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Management DecisionStakeholder theory: issues to resolveEmerson
Wagner Mainardes Helena Alves Mario Raposo
Article information:To cite this document:Emerson Wagner
Mainardes Helena Alves Mario Raposo, (2011),"Stakeholder theory:
issues to resolve",Management Decision, Vol. 49 Iss 2 pp. 226 -
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http://dx.doi.org/10.1108/00251741211279648Heiko Spitzeck, Erik G.
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Stakeholder theory: issues toresolve
Emerson Wagner Mainardes, Helena Alves and Mario RaposoCenter
for Studies in Management Science,
Management and Economics Department, NECE, University of Beira
Interior,Covilha, Portugal
Abstract
Purpose The objective of this paper is to collate and debate the
main issues driving the stakeholdertheory academic debate.
Design/methodology/approach First, a discussion of the
stakeholder concept is set out beforemoving on to the history and
nature of stakeholder theory. The work proceeds with an attempt
tobring together systematically the points of divergence among
researchers interested in stakeholdertheory, and, finally, there is
a brief discussion of these theoretical loopholes in conjunction
with aproposed research agenda for the field.
Findings Based on the unification of the theoretically
problematic issues, research agenda are putforward with the
objective of clarifying doubts and resolving the controversies
ongoing amongacademics. As regards the formulation of stakeholder
theory, one question requiring resolution is thatof the stakeholder
concept itself. Additionally, further research should focus on the
boundaries as towhat constitutes a stakeholder group as well as
defining the criteria for attributing individualmembership of one
or another group. In practical theoretical application, it is
correspondinglynecessary to target research on aspects such as
conflicts of interest between stakeholders andmanagement
difficulties in coping with multiple objectives. Finally, there is
a need for research thatsystematizes the knowledge produced with
the objective of attaining the theoretical convergencenecessary for
the development of stakeholder theory.
Originality/value The main contribution of this paper derives
from the systematization of thevarious shortcomings that need
overcoming within the framework of stakeholder theory and
theidentification of research agendas.
Keywords Stakeholders, Research work
Paper type Literature review
1. IntroductionStakeholder theory was put forward by Freeman
(1984) as a proposal for the strategicmanagement of organizations
in the late twentieth century. Over time, this theory hasgained in
importance, with key works by Clarkson (1994, 1995), Donaldson and
Preston(1995), Mitchell et al. (1997), Rowley (1997) and Frooman
(1999) enabling both greatertheoretical depth and development. From
an initially strategic perspective, the theoryevolved and was
adopted as a means of management by many
market-basedorganizations.
Given it remains a relatively recent addition to the management
field, stakeholdertheory has not been fully developed. According to
Fassin (2008), the success of
The current issue and full text archive of this journal is
available at
www.emeraldinsight.com/0025-1747.htm
This research was supported by the Portuguese Science Foundation
through Nucleo deInvestigacao em Ciencias Empresariais (Programa de
Financiamento Plurianual das Unidades deI&D da Fundacao para a
Ciencia e Tecnologia, Ministerio da Ciencia, Tecnologia e
EnsinoSuperior/Portugal).
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Management DecisionVol. 49 No. 2, 2011pp. 226-252q Emerald Group
Publishing Limited0025-1747DOI 10.1108/00251741111109133
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stakeholder theory, both in the management literature and in
business practice, is duein large part to the simplicity inherent
to the model. However, over the years, someacademics have
criticized the vagueness and ambiguity of this theory. The
stakeholdermodel, backed as it is by its simplicity and clear
visual presentation, has stirreddebates in the academic
literature.
Indeed, very few management themes have generated as many
published works inrecent decades as the underlying concept, i.e.
the model and theories aroundstakeholders (Donaldson and Preston,
1995; Gibson, 2000; Wolfe and Putler, 2002;Friedman and Miles,
2006). One of the most salient characteristics of this theory is
thediversity in the points of view that have been expressed within
its scope.Correspondingly, there is a low level of theoretical
integration whether in terms of thenormative, instrumental or
descriptive dimensions as well as within the actualdimensions
themselves (Lepineux, 2005).
Hence, the objective of this article is to bring together and
discuss some of thequestions driving stakeholder theory academic
debate. This research was motivatedby the sheer relevance of the
theory to various different areas, especially strategicmanagement,
marketing, corporative governance, corporate social
responsibility,business ethics, public management, among
others.
Similarly, the main contribution of this article derives
primarily from thesystematization of some of the shortcomings that
need overcoming within theframework of stakeholder theory. Based
upon this unification of the theoreticallyproblematic issues, we
then set out research agendas aiming to clarify the doubts
andresolve the controversies that have been ongoing among
academics.
In order to achieve this objective, this paper is structured as
follows: firstly, there isdiscussion of the stakeholder concept
before moving onto the history and nature ofstakeholder theory and
presenting the three approaches that explain the theory,
thenormative, instrumental and descriptive approaches. The next
stage attempts tosystematically bring together the points of
divergence among researchers interested instakeholder theory, and
finally, there is a brief discussion of these theoretical
loopholesin conjunction with a suggested research agenda for the
field.
