• No argument on theWhat is needed is a theory of stakeholder identification that can reliably separate stakeholders from nonstakeholders. • A typology of stakeholders by considering three attributes.
Stakeholder Theory
• R. Edward Freeman (1984) Strategic Management: A Stakeholder Approach
The stakeholder theory
• The stakeholder theory is a theory of organizational management and business ethics that addresses morals and values in managing an organization. • It attempts to address the "Principle of Who or What Really Counts."
– The stakeholder’s power to influence the firm; – The legitimacy of the stakeholder’s relationship with the firm; – The urgency of the stakeholder’s claim on the firm.
• Ronald K. Mitchell, Bradley R. Agle, Donna J. Wood, (1997) , Toward a Theory of Stakeholder Identification and Salience: Defining the Principle of Who and What Really Counts, The Academy of Management Review
Instrumental
• Connections between stakeholder management and the achievement of traditional corporation objectives (e.g., profitability, growth). • If you want to achieve(avoid) results X, Y, or Z, then adopt (don’t adopt) principles and practices A, B, or C.
Normative
• The identification of moral or philosophical guidelines for the operation and management of corporations. • Do (Don’t) do this because it is the right (wrong) thing to do.
What’s a stakeholder?
• A broad way
– any group or individual who can affect or is affected by the achievement of the organization's objectives" (Freeman ,1984: 46) – Voluntary stakeholders bear some form of risk as a result of having invested some form of capital, human or financial, something of value, in a firm. Involuntary stakeholders are placed at risk as a result of a firm's activities. But without the element of risk there is no stake
T Donaldson, LE Preston, (1995), The stakeholder theory of the corporation: Concepts, evidence, and implications, Academy of management Review
A traditional input-output model of a firm
Suppliers
Investors
A firm
Customers
Employees
(Donaldson & Preston, 1995)
A Stakeholder Model of a Firm
(Donaldson & Preston, 1995)
Suppliers
Government
Environmental Group
Investors
A firm
Customers
Community
Employers
Future Generation
Descriptive
• Describes and explains specific corporate characteristics and behaviors.
– The nature of the firm – The way managers think about managing – How board members think about the interests of corporate constituencies – How some corporations are actually managed