in man-

agement literature accessible to scholars throughout the

world, as well as to the first stakeholder map and devel-

opment 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 restate-

ment of the long-standing ‘‘jointness of interests’’ tenet of


123

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 sus-

tainability, 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 stake-

holder concept undoubtedly reflected the cultural norms

and institutional structures experienced at the time—while

also influencing the norms and structures—where the co-

mingled 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 exam-

ples 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 perfor-

mances (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 Scandina-

vian 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-stake-

holder 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 Scandi-

navia’’, 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 pro-

vided in part by the University of Minnesota Center for International

Business Education and Research (CIBER).

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