2. The stakeholder conceptThe origin of the stakeholder concept
lies in the business science literature (Freeman,1984), and may be
traced back even as far as Adam Smith and his The Theory of
MoralSentiments. Its modern utilization in management literature
was brought about by theStanford Research Institute, which
introduced the term in 1963 to generalize andexpand the notion of
the shareholders as the only group that management needed to
besensitive towards ( Jongbloed et al., 2008). Within this
perspective, Freeman (1984)argued that business organizations
should be concerned about the interests of otherstakeholders when
taking strategic decisions.
Although a relatively longstanding term, the development of
stakeholder theory wasset in motion by the work of Freeman (1984).
The objective of his work was to delineatean alternative form of
strategic management as a response to rising
competitiveness,globalization and the growing complexity of company
operations. As time went by, thestakeholder concept has taken on
greater importance due to public interest, greatercoverage by the
media, concerns about corporative governance and its adoption as
apolicy within the scope of the Third Way (Hutton, 1999; Greenwood,
2008).
Stakeholdertheory: issues to
resolve
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Meanwhile, in accordance with Friedman and Miles (2006), the
term stakeholderhas been deployed indiscriminately in the last two
decades. The term is highly popularwith businesses, governments,
non-governmental organizations and even with themedia. Despite this
widespread usage, many who adopt the term neither define theconcept
nor provide any particularly clear understanding of what they mean
asregards what a stakeholder actually is. Even in academic circles,
countless definitionsof stakeholder have been put forward without
any of those suggested ever gainingconsensus, and hence there is no
single, definitive and generally accepted definition.The works of
Bryson (2004), Buchholz and Rosenthal (2005), Pesqueux
andDamak-Ayadi (2005), Friedman and Miles (2006) and Beach (2008)
contain a total of 66different concepts for the term
stakeholder.
Although each researcher defines the concept differently, they
do as a rule reflectthe same principle to a greater or lesser
extent: the company should take intoconsideration the needs,
interests and influences of peoples and groups who eitherimpact on
or may be impacted by its policies and operations (Frederick et
al., 1992).Hence, according to Clarkson (1995), the stakeholder
concept contains threefundamental factors:
(1) the organization;
(2) the other actors; and
(3) the nature of the company-actor relationships.
However, Mitchell et al. (1997) propose that these concepts
represent phenomena inthemselves, including:
. the relationship between the company and the stakeholders (as
in Freeman, 1994);
. the position of the stakeholder towards the company (e.g.
Starik, 1994);
. the company as dependent upon stakeholders (see Freeman and
Reed, 1983);
. the stakeholder wielding power over the company (according to
Brenner, 1995);
. the stakeholder as dependent on the company (as is the case in
Langtry, 1994);
. the company as holding power over the stakeholder (see
Carroll, 1993);
. the company and stakeholder as mutually dependent (e.g. Wicks
et al., 1994);
. the company and the stakeholder as engaged in contractual
relations (as in Hilland Jones, 1992);
. the stakeholder as holding a right on the company (see Evan
and Freeman, 1988);
. the stakeholder as running some kind of risk (see Clarkson,
1994);
. the stakeholder as having a moral right over the company
(according to Carroll,1989); or
. the stakeholder as having an interest in the company (see
Clarkson, 1995).
In summary, whether broader or more restrictive, these are
understandings of thestakeholder concept as connected to
organizations and which, according to Mitchellet al. (1997), may
guide the actions of a specific organization.
However, despite the countless definitions and differing
emphasizes, which mayresult in distorted conceptual interpretations
(Friedman and Miles, 2006), a largemajority of studies adopt the
definition idealized by Freeman (1984) that individuals or
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groups may influence or be influenced by the scope of
organizational objectives.Within this concept, a person, an
informal group, an organization or an institution mayall be
stakeholders. Mitchell et al. (1997) state that the Freeman (1984)
definition is sobroad that it opens up an infinite scope for
stakeholders as even climatic factors mayplay this role. Hence,
there is a need to establish limits to the extent of stakeholders.
Tothis end, Freeman and Evan (1990) reduce the organizational
environment to amultilateral agreement between an organization and
its stakeholders.
3. History and nature of stakeholder theoryThe origins of
stakeholder theory draw on four key academic fields i.e.
sociology,economics, politics and ethics and especially the
literature on corporate planning,systems theory, corporate social
responsibility and organizational theory. Freeman(1984), over the
course of his work entitled Strategic Management: a
StakeholderApproach, generally accepted as launching the
stakeholder theory concepts, defineshow stakeholders with similar
interests or rights form a group. What Freeman (1984)was seeking to
explain was the relationship between the company and its
externalenvironment and its behavior within this environment. The
author set out his model asif a chart in which the company is
positioned at the centre and is involved withstakeholders connected
with the company.
In this model, the company-stakeholder relationships are dyadic
and mutuallyindependent (Frooman, 1999). According to Fassin
(2009), the model proposed byFreeman (1984) may have been inspired
by a tool drawn from sociology, the sociogram,which visualizes the
frequency of interactions between individuals or groups. Themodel
design was influenced by the traditional capitalist organizational
productionmodel in which the company is related only to four
groups: the suppliers, employeesand shareholders supplying the
basic resources that the company transforms intoproducts or
services for the fourth group, that is, the clients. Nevertheless,
Freeman(1984) also added other groups influenced by company
activities and saw theorganization as the centre of a series of
interdependent relationships (Crane andMatten, 2004).
