Stakeholder Theory As an Ethical Approach to Effective Management: applying the theory to multiple contexts

Harrison, Jeffrey S.; Freeman, R. Edward; Abreu, Mônica Cavalcanti Sá de

doi:10.7819/rbgn.v17i55.2647

ABSTRACT

Objective:

This article provides a brief overview of stakeholder theory, clears up some widely held misconceptions, explains the importance of examining stakeholder theory from a variety of international perspectives and how this type of research will advance management theory, and introduces the other articles in the special issue.

Design/methodology/approach:

Some of the foundational ideas of stakeholder theory are discussed, leading to arguments about the importance of the theory to management research, especially in an international context.

Findings:

Stakeholder theory is found to be a particularly useful perspective for addressing some of the important issues in business from an international perspective. It offers an opportunity to reinterpret a variety of concepts, models and phenomena across may different disciplines.

Practical implications:

The concepts explored in this article may be applied in many contexts, domestically and internationally, and across business disciplines as diverse as economics, public administration, finance, philosophy, marketing, law, and management.

Originality/value:

Research on stakeholder theory in an international context is both lacking and sorely needed. This article and the others in this special issue aim to help fill that void.

Keywords:
stakeholder theory; stakeholder management; international research; effective management; business ethics; ethical decision making

Texto completo disponível apenas em PDF.

Full text available only in PDF format.

