Stakeholder theory and organizational ethics provides the most comprehensive, theoretical treatment of the stakeholder framework to date. Some examples of key stakeholders are creditors, directors, employees, government and its agencies, owners shareholders, suppliers, unions, and the. Nor do i dwell on the definition of what a stakeholder is, as the traditional definitions given by freeman. Among these, stakeholder theory or stakeholder thinking has emerged as a new narrative to understand and remedy three interconnected business problemsthe problem of understanding. In the intervening years, the literature on stakeholder theory has become vast and diverse. The stakeholder ecosystem, this theory says, involves anyone invested and involved in, or affected by, the company. Over the last twentyfive years a distinctive answer to this question has emerged in a body of ideas known as stakeholder theory. Stakeholder theory and value creation the key idea about capitalism is that the entrepreneur or manager creates value by capturing the jointness of the interests of the stakeholders. Edward freeman originally detailed the stakeholder theory of organizational management and business ethics that addresses morals and values in managing an organization. One which states that businesses do have social responsibilities. Whats certain is that stakeholder theory obligates corporate directors to appeal to all sides and balance everyones interests and welfare in the name of maximizing benefits across the spectrum of those whose lives are touched by the business.
Edward freeman published his landmark book, strategic management. Mainly, this would help in developing an empirical proposition of managerial performance by apt understanding of stakeholder theory. One who has a share or an interest, as in an enterprise. A conceptual framework of business ethics and organizational management which addresses moral and ethical values in the management of a business or other organization. A stakeholder is a party that has an interest in a company, and can either affect or be affected by the business. Doc a critique of stakeholder theory samuel mansell.
A stakeholder is any person or entity that has a significant interest in the success or failure of a business. Larsons m3a1 stewardship theory, stakeholder theory, and. The stakeholder theory of corporate governance focuses on the effect of corporate activity on all identifiable stakeholders of the corporation. Preston university of maryland the stakeholder theory has been advanced and justified in the man agement literature on the basis of its descriptive accuracy, instrumen tal power, and normative validity. The stakeholder theory is a theory of organizational management and business ethics that addresses morals and values in managing an organization. Stakeholder theory and the corporate objective revisited organization science 153, pp. The stakeholder theory of the corporation western washington.
Stockholder theory and stakeholder theory map out these two paths, allowing each business to decide which ethical path it will choose to take. Social implications a refined definition of the stakeholder concept will facilitate building social and physical. The classification model is then tested with positive results. One common version of stakeholder theory seeks to define the specific stakeholders of a company the normative theory of stakeholder identification and. Although the definition of stakeholders is quite broad, there are five types.
Indeed, it is a theory that seeks to explain the functioning of the management process and taking into account the interests of stakeholders. A stakeholder approach, a work that set the agenda for what we now call stakeholder theory. The primary stakeholders in a typical corporation are its investors. Stakeholder theory and organizational ethics robert. As for the instrumental dimension of stakeholder theory, it focuses mainly on the role of leaders.
The assertion that organisations should concern themselves with the demands of multiple. Social implications a refined definition of the stakeholder concept will facilitate building social and. Stakeholder theory has gained currency in the business and society literature in recent years in light of its practicality from the perspective of managers and scholars. Stakeholder definition of stakeholder by the free dictionary. Stakeholder theory is a component of the larger stakeholder management, which creates positive relationships with stakeholders by managing their expectations and objectives. The stakeholder theory was first proposed in the book strategic management. Stakeholder theory as an ethical approach to effective.
In accounting for the recent ascendancy of stakeholder theory, this article presents an overview of two traditional conceptualizations of corporate social responsibility csr carroll. The agency theory looks to outline the interests of a principal and an agent, which can include an individual and a financial planner. The stakeholder perspective is an alternative way of understanding how companies and people create value and trade with each other. Developing stakeholder theory friedman 2002 journal. The stakeholder concept has its origins in the study of corporations and how they make decisions. Due to this lack of appreciation it is argued that current attempts at integrating the separate strands of stakeholder theory to achieve a convergent stakeholder theory are premature. Stewardship theory, stakeholder theory and convergence by stephen l. From this perspective, stakeholder theory is part of management theory, should explicitly draw upon management theory and methods, but is equally a part of ethics and moral theory. A model is presented which combines stakeholder theory with a. Concepts, evidence, and implications thomas donaldson georgetown university lee e. A stakeholder approach originally published in 1984 and reprinted by cambridge university press in 2010 identifies and models the groups which are stakeholders of a corporation. Consider the role concept of social responsibility had on starbucks as you watch this video. Stakeholder engagement process companies need to remain relevant to survive in a challenging business environment and to be relevant requires regular interaction with important stakeholder groups.