The ideas of Freeman (1984), which culminated in stakeholder
theory, emerged outof an organizational context in which the
company was perceived as not beingself-sufficient and actually
dependent on the external environment made up of groupsexternal to
the organization, as Pfeffer and Salancik (1978) had earlier
observed. Thesewere the external groups that Freeman (1984) termed
stakeholders. This situationwas later handled by Frooman (1999) as
resource dependency.
According to Jones and Wicks (1999) and Savage et al. (2004),
the basic premises ofStakeholder Theory are:
. the organization enters into relationships with many groups
that influence or areinfluenced by the company, i.e. stakeholders
in accordance with Freemans(1984) terminology;
. the theory focuses on the nature of these relationships in
terms of processes andresults for the company and for
stakeholders;
. the interests of all legitimate stakeholder are of intrinsic
value and it is assumedthat there is no single prevailing set of
interests as Clarkson (1995) andDonaldson and Preston (1995)
pointed out;
Stakeholdertheory: issues to
resolve
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. the theory focuses upon management decision making;
. the theory explains how stakeholders try and influence
organizational decisionmaking processes so as to be consistent with
their needs and priorities; and
. as regards organizations, these should attempt to understand
and balance theinterests of the various participants.
Taking these premises into consideration, and according to
Clarkson (1995), Donaldsonand Preston (1995), Rowley (1997), Scott
and Lane (2000) and Baldwin (2002), the conceptof stakeholder
management was developed so that organizations could recognize,
analyzeand examine the characteristics of individuals or groups
influencing or being influencedby organizational behavior. Thus,
management is carried out over three levels:
(1) the identification of stakeholders;
(2) the development of processes identifying and interpreting
their needs andinterests; and
(3) the construction of relationships with the entire process
structured around theorganizations respective objectives.
On the other hand, stakeholders define their expectations,
experience the effects of therelational experience with the
organization, evaluate the results obtained and act inaccordance
with these evaluations, strengthening or otherwise their ties with
thecompany (Polonsky, 1996, Post et al., 2002, Neville et al.,
2005).
While Freeman (1984) limited his own intentions to providing an
approach to thesubject, generalizing and testing the taking of
strategic management decisions,stakeholder theory earned its wings,
both among academics and among practitioners,as a new theory of the
firm (Key, 1999). Within this framework, stakeholder
literaturebreaks down into two main branches one strategic and one
moral (Goodpaster, 1991,Frooman, 1999). The strategic literature
emphasizes the active management ofstakeholder interests while
literature in the moral field is primarily interested in abalance
between stakeholder interests.
Freeman and McVea (2001) clarified how stakeholder theory was
originallydeveloped within a framework of four distinct lines of
organizational managementresearch, as demonstrated by Freeman
(1984):
(1) strategic organizational planning;
(2) systems theory;
(3) corporate social responsibility; and
(4) organizational theory:
Within the strategic organizational planning line, the concept
is that successfulstrategies correspond to the integration of all
stakeholder interests (contrary to themaximization of one groups
position to the detriment of others).
Both systems theory and organizational theory focus upon the
idea thatorganizations are open systems that interact with diverse
third parties and thus it isnecessary to set out collective
strategies that perfect the system as a whole beyond theactual
recognition of all the relationships on which companies depend for
their ownsurvival.
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Corporate social responsibility is not considered a formalized
theoretical group butrather a series of business case studies and
empirical analyses seeking to demonstratethe importance of building
up strong and trustworthy relationships and maintaining agood
reputation with all groups external to the organization for its
ongoing success.
Within the broad context of this theory, it may be stated that
diverse stakeholdergroups interact with a company. According to
Clarkson (1995), these groups may besubdivided into two:
(1) the primary those with formal or official contractual
relationships with thecompany, such as clients, suppliers,
employees, shareholders, among others;and
(2) the secondary those without such contracts, such as
government authoritiesor the local community.
In this way, we may configure a company as a set of
relationships, explicit or implicit,across both the internal and
external environments. However, with the emergence andadvance of
stakeholder theory, attention began to be paid to the interests of
thesedistinct groups of individuals and not only to the
shareholders or owners of thecompany (Argandona, 1998; Gibson,
2000).
Indeed, history now states it was Freeman (1984) who was the
first researcher toclearly identify the strategic importance of
other groups and individuals to thecompany, different to the
traditional groups of clients, suppliers, employees
andshareholders. In fact, he saw these groups as highly disparate,
such as localcommunity, environmentalist and consumer defense
organizations as well asgovernment authorities, special interest
groups and with even competitors and themedia as legitimate
stakeholders (Clement, 2005). Given there were so manystakeholder
groups listed by Freeman (1984), over time the need to group them
wasencountered within the scope of efforts to reduce managerial
complexity. For example,Gibson (2000) proceeded to group
stakeholders into institutional (involving laws,regulations),
economic (actors in the marketplace) and ethical (environment and
socialpressure groups) categories. Furthermore, for Lepineux
(2005), these becameshareholders, internal stakeholders,
operational partners and community.
