Stakeholder theory is a theory of organizational management and business ethics, most closely associated with R. Edward Freeman's 1984 book Strategic Management: A Stakeholder Approach, that holds a company should be managed for the benefit of all its stakeholders, including employees, customers, suppliers, communities, and shareholders, rather than for shareholders alone. Freeman argued that attending to the interests of this broader set of groups affected by or able to affect a firm's objectives is both an ethical obligation and, over the long run, good for the firm's own performance and survival. The theory has been influential in debates over corporate governance and corporate social responsibility, often presented as a direct alternative to shareholder primacy models of the firm.
Facts
Core ClaimStakeholder theory holds that managers should identify a company's stakeholders and weigh their interests in decision-making, rather than serving shareholders alone. 1 Cross-Tradition Connections
Associated With
Agency theory and stakeholder theory are the standard contrasting theories of corporate purpose and governance, routinely paired in the literature.
Sources
1. Wikipedia, Stakeholder Theory
WikipediaWikipedia, Stakeholder theory lead sectionQuote, Wikipedia, Stakeholder theory lead section
It accounts for multiple constituencies impacted by business entities like employees, suppliers, local communities, creditors, and others.
1. Wikipedia, Stakeholder Theory
WikipediaWikipedia, Stakeholder theory History sectionQuote, Wikipedia, Stakeholder theory History section
R. Edward Freeman had an article on Stakeholder theory in the California Management Review in early 1983, but makes no reference to Mitroff's work, attributing the development of the concept to internal discussion in the Stanford Research Institute.
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