A robust stakeholder engagement model is vital for companies to be able to understand and respond to legitimate stakeholder concerns. Stakeholders can have a significant impact on decisions regarding the operations and finances of an organization. The term stakeholder appeared in 1963 for referring the accountability of an organisation before all the people and groups who influence its functioning. A stakeholder approach 1984 which is regarded as a seminal work of stakeholder theory. Project stakeholder management processes required to identify all people or organizations impacted by the project, analyzing stakeholder expectations, and impact on the project, and developing appropriate management strategies for effectively engaging stakeholders in project decisions and execution. Robert phillips provides an extended defense of stakeholder theory as the preeminent theory of organizational ethics today. Stakeholder theory and the corporate objective revisited. Second, lets clarify the meaning attributed to the stakeholder value and the method by which it was measured. Preston 1995, stakeholders are defined by their legitimate interest in an organisation. A stakeholder approach to corporate social responsibility. It seeks to help leaders understand the stakeholders and direct. Larson july 14, 20 stewardship theory history and overview stewardship theory is a relatively new concept karns, 2011 and assumes that the manager is a steward of the business with behaviors and objectives consistent with those of the owners. The constructs of the classification model juxtapose existing stakeholder theories and contributions from across the multicontextual applications of stakeholder theory, thereby providing an invaluable overview of what we know about stakeholder theory in one model.
Stakeholder theory is a view of capitalism that stresses the interconnected relationships between a business and its customers, suppliers, employees, investors, communities and others who have a stake in the organization. Stakeholder mapping is a dynamic process, and the definition of an organizations stakeholders will change as the business environment, stakeholder requirements, and opinions change. A stakeholder approach, and identifies and models the groups which are stakeholders of a corporation, and both describes and recommends methods by which management. The development and implications of the stakeholder theory the primary debates of the stakeholder theory the comparison between the shareho.
In order to control this process, a strategic plan is required. Stakeholder theory can be normative because the function of a firm can be interpreted and moral and philosophical guidelines in the operation of a firm can be identified. This chapter aims to contribute to the optimal development of stakeholder theory by clarifying the. Stakeholder theory takes a broad view of the constituencies that a corporation serves. If the condo company truly wants longterm success, stakeholder theory holds, it should treat suppliers and vendors well, but also do due diligence on how the supplier companies themselves do business. Stakeholders can affect or be affected by the organizations actions, objectives and policies. This is only a partial representation of ed freemans published works on stakeholder theory. The stakeholder theory has been advanced and justified in the man agement literature on the basis of its descriptive accuracy, instrumen tal power, and normative validity.
We can make the definition for stakeholder theory more suitable for events and tourism, and in these contexts it is considered to be essential to encompass. Recognizing the stakeholder concept as an essentially contested concept subject to multiple competing interpretations, this chapter presents a systematic metalevel conceptual analysis. A stakeholder approach, cambridge university press, new york. Both stockholder and stakeholder theories are normative theories of corporate social responsibility that outline the ethical responsibilities of. Stakeholder theory an overview sciencedirect topics. Freeman, harrison and zyglidopoulos discuss the foundation concepts and implementation of stakeholder management as well as the advantages this approach provides to firms and their managers. All stakeholders must be treated equally gioia, 1999. It suggests that shareholders are merely one of many stakeholders in a company. Though several versions of what it means to treat stakeholders. This theory posits that corporate managers officers and directors should take into consideration the interests of each stakeholder in its governance process. Yes, sometimes the interests are in conflict, but over time they must be shaped in the same direction. A person, group or organization that has interest or concern in an organization. The international standard providing guidance on social responsibility, called iso 26000, defines a stakeholder as an individual or group that has an interest in any decision or activity of an organization.
Stakeholders typically are defined as individuals, groups and organizations that have an interest in the processes and outcomes of the firm and. In response to corporate scandals of recent years including. Stakeholder theory classification, definitions and. Cambridge core strategic management stakeholder theory by r. Stakeholder theory is a a conceptual framework of business ethics and organizational management which addresses moral and ethical values in the management of a business or other organization. However, under stakeholder theory, suppliers should also be operating their own businesses ethically, fairly, and equitably. The critical corporate stakeholder issues, both in theory and in practice, involve evidentiary considerations and conceptual issues e. Stakeholder theory can be instrumental because the relationship between stakeholder management and the achievement of the objectives of a firm can be identified. According to the stakeholders theory, the organisation is a network of mutual dependencies where the interests and expectations of the different stakeholders can be jeopardised in diverse ways.
306 1416 792 656 1127 263 559 1358 102 967 302 588 516 788 612 762 1284 1450 334 189 806 394 12 274 576 602 560 1265 456 916 1007 789 752 901 260 1238 1142 1391 262 954 1143 1441 556 209 601