However, in accordance with Freeman and Liedtka (1997),
stakeholder theory wasbound up with an already long-standing
tradition that perceived business as anintegral part of society and
not as some separate and purely economic institution.Radin (1999)
affirmed that stakeholder theory means recognizing that
organizationshold responsibilities towards people and entities
beyond their stockholders.Stakeholder theory draws on analytical
mechanisms from Systems Theory, forexample, regarding the
interdependence and integration of actors making up a systemand in
seeking to explain the interrelationship between them (Campbell,
1997). Hill andJones (1992) had already utilized agency theory,
which approaches the company as thenexus of contracts between
stakeholders and managers as if some central node. Thisoperates as
the means to explain how managers bear responsibility for
conciliatingdivergent interests, taking strategic decisions and
allocating strategic resources inwhatever form proves most coherent
with the demands of the other stakeholders.
Thus, the theory of Freeman (1984) came against a scenario of
rising awareness asto the importance of business to society and
along with the beginnings of theglobalization of markets and the
development of information technologies and means
Stakeholdertheory: issues to
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of communication followed by the later heightening of social
pressures applied bygovernments, trade unions, political groups and
communities in general. Stakeholdertheory arrived in time to
explain and predict how organizations should act by takinginto
consideration the influences of stakeholders hitherto left out of
the range ofanalysis, such as the local community and the media,
among others.
Many have already posited that the destiny of stakeholder theory
is to topple thedominant paradigm, the economic model of the
company (Key, 1999). Theaforementioned theory seeks to set down
attitudes and organizational practices forthe company to survive
and prosper (Brenner, 1993). Given this situation, the influenceof
stakeholders in organizational strategy requires responses on
behalf of the companyreflecting the potential power, whether to
threaten or to cooperate, of each stakeholderwithin a context of
mutually exchanging interests and benefits.
Without doubt, the appearance of stakeholder theory proved a
counterbalance to thekey actor approach, based upon agency theory,
in its presentation of a more collectivistvision of organizations
as a social vehicle for human development. Within thisframework,
Clarkson (1995) stated that the survival and sustainable
profitability oforganizations depended upon their capacity to
comply with the economic and socialpurpose defined as creating and
distributing sufficient wealth or value to ensure thateach group of
primary stakeholders continues to be a part of the companys
system.Hence, an organization may be seen as a set of
interdependent relationships betweenprimary stakeholders, a
perspective that has seen significant research in the field
oforganizational strategy (Evan and Freeman, 1988; Hill and Jones,
1992; Kotter andHeskett, 1992; Harrison and St John, 1994;
Donaldson and Preston, 1995; Jones, 1995;Greenley and Foxall, 1996;
Hillman and Keim, 2001).
After the theory took shape and over time, stakeholders slowly
moved in from theperiphery of organizational activities towards a
more central position. Andriof et al.(2002) explains that the
stakeholder concept, its involvement and relationship with
theorganization is now positioned as characteristic of most modern
companies. In the lasttwo decades, there has been a perceivable
rise in the number of research publicationsdealing with the
strategy and positioning of stakeholders in
organizationaldecision-making (Asher et al., 2005). Various studies
point to the utilization ofstakeholder theory for analyzing the
circumstances faced by contemporaryorganizations (Freeman and
Liedtka, 1997; Metcalfe, 1998; Clarke, 2005).
This emphasis may have come about, according to Clement (2005),
given the greaterlevel of pressures on organizations currently
facing demands for responses fromdistinct groups of stakeholders.
As these stakeholders are in constant interaction withthe company,
they may provide them with contributions or important resources
whileeach also represents interests needing to be satisfied.
Correspondingly, analyzing whothe stakeholders are, identifying
their interests and how they act is fundamental tocontemporary
organizations, and especially in terms of those stakeholders of
greatestimportance to organizational survival and being able to
meet their respective needs(Hill and Jones, 1998).
4. Normative aspects of stakeholder theoryAs Donaldson and
Preston (1995) affirmed, stakeholder theory cannot be considered
asingle theory, but rather a set of theories for the management of
stakeholders. Thistheoretical set is divided into three approaches
(Friedman and Miles, 2006):
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(1) the descriptive (which sets out how the organization
operates in terms ofstakeholder management);
(2) the instrumental (which demonstrates how to attain
organizational objectivesthrough stakeholder management); and
(3) the normative (which defines how businesses should operate,
especially inrelation to moral principles).
We now take up this third theme.The normative approach is based
upon moral premises about how actors and
organizations should go about their activities. According to
Donaldson and Preston(1995), stakeholder-oriented policies are
justifiable based upon the supposition thatthey do hold legitimate
interests in the company activities that should be taken
intoconsideration by managers as, from Freemans (1998) perspective,
stakeholders shouldnot be seen merely as the means of raising
organizational performance. Researchwithin this framework evaluates
relationships in accordance with ethical andphilosophic principles.
Jones and Wicks (1999) propose stakeholder theory as anormative
ethic that should approach which obligations from the stakeholder
modelrest upon the management, and particularly the level of
importance of obligationsattributed to some stakeholders over other
stakeholder groups.
Within this perspective, Friedman and Miles (2006) draw an
institutional vision ofthe organization defined as an arena of
competing, and on occasion conflicting,multiple interests. This
social space sees stakeholders acting from different positions
ofpower depending on the organizational sustainability of
negotiations and the specificcooperative solutions agreed upon.
