Fst forms part of the italian economia aziendale or business administration studies. Developing stakeholder theory friedman 2002 journal. This chapter examines the stakeholder theory of corporate governance. 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. The idea of the stakeholder as a factor in corporate governance is quite new. The purpose of this chapter is to trace the development of what has come to be known as stakeholder theory. It is not the purpose of this paper to provide an overview of the vast literature on corporate social responsibility csr, stakeholder theory sht and the socalled triple bottom line 3bl. Analysis of three themes emanating from this literature leads to the development of. Theory and practice deals with the stakeholder field in a comprehensive manner. Stakeholder theory provides an appropriate lens for considering a more complex perspective of the value that stakeholders seek as well as new ways to measure it.
This first part will explain what share and stakeholder capitalism is and will explore the origin of these philosophies. Concepts, evidence, and implications thomas donaldson georgetown university lee e. Introduction there has been much debate for many years as to what should be the objective of the large public company. Stewardship theory, stakeholder theory, and convergence. Convergent stakeholder theory foster school of business. The stakeholder theory of corporate governance has been developed extensively in the uk, and has even been enshrined into law companies act 2006. A model is presented which combines stakeholder theory with a realist theory of social change and differentiation.
Stakeholder theory, value, and firm performance business. International journal of applied institutional governance volume 1 issue 1 the stakeholder theory in the modern global business environment tony ike nwanji phd researcher on corporate governance kerry e. Stakeholder theory, corporate governance and public. Freeman 1994 had argued against the notion of convergent stakeholder theory, he argued that, the stakeholder theory can be unpacked into a number of stakeholder theories, each of which has a normative core, inextricably linked to the way that. Theory and practice fran ackermann and colin eden this article explores how top management teams can increase the robustness of their strategies by attending to important concepts emerging from the stakeholder literature. To begin we go back to freemans original book and retell the story, told there, of the origins of the idea of stakeholders. Freeman surveyed use of the stakeholder concept up to the writing of his book. It suggests that the theory in previous comments are derived in descriptive, instrumental, and normative theory. Stewardship theory, stakeholder theory and convergence. The term shareholder value approach is a term out of the field of business economics and. This paper merges the tenets of stakeholder theory and the theoretical constructs of attachment and allegiance initially investigated in covell 2004. This essay examines links, similarities, and dissimilarities between stakeholder theory and sustainability management.
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. Distinctions in descriptive and instrumental stakeholder theory. Social science stakeholder theorytends to focus stakeholders and the supply chain 71 derwal03. The stakeholder theory is a theory of organizational management and business ethics that accounts for multiple constituencies impacted by business entities like employees, suppliers, local communities, creditors, and others. Convergence theory presumes that as nations move from the early stages of industrialization toward becoming fully industrialized, they begin to resemble other industrialized societies in terms of societal norms and technology. Aseem nath tripathi introduction there is a continuing debate about what the purpose of the modern corporation should be. Examine social responsibility and how it influences stakeholder management differentiate between the systems theory, social network theory, collaboration theory and social exchange theory. It analyzes the theory s feature of serving fair return on the investment of the companys customers, suppliers, employees, and the local communities. Evans brako ntiamoah, priscilla oforiwaa egyiri, michael kwamega. It is perhaps not surprising that a theory as popular as stakeholder theory should be used in different. 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. Divergent thinking is the process of thinking that explores multiple possible solutions in order to generate creative ideas.
As a result of their perceived stake in the entity or task. Developing a model for effective stakeholder engagement. The theory suggests that the firms purpose is to contribute to humanity by serving customers, employees and the community karns. Stakeholder theory by freeman 1984 provides us with a framework that can be used to map out the stakeholders of all different types of businesses. Based on the analysis a conceptual framework is developed to increase the applicability and the application of stakeholder theory in sustainability management.
This study investigates how an ivy league schools football season ticket holders demonstrate their attachment and allegiance to the intercollegiate athletic product through the application of stakeholder theory as a marketingbased construct. Because of the vital importance of knowing and managing stakeholders in all contexts, whether it is a. This form of theory is explicitly and unabashedly normative, demonstrating how managers can create morally sound approaches to business and make them work. The popularity of the stakeholder model has been achieved thanks to its powerful visual scheme and its very simplicity. Stakeholder theory, corporate governance, and public. Since neither approach is complete without the other, we propose a new way of theorizing about organizations.
