Stakeholder Theory

Though there is clearly a “family resemblance” to the work that is typically done under its bailiwick, stakeholder theory continues to resist precise circumscription. Like the organizations it attempts to understand, the boundaries of the theory remain contentious. While various attempts have been made to clearly define the parameters of stakeholder theory (i.e., Clarkson Center for Business Ethics, 1999; Donaldson & Preston, 1995; Freeman, et al., 2010; Jones & Wicks, 1999; Phillips, 2003; Phillips, Freeman & Wicks, 2003), none of these efforts has gained universal acceptance. The following, which combines ideas from a variety of well-known sources (Freeman, 1984; Freeman, Harrison, Wicks, Parmar, & de Colle, 2010; Freeman, 2017), conveys the ideas that tie together stakeholder thinking: Business is a set of value-creating relationships among groups that have a legitimate interest in the activities and outcomes of the firm and upon whom the firm depends to achieve its objectives. It is about how customers, suppliers, employees, financiers (stockholders, bondholders, banks, etc.), communities, and management work cooperatively to create value. Understanding a business means understanding how these relationships work. The manager’s job is to shape and direct these relationships. With these ideas in common, stakeholder theory has struck a chord with scholars across a myriad of academic disciplines (La Plume, Sonpar, & Litz, 2008). Particularly in the current age of organizational complexity characterized by subcontracting, outsourcing, joint ventures, “doing business as” (DBA), the “gig economy”, etc., etc., clear thinking about the organization of stakeholders and their cooperative role in value creation is needed more now than ever. By way of setting the stage for the work to come (both within this volume and beyond), below we will examine what we see as the important lingering questions for stakeholder theory