Some studies have explicitly justified this normative dimension
to stakeholdertheory (Freeman and McVea, 2001, Hansen et al., 2004)
making recourse to legalarguments, such as property rights
(Donaldson and Preston, 1995, Blair, 1998). Othersdeploy the
Rawlsian construct of a social contract (Freeman and Evan, 1990;
Child andMarcoux, 1999; Phillips, 2003). There are, however, also
economic arguments thatincorporate relationships of trust
(Goodpaster, 1991; Boatright, 1994; Marcoux, 2003) oragency theory
(Shankman, 1999) and moral reasoning (Gibson, 2000), such as
theequity principle (Phillips, 1997; Metcalfe, 1998), Kantian
theory, the right to be treatedas an end (Evan and Freeman, 1988;
Bowie, 1999) or through recourse to the concept ofthe common good
(Argandona, 1998).
According to proponents of business ethics, the normative aspect
of stakeholdertheory incorporates the following trends: Evan and
Freeman (1983) and Bowie (1994)identify Kantian capitalism, for
Phillips (1997) justice, according to Freeman (1994) faircontracts,
while Freeman and Gilbert (1988) propose personal projects and,
inaccordance with Wicks et al. (1994), the feminist approach.
In summary, these theories guide the thinking behind stakeholder
theory, orientingits principles towards the application of theory
as a proposed relationship between thecompany and its stakeholders
within a fair, ethical and morally correct framework(deontological
principles), where interests are not purely economic
(utilitarianprinciples), thereby justifying both the actions of
management as well as the resultsobtained. The theories cited,
according to Friedman and Miles (2006), act as influentialinputs
into stakeholder theory normative thinking.
Stakeholdertheory: issues to
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Therefore, the normative facet to stakeholder theory may serve
to generalize theunderstanding of how organizational behaviors may
be shaped and fashioned. In otherwords, the efforts of management
need to be focused on grasping why the companyneeds to satisfy its
stakeholders and how to achieve this as well as prescribing
valuesfor the undertaking of normative research projects (Freeman,
1999; Radin, 1999).
Complementarily, McVea and Freeman (2005) propose that
stakeholders should beunderstood as real, and not abstract,
individuals as only thus can managers gainawareness about the
options they take and considering the moral and ethical aspects
toeach organizational decision. Stakeholder theory should focus on
the creation of value,decision-making processes and relationships
with real individuals. This represents anindividualization of the
company-stakeholder relationship.
Many researchers involved in stakeholder theory agree that the
normativedimension depends upon the other dimensions (descriptive
and instrumental) andthese should not be underestimated. When
positing certain types of behavior, it isimportant to compare the
desirable with the real. Rowley (1997) explained that
anyunderstanding of this theory requires not only explaining the
influences wielded bystakeholders, but also how the company
responds to these influences. In addition,stakeholder theory needs
to describe and predict how organizations are to operateunder
diverse and different conditions. More recent revisions of the
normative facet ofstakeholder theory suggest three categories for
stakeholder participation:
(1) moderate, that is dealing with parties with respect;
(2) intermediary, thus incorporating some stakeholder interests
into organizationalmanagement; and
(3) demanding, hence with the full participation of such actors
in corporate decisionmaking processes (Hendry, 2001 Flak et al.,
2008).
5. Analytic aspects of stakeholder theoryThe analytical
perspective to stakeholder theory covers two dimensions:
(1) the descriptive perspective; and
(2) the instrumental perspective.
Both were discussed in the study by Donaldson and Preston
(1995), and later renamedby Reed (2002) as positive and strategic.
Despite this proposal, the original terminology(i.e. descriptive
and instrumental) has prevailed in the literature. According
toFriedman and Miles (2006), these perspectives should be centered
on the organization,on the organization-stakeholder relationship,
or directly on the stakeholder.
The instrumental perspective, proposed initially by Jones (1995)
and later furtheredby Donaldson and Preston (1995), explores how
the stakeholder model may be used toattain the performance
objectives of an organization as a tool to be deployed instrategic
decision making, where certain results derive from enacting certain
behaviors( Jones and Wicks, 1999). This relates primarily to the
relational management ofspecific stakeholder groups (Freeman,
1984). For example, Berman et al. (1999)proposed a strategic
stakeholder management model based on the premise thatcompanies
address the concerns of stakeholders when believing this will
boostcompany financial performance and is hence an instrumental
approach. Theinstrumental perspective of stakeholder theory is
based upon organizational
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economics, especially agency theory, transaction cost theory and
corporate behavioralethics ( Jones, 1995). From Stariks (1994)
perspective, that which became theinstrumental aspect enables
organizations to personalize relationships withstakeholders,
particularize their interests and raise managerial awareness
oforganizational decisions, processes and policies.
Studies adopting the instrumental theory normally use
statistical methodologiesand focus principally upon the
relationship between the pressures that stakeholdersmay apply and
the process by which organizational strategy is formulated
(e.g.Weaver et al., 1999) and derive from the relationship between
financial and socialperformance (as with the studies by Cochran and
Wood, 1984; Cornell and Shapiro,1987; McGuire et al., 1988; Barton
et al., 1989; Preston et al., 1991). In general, theyexplore causes
and effects.
As regards the descriptive perspective, this seeks to describe
and/or explaincharacteristics and organizational behaviors relative
to stakeholders. This perspectivediscusses issues relating to the
nature of the firm, how managers act and what theythink about the
strategic components (Donaldson and Preston, 1995). Wood
(1994)advocated that the descriptive theory of the stakeholder
should extend over two facets:
(1) describing the organizational reality; and
(2) describing the company-stakeholder relationships.