REFERENCES

Abreu, M.C.SÁ., Cunha, L.T. & Barlow, C.Y. (2015). Institutional dynamics and organizations affecting the adoption of sustainable development in the United Kingdom and Brazil. Business Ethics: A European Review, 24: 73-90.
Argandoña, A. (1998). The stakeholder theory and the common good. Journal of Business Ethics17(9): 1093-102.
Bosse, D.A. and Harrison, J.S. (2011). Stakeholders, entrepreneurial rent and bounded self-interest. In R.A. Phillips, Ed. Stakeholder Theory: Impact and Prospects, Cheltenham, UK: Edward Elgar: 193-211.
Bosse, D.A., Phillips, R.A., and Harrison, J.S. (2009). Stakeholders, reciprocity and firm performance. Strategic Management Journal, 30: 447-456.
Blyler, M. and Coff, R.W. (2003). Dynamic capabilities, social capital, and rent appropriation: Ties that split pies. Strategic Management Journal , 24, 677-686.
Brealey, Myers and Marcus (2003). Principles of corporate finance New York, McGraw Hill/Irwin.
Campbell, J. (2007). Why would corporations behave in socially responsible ways: An institutional theory of corporate social responsibility. Academy of Management Review, 32, 946-967.
Capron, L. and Pistre, N. (2002) When do acquirers earn abnormal returns? Strategic Management Journal , 23, 781-794.
Choi, J. and Wang, H. (2009). Stakeholder relations and the persistence of corporate financial performance. Strategic Management Journal , 30: 895-907.
Cording, M., Harrison, J.S., Hoskisson, R.E. and Jonsen, K. (2014). Walking the talk: A multi-stakeholder exploration of organizational authenticity, employee productivity and post-merger performance. Academy of Management Perspectives, 28(1), 38-56.
Danielson, M.G., Heck, J.L. and Shaffer, D.R. (2008). Shareholder theory - how opponents and proponents both get it wrong. Journal of Applied Finance, 18, 62-66.
Datta, D. K., Pinches, G. E. and Narayanan, V. K. (1992). Factors influencing wealth creation from mergers and acquisitions: A meta-analysis. Strategic Management Journal , 13, 67-84.
DiMaggio, P.J. and Powell, W.W. (1991). The iron cage revisited: Institutional isomorphism and collective rationality in organizational field. In Powell, W.W. and DiMaggio, P.J. (eds), The New Institutionalism in Organizational Analysis Chicago: The University of Chicago Press, Chicago, 63-82.
Donaldson, T. and Dunfee, T.W. (1994). Toward a unified conception of business ethics: Integrative social contracts theory. Academy of Management Review , 18, 252-284.
de Luque, M.S., Washburn, N., Waldman, D.A. and House, R.J. (2008). Unrequited profit: How stakeholder and economic values relate to subordinate perceptions of leadership and firm performance. Administrative Science Quarterly, 53, 626-654.
Ekeh, P.P. (1974). Social exchange theory. Cambridge, MA, Harvard University Press.
Evan, W.M., and Freeman, R. E. (1993). A stakeholder theory of the modern corporation: Kantian capitalism. In Beauchamp, T.L. and Bowie, N.E. (eds.) Ethical Theory and Business Englewood Cliffs, N.J.: Prentice-Hall, 97-106.
Fama, E. F. (1970). Efficient capital markets: A review of theory and empirical work, Journal of Finance, 25, 383-417.
Fehr, E. and Gachter, S. (2000). Fairness and retaliation: The economics of reciprocity. Journal of Economic Perspectives, 14, 159-181.
Freeman RE. (1984). Strategic management: A stakeholder approach Boston, Pitman Publishing Inc.
Freeman, R.E. (1994). The politics of stakeholder theory. Business Ethics Quarterly, 4, 409-21.
Freeman, R.E., Harrison, J.S., Wicks, A.C., Parmar, B. and de Colle, S. (2010). Stakeholder theory: The state of the art Cambridge: Cambridge University Press.
Freeman, R.E., Harrison, J.S. and Wicks, A.C. (2007). Managing for stakeholders: Survival, reputation and success, New Haven, CT, Yale University Press.
Haleblian, J., Dever, C. E., McNamara, G., Carpenter, M.A. and Davison, R.B. (2009). Taking stock of what we know about mergers and acquisitions: A review and research agenda. Journal of Management, 35, 469-502.
Harrison, J.S. and Wicks, A.C. (2013). Stakeholder theory, value and firm performance. Business Ethics Quarterly, 23, 97-125.
Harrison, J.S., and Bosse, D.A. (2013). How much is too much? The limits to generous treatment of stakeholders. Business Horizons, 56 (3), 313-322.
Harrison, J.S. and Freeman, R.E. (1999). Stakeholders, social responsibility and performance: Empirical evidence and theoretical perspectives. Academy of Management Journal, 42, 479-487.
Harrison, J.S. and Thompson, S.M. (2015). Strategic management of healthcare organizations: A stakeholder management approach New York, Business Expert Press.
Harrison, J.S. and St. John, C.H. (1996). Managing and partnering with external stakeholders. Academy of Management Executive, 10 (2), 46-60.
Harrison, J.S., Bosse, D.A. and Phillips, R.A. (2010). Managing for stakeholders, stakeholder utility functions and competitive advantage. Strategic Management Journal , 31, 58-74.
Heath, J. (2009). The uses and abuses of agency theory. Business Ethics Quarterly , 19, 497-528.
Henisz, W.J., Dorobantu, S. and Nartey, L.J. (2014). Spinning gold: The financial returns to stakeholder management. Strategic Management Journal , 35: 1727-1748.
Hillman, A.J. and Keim, G.D. (2001). Shareholder value, stakeholder management, and social issues: What’s the bottom line? Strategic Management Journal , 22: 125-139.
Hoffman, A.J. (2001). Linking organizational and field-level analyses: The diffusion of corporate environmental practice. Organization & Environment, 14(2), 133-156.
Jamali, D. and Mirshak, R. (2007). Corporate social responsibility: Theory and practices in a developing country context. Journal of Business Ethics, 72, 243-262.
Jamali, D. and Neville, B. (2011). Convergence versus divergence of CSR in developing countries: An embedded multi-layered institutional lens. Journal of Business Ethics, 102, 599-621.
Jensen, M. C. and Meckling, W. H. (1976). Theory of the firm: Managerial behavior, agency costs, and ownership structure. Journal of Financial Economics, 3, 305-360.
Jensen, M.C. (2001). Value maximization, stakeholder theory, and the corporate objective function. European Financial Management, 7, 297-317.
Jones, T.M. (1995). Instrumental stakeholder theory: A synthesis of ethics and economics. Academy of Management Review , 20, 404-437.
Matten, D. and Moon, J. (2008). “Implicit” and “explicit” CSR: A conceptual framework for a comparative understanding of corporate social responsibility. Academy of Management Review , 33, 404-424.
Oler, D.K., Harrison, J.S. and Allen, M.R. (2008). The danger of misinterpreting short-window event study findings in strategic management research: an empirical illustration using horizontal acquisitions. Strategic Organization, 6(2), 151-184.
Parmar, B.L., Freeman, R.E., Harrison, J.S., Wicks, A.C., Purnell, L. and de Colle, S. (2010). Stakeholder theory: The state of the art . Academy of Management Annals, 3, 403-445.
Phillips, R.A. (2003). Stakeholder theory and organizational ethics San Francisco, Berrett-Koehler Publishers.
Phillips, R.A., Freeman, R.E. and Wicks, A.C. (2003). What stakeholder theory is not. Business Ethics Quarterly , 13, 479-502.
Reuer, J. J. and Miller, K. D. (1997) Agency costs and the performance implications of international joint venture internalization, Strategic Management Journal , 18: 425-438.
Shelton, L. M. (1988). Strategic business fits and corporate acquisitions: Empirical evidence, Strategic Management Journal , 9, 279-287.
Shen, W. and Canella, A. A. Jr. (2003) Will succession planning increase shareholder wealth? Evidence from investor reactions to relay CEO successions, Strategic Management Journal , 24: 191-198.
Sisodia, R., Wolfe, D.B. and Sheth, J. (2007). Firms of endearment: How world-class companies profit from passion and purpose Upper Saddle River, NJ, Wharton School Publishing.
Stout, L. (2012). The shareholder value myth: How putting shareholders first harms investors, corporations and the public San Francisco, CA: Berrett-Kohler Publishers.
Tantalo, C. and Priem, R.L. (2014). Value creation through stakeholder synergy. Strategic Management Journal , DOI: 10.1002/smj.2337.
» https://doi.org/10.1002/smj.2337
Walsh, J.P. (2005). Taking stock of stakeholder management. Academy of Management Review , 30, 426-438.
Wicks, A.C. and Freeman, R.E. (1998). Organization studies and the new pragmatism: Positivism, anti-positivism, and the search for ethics. Organization Science, 9. 123-140.
Wicks, A.C., Gilbert, D.R. and Freeman, R. E. (1994). A feminist reinterpretation of the stakeholder concept. Business Ethics Quarterly 4 (4): 475-497.
Wicks, A.C. and Harrison, J.S. (2015). A practitioner critique of a conceptual paper on measuring value and performance. Stakeholder Management & Stakeholder Responsibilities eJournal, 4(17), 1-21.

