THE PROBLEMS OF STAKEHOLDER THEORY
Polo C.
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Abstract
Stakeholder theory diverts attention from creating business success to concentrating on who share its fruits. But what right have stakeholders to make the claims they do? Perhaps a new model is needed. T F J Ambler is Grand Metropolitan Senior
Key takeaways
- Conflict between different stakeholder groups has played a less influential political part than the gradual shift of emphasis from the individual's perceived obligations to his or her perceived rights, at least in the UK and USA where most of the debate has taken place.
- Stakeholder theory is central to the debate on corporate responsibility and ownership, and the role of organisations in society.
- The implication of stakeholder theory is that society, rather than the company, can determine what constitutes success, to the possible frustration of corporate efforts.
- Stakeholder theory goes beyond that to suggest that the purposes of a company can be decided by those affected by a company rather than by those who contribute to it and are part of it.
- Stakeholder rights thus have to be earned through the exercise of responsibilities towards the company.
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In this article a critique of stakeholder theory is presented. The analysis highlights several concerns regarding the scientific rigor of this body of knowledge revealing the assumptions and inconsistencies that underpin its main propositions. The discussion shows in particular some of the internal contradictions between, on the one hand, the ideology of social good, and on the other hand, the
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Recognising the stakeholder concept as an essentially contested concept subject to multiple competing interpretations, this chapter presents a systematic meta-theory level conceptual analysis of stakeholder theory. A conceptual enquiry is required for optimal development of stakeholder theory: to reduce conceptual confusion and prevent stakeholder theory from developing into an accumulation of disparate ideas. Methodology A bounded systematic review was undertaken to extract the extant range of stakeholder definitions. Using a meta-level conceptual enquiry the definitions were deconstructed and analysed to establish how these relate to variants of stakeholder theory. Determinants of the stakeholder concept were reconstructed, sorted, filtered and ordered to produce a comprehensive, multidimensional classification of stakeholder theory which was then subjected to empirical testing. Findings 593 different stakeholder interpretations were identified, analysed, sorted and ordered into a classification model based on 4 hyponyms leading to 16 definitional categories. The classification was tested with positive results. Limitations The conceptual enquiry focuses exclusively on management literature: Alternative worldviews may propose alternative variables/classifications. Originality Stakeholder theory has been accused of being an umbrella concept rather than a distinct theory per se. The proposed classification, based on an unparalleled systematic review and meta-level analysis of stakeholder definitions, clearly indicates that stakeholder theory is a single theory. Through the analysis of multi-contextual contributions to Central to stakeholder theory is the concept of the stakeholder, but what is a stakeholder? This appears a simple question but is not one that has been answered with any degree of consensus. The lack of consensus arises from the very nature of stakeholder theory, as an amalgamation of eclectic narratives (Gilbert and Rasche, 2008) spanning strategic management, business ethics, marketing, human resource management, finance and corporate governance as well as far reaching adoption outside of business disciplines. Widely different conceptualisations of stakeholder theory and stakeholder definitions have emerged from these narratives as different definitions and approaches are generated to serve different purposes (Freeman, Harrison, Wicks, Parmar, and DeColle, 2010), each focusing on attributes that are relevant to context. As a consequence hundreds of stakeholder definitions exist (Miles, 2011). Such profusion is testimony to the appeal of stakeholder theory but it is also "one of its prominent theoretical liabilities" (Phillips, Freeman and Wicks, 2003:479) and an issue that opponents, such as Sternberg (1997) are quick to criticize. There have been numerous calls made by academics (e.g.
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Teaching Stakeholder Theory: It's for Strategy, Not Business Ethics
Journal of Legal Studies Education, 1998
Other professoriala phrases that silence a mom indude tabula rasa, wid abhitio, ex ante, and ZeK have a pop quiz." I believe "Let's have a pop quiz" is the Englieh translation of tabula m a. ' Clearly not a profeesional term but one fitting rather into that category of terminology that includes. "Hey, doggies," 'Shazam," and "Show me the money." ' The author has actually exaggerated here CShazam!"). Stakeholder theory is a hifhlutin (see note 2 supm) term that emerged from the water in the form of a mythical professor and PETA advocate who surfaced while holding up a sign on problems with capitalism (legend has it that the sign read 'Capitalism ie a tool of the deviL3 Actually, stakeholder theory of the eighties ie tied to (no pun intended) a play on the word 'shareholder." The seminal work in the 1980's stakeholder field is attributed to FL Edward Freeman in his book, STRATEGIC MANAG= A S I m O L D E R APPROACH (1984). Freeman has continued the stakeholder quest with hie latest piece, A Ferninkt Reinterpretation ofthe Stakeholder Concept, appearing in 4 BUS. ETHICS Q. 475 (1994). More to come on feminists, see note 36 infrrr. No one seems to see the irony in the name origin of stakeholdex it's an interest in a company for free, man. Freeman ia not the originator of the tenn 'stakeholder" in the management literature, but he attributes its first appearanee to an internal memorandum at the Stanford 204 1 Vol. 16 1 The J o u m l of Legal Studies Education theory has been embraced by those who find that using it makes teaching business ethics really easy while enhancing cooperative Iearning.' When analyzing a case, all a professor needs to say is, "Now, who are all the stakeholders?" And the students respond, "Employees, suppliers, customers, our good fiends in Mister Rogers' Neighborhood, and aIl the fowls in the air and creatures of the sea and critters in our w~odlands."~ The activity of listing stakeholders affords us the quality Research Institute in 1963 which defined stakeholders as 'those groups without whose support the organization would cease to &t." Freeman, at 31. John Donaldson attributes its origins to Robert K. Merton in the 1950s. JOHN DONALDSON, BUSINESS However. the earlier origins of stakeholders in the legal literature is largely ignored and rarely credited. And not crediting lawyers for their work is dangerous ex ants. It was in the 1930s that law Professors Adolf Berle and Marrick Dodd went at each other on their disagreement about social responsibility. Berle and Dodd debated that great legal question: should those who hand over their dough, risk-wise, be required to listedsuccumb to those who have not invested any dough but are advocates for various causes? Berle maintained that nonshareholder interests (i.e., stakeholders) are an appropriate concern only if the shareholders say they are. Dodd, on the other. hand, described stakeholders as 'absentee ownera whose interests can be subjugated to those of other corporate constituencies and those of society at large." See, Adolf Berle,
(review of the book) Edward Freeman, Jeffrey Harrison, Andrew Wicks, Bidhan Parmar, and Simone de Colle (2010). Stakeholder Theory: The State of the Art.Cambridge: Cam- bridge University Press. Reviewed by Karan Sonpar, University College Dublin, Ireland [email protected]
2011
M@n@gement vol. 14 no. 3, 2011, 209-220 book review
Stakeholder management theory: a critical theory perspective
Business Ethics Quarterly, 1999
STAKEHOLDER MANAGEMENT THEORY: A CRITICAL THEORY PERSPECTIVE Darryl Reed Abstract This article elaborates a normative Stakeholder Management Theory (SHMT) from acritical theory perspective. ... 11. A Critical Theory Model of Stakeholder Management ...
The stakeholder theory and the common good
Journal of Business Ethics, 1998
ABSTRACT. The theory of the social responsibility of the firm oscillates between two extremes: one that reduces the firm's responsibility to the obtainment of (the greatest possible) profit for its shareholders, and another that extends the firm's responsibility to ...
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