This represents the difference between inductive and deductive
visions. According tothis author, of these two modes, neither is
preferred and both approaches makesignificant contributions towards
the development of stakeholder theory as bothcontain factors
important for any understanding of organizational relationships
withstakeholders.
Descriptive theory resulted out of the need to describe (and
very often explain)specific characteristics and behaviors,
including the nature of firms (Brenner andCochran, 1991), how
managers perceive their companies (Brenner and Molander, 1977),how
organizations are managed (Halal, 1990; Clarkson, 1991; Kreiner and
Bhambri,1991), the diffusion of social information (Ullman, 1985),
the concept oftarget-stakeholders (Mitchell et al., 1997), and the
meanings attributed to eachstakeholder, varying in accordance with
the phase reached in the respective companylife cycle ( Jawahar and
McLaughlin, 2001). Research carried out under this approach
isnormally exploratory.
Of these two approaches, the instrumental perspective has
received greatestattention from researchers with its highlighting
of stakeholder management as a factorfor competitive advantage and
better performance. According to Donaldson andPreston (1995), the
effectiveness of stakeholder management is positively
correlatedwith conventional performance indicators.
The instrumental aspects of the Donaldson and Preston (1995)
model were taken upespecially by Mitchell et al. (1997), who
researched manager perceptions on stakeholdercharacteristics and
their relevance as regards facets such as power, legitimacy
andurgency, given how stakeholder management is of particular
importance to businessprojects taking place in institutionally
demanding environments.
According to Aaltonen et al. (2008), the existing research
points to managementpaying attention to stakeholders where these
are deemed more important in terms ofpower, legitimacy and urgency.
The question of stakeholder relevance and the extent
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to which managers attribute priority to competing stakeholder
requests stretchesbeyond the issue of stakeholder identification.
Thus, it is correspondingly necessary totheoretically grasp how
stakeholder relevance may be able to explain where managersreally
should be applying their attentions (Mitchell et al., 1997).
With the objective of resolving this question, a three-factor
model was put forward(power, urgency and legitimacy) by Mitchell et
al. (1997). Entitled stakeholdersalience, it was defined according
to Friedman and Miles (2006) to bring aboutstakeholder powers of
negotiation, the legitimacy of relationships with organizations,and
urgency as regards meeting the needs present. In the perspective of
Mitchell et al.(1997), stakeholder salience suggests a dynamic
model based on an identificationtypology enabling the explicit
recognition of the uniqueness of situations and amanagement
perception explaining how managers should prioritize relationships
withstakeholders. The authors demonstrated how the identification
typology enabledforecasts of managerial behavior as regards each
class of stakeholder to be generatedas well as predictions as to
how stakeholders change from one class to another andwhat that
actually means to the management. This model features three
advantages:
(1) it is political (considering the organization as the result
of conflicting andunequal interests);
(2) it is operational (qualifying the stakeholders); and
(3) it is dynamic (contemplating changes of interests in social
space-time).
The model proposed suggests that the strategic behavior of an
organization is subjectto diverse groups located within its
environment, given that its strategies should meetthe needs of
these groups in accordance with their respective importance. This
isdefined by the following three factors, which vary depending on
the prevailingsituation (Mitchell et al., 1997):
(1) Power The ability to make someone do something that would
not otherwisehave been done, the power of the stakeholder over the
organization may becoercive (strength or threat), normative
(legislative, the media) or utilitarian(holding resources or
information).
(2) Legitimacy The generalized perception that the actions of an
entity aredesirable or appropriate in accordance with the socially
constructed context andmay be individual, organizational or
social.
(3) Urgency The immediate need for action, determining the
organizationalresponse time when receiving requests from
stakeholders, should consider timesensitivity (the need for speed
in the organizational response) and the criticality(the importance
of the request or the company relationship with the stakeholderin
question), with this factor rendering the model dynamic.
According to Wartick (1994), power is the most critical
dimension to stakeholdermanagement, and hence he recommends great
care in recognizing and monitoringrelationships with those
stakeholders holding greatest power. After all, one of the
basictenets of stakeholder theory is that stakeholders are not
equal with their importancealso varying dependent on the prevailing
context and organization. As Evan andFreeman (1983) detailed, the
essence of the company is to manage the interests ofdifferent
stakeholders and including changes in expectations and demands.
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Mitchell et al. (1997) held that the model proposed is dynamic
for three reasons:
(1) the three attributes are variable (and neither static nor
stationary);
(2) the attributes are socially constructed (and not objective);
and
(3) not all stakeholders are aware that they possess one or more
attributes.
These questions make the stakeholder salience model fairly
dynamic and subject tofrequent change. Stakeholders may hold only
one attribute today and acquire anotherone or two attributes
tomorrow.
Finally, in addition to the work of Mitchell et al. (1997),
focusing on identifying andevaluating the salience of stakeholders,
other studies stand out as important within theinstrumental and
descriptive perspectives according to Friedman and Miles
(2006).However, it is the work of Mitchell et al. (1997) that has
proved to be of greatestinfluence to the stakeholder theory
literature.
6. The shortcomings of stakeholder theoryFollowing its original
proposition, stakeholder theory underwent rapid growth in the1990s
with a lot of research ongoing and its adoption by researchers in
theorganizational field. These works looked at a series of facets
and expanded the theoryspopularity among both academics and
management practitioners. Nevertheless, somequestions still remain.