2
Evaluation process: Double Blind Review

Publication Dates

Publication in this collection
Apr 2015

History

Received
15 May 2015
Accepted
14 Aug 2015

This is an open-access article distributed under the terms of the Creative Commons Attribution License

[1] Abreu, M.C.SÁ., Cunha, L.T. & Barlow, C.Y. (2015). Institutional dynamics and organizations affecting the adoption of sustainable development in the United Kingdom and Brazil. Business Ethics: A European Review, 24: 73-90.

[2] Argandoña, A. (1998). The stakeholder theory and the common good. Journal of Business Ethics17(9): 1093-102.

[3] Bosse, D.A. and Harrison, J.S. (2011). Stakeholders, entrepreneurial rent and bounded self-interest. In R.A. Phillips, Ed. Stakeholder Theory: Impact and Prospects, Cheltenham, UK: Edward Elgar: 193-211.

[4] Bosse, D.A., Phillips, R.A., and Harrison, J.S. (2009). Stakeholders, reciprocity and firm performance. Strategic Management Journal, 30: 447-456.

[5] Blyler, M. and Coff, R.W. (2003). Dynamic capabilities, social capital, and rent appropriation: Ties that split pies. Strategic Management Journal , 24, 677-686.

[6] Brealey, Myers and Marcus (2003). Principles of corporate finance New York, McGraw Hill/Irwin.

[7] Campbell, J. (2007). Why would corporations behave in socially responsible ways: An institutional theory of corporate social responsibility. Academy of Management Review, 32, 946-967.

[8] Capron, L. and Pistre, N. (2002) When do acquirers earn abnormal returns? Strategic Management Journal , 23, 781-794.

