What Complex Organizations Do to Ethics | Ed Freeman

Jan 27, 2026

R. Edward Freeman, Darden professor and originator of stakeholder theory, reframes business as networks of relationships. He explores how organizational systems create ethical outcomes. Short takes cover legitimacy and managerial responsibility. He contrasts ethics and strategy, explains stakeholder mapping, and urges moral imagination over trade-offs.

Ask episode

AI Snips

Chapters

Books

Transcript

Episode notes

ADVICE

Start Strategy By Declaring Purpose

Ask "What do you stand for?" before deciding what business you're in.
Let purpose determine strategy so actions align with what the company aspires to be.

INSIGHT

Use A Two-Dimensional Stakeholder Map

Stakeholders' cooperative potential and competitive threat vary with current behavior.
Classify stakeholders to change rules, amplify allies, or monitor risks strategically.

ADVICE

Base Responses On Stakeholder Behavior

Focus on stakeholders' observed behavior to decide how to respond.
Ask how their behavior could change to help or hurt you and design responses accordingly.

Get the Snipd Podcast app to discover more snips from this episode

Get the app

Ethical questions at work rarely show up as rules or compliance issues. They show up in the systems organizations design and the outcomes those systems produce. And even well-intentioned leaders can create harm without meaning to. In this episode, Dart and Ed explore legitimacy, responsibility, employees, power, and why acting ethically inside complex systems is so difficult, even when people know what the right thing is.

Ed Freeman is best known for stakeholder theory, which challenged the idea that companies exist only to serve shareholders. He argues instead that businesses are built on relationships, and that ethics and strategy can’t be separated.

In this episode, Dart and Ed discuss:
- Why stakeholder theory was never “shareholders versus everyone else”
- What legitimacy means and why companies lose it
- How ethics and strategy got separated
- Why values come before business models
- Managing stakeholders vs. building relationships
- Why interdependence matters more than primacy
- When trade-offs signal a lack of imagination
- How ignoring people can lead to harm
- Why ethics can’t be outsourced to regulation
- What it means to act ethically inside complex systems
- And other topics…

R. Edward Freeman is Stephen E. Bachand University Professor of Business Administration and Olsson Professor of Business Administration at the University of Virginia’s Darden School of Business. He previously taught at the Wharton School and the University of Minnesota. His work focuses on stakeholder theory, business ethics, and the role of purpose in strategy. He is the author of the award-winning Strategic Management: A Stakeholder Approach and numerous articles on ethics, value creation, and capitalism.

Resources Mentioned:
Ed’s Book, Strategic Management: A Stakeholder Approach: https://www.amazon.com/Strategic-Management-R-Edward-Freeman/dp/0521151740
Ed’s Podcast, The Stakeholder Podcast: https://podcasts.apple.com/us/podcast/the-stakeholder-podcast/id1526139352

Connect with Ed:
Darden faculty page: https://www.darden.virginia.edu/faculty-research/directory/r-edward-freeman
LinkedIn: https://www.linkedin.com/in/r-edward-freeman-98b8897/

Work with Dart:
Dart is the CEO and co-founder of the work design firm 11fold. Build work that makes employees feel alive, connected to their work, and focused on what’s most important to the business. Book a call at 11fold.com.