Throughout the first decade of the twenty-first century, it maybe
stated that the theory was commonly deployed but, on the other
hand, in theoreticalterms, there was very little progress and the
current reality of stakeholder theorydemonstrates that little
changed in the last decade. Furthermore, that means a series
ofshortcomings still need resolution particularly regarding aspects
involving thetheoretical formulation in itself, the normative,
descriptive and instrumentalapproaches, the application of theory
to organizational realities and the developmentof the theoretical
body of work.
One of the main questions raising discussions around stakeholder
theory is notcriticism of the Theory in itself but rather targets
the content of the term stakeholder,which is essentially relatively
vague (Jones and Wicks, 1999). Clarkson (1994) hadearlier observed
that terms such as stakeholders, stakeholder models,
stakeholdermanagement and stakeholder theory were defined and used
in different ways and indifferent approaches and correspondingly
based on a diverse range of evidence andcontradictory arguments, as
already mentioned above in relation to the stakeholderconcept.
Another relevant question for Key (1999) is that Freeman (1984)
focused on thetechnical rather than the theoretical. The
presentation of identifiable actors provides avaluable strategic
tool, which was one of his intentions, but he did not provide
atheoretical base that was appropriate for explaining either the
behavior of the companyor that of individual actors, whether
internal or external. He then correctly asserts thatthe economic
model does not describe company behavior with any precision
andprovides no alternative beyond rethinking the company as an
entity convertingresources influenced by and influencing both
internal and external actors. According toKey (1999), stakeholder
theory does not adequately explain the process, makes anincomplete
interlinking between the internal and external variables, does not
payenough attention to the system within which companies operate as
well as those levelsof analysis within the system, and also
inappropriately evaluates the environment. In
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the perspective of Voss et al. (2005), stakeholder theory does
not respond to the needs ordemands of stakeholders given that these
are dynamic, latent or difficult to discern.
As regards the original proposal, the questions left open and
the suggestions forrefinements cover some ground. One question
discussed within stakeholder theory isthat Freeman (1984) put
forward a new framework nevertheless lacking any logic
ofdevelopment or the causality that would serve to connect the
variables and does notprovide any form of testing or predicting the
behavior of either the company or that ofexternal actors. The first
steps to identify this logic were the work of Donaldson andDunfee
(1994) and Jones (1995). They proposed social contract theory as
being at thecore of relationships with stakeholders, similar to the
logic explaining the relationshipbetween managers and shareholders
within the scope of economics even if there hasbeen little
subsequent development to the work of the aforementioned
authors.
Furthermore, Freeman (1984) included an incomplete connection
between actorsand between internalities and externalities. Despite
failing to identify the internal andexternal interest groups,
simply left incomplete, he provided for unlimited
connectionsbetween these groups and individual actors. To this end,
an actor may be a member ofa variety of groups; hence, an employee
may be a member of internal interest groups,shareholders and
employees, and external stakeholder groups, such as professionaland
consumer organizations, environmental activist associations, parent
or othercommunity action entities (Hsueh et al., 2010; Wegner et
al., 2010). To try and resolvethis, Rowley (1997) suggested
stakeholder networks. Freeman also describesrelationships as if
some kind of network, suggesting an even still greater
complexity(Rowley, 1998). However, there has been no empirical
evaluation of this.
Within this line, the Freeman (1984) model suggests that
stakeholder groups may beclearly identified as separate entities,
which would lead to a loss of complexity in theirreal relationships
(Rowley, 1997). It may be the case that stakeholder groups cannot
beclearly identified but the interests represented by the groups
(internal versus external)are susceptible to due identification
(Connelly, 2010; Mas-Verdu et al., 2010). Hence, theinterests may
prove to be the critical variable, and not the interested parties
inthemselves. Donaldson and Preston (1995) have argued in favor of
stakeholders beingidentified by their interests although this
position has not gained any consensus in theliterature.
Another question posed by Key (1999) refers to the fact that
stakeholder theoryincorrectly approaches the environment as
something static, focused upon thecompany and made up only of
stakeholder groups. Considering that the system andprocesses
sustaining the system are not totally overcome, the company image
at anyspecific time is fixed. Therefore, the element of change that
takes place over time is notexplainable through recourse to
Freemans (1984) model with very few propositions forthe resolution
of this problem having been put forward thus far. While part of
thestrategic management approach set out by this author includes
evaluating theenvironment for the identification of stakeholder
groups, there is no provision forunderstanding how to manage
change. Curiously, the work of Freeman (1984) is basedon his own
evaluation of climate change and how this impacted upon the company
tosuch an extent that it became necessary to respond to groups
other than shareholders.One contribution towards this thinking was
made by Rowley (1998), who used networkanalysis to evaluate the
environmental influence on the relationship between acompany and
its stakeholders.
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From another line of rationale, more philosophical,
Antonacopoulou and Meric(2005) concluded that stakeholder theory is
more of an ideological product thansomething scientific. They
considered that the theory in question is based uponpsychology and
socialization and preaches more moral behavior to
marketorganizations as a counterbalance to capitalism and the
financial and economicobjectives of firms. They point to the lack
of scientific thoroughness in the propositionsset out by
stakeholder theory researchers. Much of the theory is presented in
veryutilitarian terms, trusting in Kantian ideas and attributing
intrinsic value to thestakeholder (Martin et al., 2010). The theory
lacks the production of knowledge able toexplain the complex and
multi-faceted social relationships between the company andits
stakeholders (Melia et al., 2010; Un and Montoro-Sanchez,
2010).