[9] Choi, J. and Wang, H. (2009). Stakeholder relations and the persistence of corporate financial performance. Strategic Management Journal , 30: 895-907.

[10] Cording, M., Harrison, J.S., Hoskisson, R.E. and Jonsen, K. (2014). Walking the talk: A multi-stakeholder exploration of organizational authenticity, employee productivity and post-merger performance. Academy of Management Perspectives, 28(1), 38-56.

[11] Danielson, M.G., Heck, J.L. and Shaffer, D.R. (2008). Shareholder theory - how opponents and proponents both get it wrong. Journal of Applied Finance, 18, 62-66.

[12] Datta, D. K., Pinches, G. E. and Narayanan, V. K. (1992). Factors influencing wealth creation from mergers and acquisitions: A meta-analysis. Strategic Management Journal , 13, 67-84.

[13] DiMaggio, P.J. and Powell, W.W. (1991). The iron cage revisited: Institutional isomorphism and collective rationality in organizational field. In Powell, W.W. and DiMaggio, P.J. (eds), The New Institutionalism in Organizational Analysis Chicago: The University of Chicago Press, Chicago, 63-82.

[14] Donaldson, T. and Dunfee, T.W. (1994). Toward a unified conception of business ethics: Integrative social contracts theory. Academy of Management Review , 18, 252-284.

[15] de Luque, M.S., Washburn, N., Waldman, D.A. and House, R.J. (2008). Unrequited profit: How stakeholder and economic values relate to subordinate perceptions of leadership and firm performance. Administrative Science Quarterly, 53, 626-654.

[16] Ekeh, P.P. (1974). Social exchange theory. Cambridge, MA, Harvard University Press.

[17] Evan, W.M., and Freeman, R. E. (1993). A stakeholder theory of the modern corporation: Kantian capitalism. In Beauchamp, T.L. and Bowie, N.E. (eds.) Ethical Theory and Business Englewood Cliffs, N.J.: Prentice-Hall, 97-106.

[18] Fama, E. F. (1970). Efficient capital markets: A review of theory and empirical work, Journal of Finance, 25, 383-417.

[19] Fehr, E. and Gachter, S. (2000). Fairness and retaliation: The economics of reciprocity. Journal of Economic Perspectives, 14, 159-181.

[20] Freeman RE. (1984). Strategic management: A stakeholder approach Boston, Pitman Publishing Inc.

[21] Freeman, R.E. (1994). The politics of stakeholder theory. Business Ethics Quarterly, 4, 409-21.

[22] Freeman, R.E., Harrison, J.S., Wicks, A.C., Parmar, B. and de Colle, S. (2010). Stakeholder theory: The state of the art Cambridge: Cambridge University Press.

[23] Freeman, R.E., Harrison, J.S. and Wicks, A.C. (2007). Managing for stakeholders: Survival, reputation and success, New Haven, CT, Yale University Press.

[24] Haleblian, J., Dever, C. E., McNamara, G., Carpenter, M.A. and Davison, R.B. (2009). Taking stock of what we know about mergers and acquisitions: A review and research agenda. Journal of Management, 35, 469-502.

[25] Harrison, J.S. and Wicks, A.C. (2013). Stakeholder theory, value and firm performance. Business Ethics Quarterly, 23, 97-125.

[26] Harrison, J.S., and Bosse, D.A. (2013). How much is too much? The limits to generous treatment of stakeholders. Business Horizons, 56 (3), 313-322.

[27] Harrison, J.S. and Freeman, R.E. (1999). Stakeholders, social responsibility and performance: Empirical evidence and theoretical perspectives. Academy of Management Journal, 42, 479-487.

[28] Harrison, J.S. and Thompson, S.M. (2015). Strategic management of healthcare organizations: A stakeholder management approach New York, Business Expert Press.

[29] Harrison, J.S. and St. John, C.H. (1996). Managing and partnering with external stakeholders. Academy of Management Executive, 10 (2), 46-60.

[30] Harrison, J.S., Bosse, D.A. and Phillips, R.A. (2010). Managing for stakeholders, stakeholder utility functions and competitive advantage. Strategic Management Journal , 31, 58-74.

[31] Heath, J. (2009). The uses and abuses of agency theory. Business Ethics Quarterly , 19, 497-528.