The article focuses on a proposal concerning convergent stakeholder theory. Larsons m3a1 stewardship theory, stakeholder theory, and. What is the stakeholder theory of corporate governance. Among academics in general and management scholars in particular, there appears to be a growing interest in what has been broadly. A challenge for empirical research abstract stakeholder theory is one of the most influential theories in business ethics. This theory emphasises the importance of the involvement of stakeholders in the business in order to create value parmar et al, 2010. Nevertheless, legitimate criticism continues to insist on clarification and emphasises on the perfectible nature of the model. Pdf a stakeholder approach to strategic management. The shareholder and stakeholder theories of corporate purpose. We intend to accomplish this in what is perhaps an unusual manner. Company, interest groups, income, stakeholders, value. The term stakeholder appeared in 1963 for referring the accountability of an organisation before all the people and groups who influence its functioning.
For the 1st interdisciplinary conference on stakeholders, resources and value creation. It states that what is needed are theories that are divergent and thus utilize the point of view of stakeholder terms in showing different but useful methods of understanding organizations. We describe two divergent approaches to stakeholder theory a social science approach and a normative ethics approachand examine their differences and similarities. It suggests that the theory in previous comments are derived in descriptive. It explains the basis of the theory, citing the extraordinary status and control that shareholders are given under corporate law. A model is presented which combines stakeholder theory with a realist theory. 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. Other frameworks, such as stakeholder theory, arise from a more socialorientated perspective on corporate governance. Howell professor of governance and regulation issn.
Distinctions in descriptive and instrumental stakeholder. Takes a positive view of managers, considering them as stewards whose interests are aligned with that of the owners. The term shareholder theory or also shareholder value approach can refer to different ideas. Stakeholder theory offers a number of perspectives and expectations that stakeholders may hold.
It figures markedly in the latest version of the corporate governance code. It states that what is needed are theories that are divergent and thus utilize the point of view of stakeholder terms in. Developing stakeholder theory article pdf available in journal of management studies 391. We develop a fourfactor perspective for defining value that includes, but extends beyond, the. Stakeholder theory is widely accepted but elementary aspects remain indeterminate as the term stakeholder is an essentially contested concept miles, j bus ethics 108. He expressed the concept clearly, emphasized the way the concept could be implemented by management in practice. Following the essays by each symposium panelist, we will offer some concluding comments regarding possible avenues that niight lead toward and enable the continuing development of superior stakeholder theory. Corporate social responsibility awareness, firm commitment and organizational performance. Convergence theory definition, discussion and examples. Its a straight forward process that focuses on figuring out the most effective answer to a problem.
It addresses morals and values in managing an organization, such as those related to corporate social responsibility, market economy, and social contract theory. Stakeholder management has become an important tool to transfer ethics to management practice and strategy. Stakeholder theory advocates for treating all stakeholders with fairness. Stewardship theory stewardship theory of corporate governance comprises of the management concepts such as. Pdf attachment, allegiance and a convergent application. Applying stakeholder theory in sustainability management. Stewardship theory, stakeholder theory and convergence by stephen l. In particular we pay attention to how using stakeholder as a basic unit of analysis makes it more difficult to ignore matters of ethics.
The relationship between stakeholder management models and firm financial performance. This paper presents a model for exploring the relationships between the stakeholder management theory smt and the firm system theory fst which are interpreted from an ethical perspective. Since business is an integral part of todays society, the firm must consider. An interesting and important aspect of stakeholder theory is that it is comprehensive in its approach. The process of figuring out a concrete solution to any problem is called convergent thinking. 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.
Stakeholder theory an overview sciencedirect topics. We argue that the primary responsibility of the executive is to create as much value for stakeholders as possible, and that no stakeholder interest is viable in isolation of the other stakeholders. 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. Larson july 14, 20 stakeholder theory expands the focus of business beyond its own corporate boundaries.
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