[32] Henisz, W.J., Dorobantu, S. and Nartey, L.J. (2014). Spinning gold: The financial returns to stakeholder management. Strategic Management Journal , 35: 1727-1748.

[33] Hillman, A.J. and Keim, G.D. (2001). Shareholder value, stakeholder management, and social issues: What’s the bottom line? Strategic Management Journal , 22: 125-139.

[34] Hoffman, A.J. (2001). Linking organizational and field-level analyses: The diffusion of corporate environmental practice. Organization & Environment, 14(2), 133-156.

[35] Jamali, D. and Mirshak, R. (2007). Corporate social responsibility: Theory and practices in a developing country context. Journal of Business Ethics, 72, 243-262.

[36] Jamali, D. and Neville, B. (2011). Convergence versus divergence of CSR in developing countries: An embedded multi-layered institutional lens. Journal of Business Ethics, 102, 599-621.

[37] Jensen, M. C. and Meckling, W. H. (1976). Theory of the firm: Managerial behavior, agency costs, and ownership structure. Journal of Financial Economics, 3, 305-360.

[38] Jensen, M.C. (2001). Value maximization, stakeholder theory, and the corporate objective function. European Financial Management, 7, 297-317.

[39] Jones, T.M. (1995). Instrumental stakeholder theory: A synthesis of ethics and economics. Academy of Management Review , 20, 404-437.

[40] Matten, D. and Moon, J. (2008). “Implicit” and “explicit” CSR: A conceptual framework for a comparative understanding of corporate social responsibility. Academy of Management Review , 33, 404-424.

[41] Oler, D.K., Harrison, J.S. and Allen, M.R. (2008). The danger of misinterpreting short-window event study findings in strategic management research: an empirical illustration using horizontal acquisitions. Strategic Organization, 6(2), 151-184.

[42] Parmar, B.L., Freeman, R.E., Harrison, J.S., Wicks, A.C., Purnell, L. and de Colle, S. (2010). Stakeholder theory: The state of the art . Academy of Management Annals, 3, 403-445.

[43] Phillips, R.A. (2003). Stakeholder theory and organizational ethics San Francisco, Berrett-Koehler Publishers.

[44] Phillips, R.A., Freeman, R.E. and Wicks, A.C. (2003). What stakeholder theory is not. Business Ethics Quarterly , 13, 479-502.

[45] Reuer, J. J. and Miller, K. D. (1997) Agency costs and the performance implications of international joint venture internalization, Strategic Management Journal , 18: 425-438.

[46] Shelton, L. M. (1988). Strategic business fits and corporate acquisitions: Empirical evidence, Strategic Management Journal , 9, 279-287.

[47] Shen, W. and Canella, A. A. Jr. (2003) Will succession planning increase shareholder wealth? Evidence from investor reactions to relay CEO successions, Strategic Management Journal , 24: 191-198.

[48] Sisodia, R., Wolfe, D.B. and Sheth, J. (2007). Firms of endearment: How world-class companies profit from passion and purpose Upper Saddle River, NJ, Wharton School Publishing.

[49] Stout, L. (2012). The shareholder value myth: How putting shareholders first harms investors, corporations and the public San Francisco, CA: Berrett-Kohler Publishers.

[50] Tantalo, C. and Priem, R.L. (2014). Value creation through stakeholder synergy. Strategic Management Journal , DOI: 10.1002/smj.2337.
» https://doi.org/10.1002/smj.2337

[51] Walsh, J.P. (2005). Taking stock of stakeholder management. Academy of Management Review , 30, 426-438.

[52] Wicks, A.C. and Freeman, R.E. (1998). Organization studies and the new pragmatism: Positivism, anti-positivism, and the search for ethics. Organization Science, 9. 123-140.

[53] Wicks, A.C., Gilbert, D.R. and Freeman, R. E. (1994). A feminist reinterpretation of the stakeholder concept. Business Ethics Quarterly 4 (4): 475-497.

[54] Wicks, A.C. and Harrison, J.S. (2015). A practitioner critique of a conceptual paper on measuring value and performance. Stakeholder Management & Stakeholder Responsibilities eJournal, 4(17), 1-21.

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