Within the same context, Stoney and Winstanley (2001) label
stakeholder theory asin fact being a political pluralism theory.
Adopting a Marxist criticism of pluralism,these authors argue that
this theory supplies an excessively simplisticconceptualization of
power as a good that may be negotiated between theorganization and
the groups of stakeholder and, therefore, very limited in
itsexplanation of the means by which different stakeholder group
interests emerge andare generated by society. Without the capacity
to distinguish between the divergentorganizational stakeholder
interests, stakeholder theory may easily be subverted to aunitary
concept (Bonet et al., 2010; Comeche and Loras, 2010).
Stieb (2009) complemented this in affirming that the pretensions
of stakeholdertheorists as to their theory evolving to replace
capitalist theories were unfounded. It issimply not possible to
create value for all stakeholders in any equalitarian
fashion(distributive justice). This author holds that stakeholder
theory has not proven a solutionfor the economic ills afflicting
society. Given this, and taking into consideration thepositions of
Stoney and Winstanley (2001), Antonacopoulou and Meric (2005),
Stieb(2009) and Sanyang and Huang (2010), we may thus perceive of
the need to definestakeholder theory within the field of
organizational management and avoid the theoryspilling over into
other fields such as philosophy, sociology and psychology.
These critical questions, involving philosophical and
theoretical points of view,were closely analyzed and broadly
commented upon in the scientific literature(Donaldson and Dunfee,
1994; Donaldson and Preston, 1995; Weiss, 1995; Sternberg,1996;
Key, 1999; Moore, 1999; Gibson, 2000; Kaler, 2003; Fassin, 2008;
Rubalcaba et al.,2010). There have also been attempts to integrate
the theory into research fromdifferent areas so as to advance the
state of stakeholder theory (Jawahar andMcLaughlin, 2001; Andriof
et al., 2002; Venkataraman, 2002; Koelling et al., 2010;Sebora and
Theerapatvong, 2010). Nevertheless, much work still remains to be
done.
According to Fassin (2009), a juridical interpretation,
strengthening thephilosophical input, based upon rights and
contracts means stakeholders havedemands and companies have
obligations and duties. On the other hand, themanagerial approach,
stemming from organizational theory and sociology, is morepragmatic
and emphasizes the relational aspects between interested parties
and thecompany. These two opposing visions of the stakeholder
concept reflect totallydifferent questions. This mixture, in
constant evolution, overlapping and combiningutilizations of both
definitions (Kaler, 2003), has boosted the perception of
uncertaintysurrounding the model and demanding theoreticians take
up their positions as regardswhich problem they aim to resolve.
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Specifically, from the instrumental perspective, according to
Sternberg (1999), themeaning and applicability of the stakeholder
doctrine depends on what is involved inbalancing out the benefits
generated. Nevertheless, this idea has also come in forcritical
analysis. First, stakeholder theory does not provide any
orientation as regardshow to benefit all parties equally and
justly. Were all stakeholders able to affect or beaffected by the
organization, the number of groups whose benefits were to be
includedin the calculation would be infinite. For any balance to be
reached, the number or typeof stakeholder would have to be
restricted in some way or another (Ramrez et al., 2010;Tihula and
Huovinen, 2010). However, stakeholder theory at this stage does
notprovide any orientation as to the way in which stakeholder
groups should be selectedor defined.
Remaining with instrumental issues, the stakeholder model
structure visuallyillustrates the relationships between the
different groups of actors surrounding acompany. However, it is
necessary to be aware that all representations, models andlayouts
are social constructions that inevitably simplify and reduce
reality. Thisobservation naturally holds valid for stakeholder
theory (Pesqueux and Damak-Ayadi,2005) as well. The recent
literature on the theme puts forward an impressive range
ofperfections and improvements but there still lacks a
clarification and thoroughdefinition of the models nature ( Jones
and Wicks, 1999; Lepineux, 2005).
Also questioning the model, Carroll and Buchholtz (2006)
highlight the reciprocalinteraction between stakeholders and
society. The stakeholder model graphicallyrepresents the
relationship between the stakeholders and the company by means of
abi-directional arrow. These arrows depict not only a relationship,
but also expressdependence and reciprocity (Tortosa-Edo et al.,
2010). The relationships between themare reciprocal given that each
may impact on the other in terms of losses and gains aswell as
rights and duties (Evan and Freeman, 1988). However, not all
relationships areequal: the intensity of interaction in each
direction might be quite different dependingon the power and the
sensitivity to influence (Post et al., 2002; Phillips, 2003).
Theintensity may be seen as a point on a continuum and this may be
expressed in differentarrow widths, as in a sociogram, with
possible width differences in either direction, asolution uncommon
to studies on stakeholder theory.
Complementarily and as already observed, one interpretation of
stakeholder theoryincorrectly perceives that a company should take
into account the aspirations of allparticipants and that they
should all be treated equally, independent of the fact thatsome
clearly contribute more than others to the organization (Gioia,
1999; Marcoux,2003; Phillips, 2004; Tortosa-Edo et al., 2010).
However, the management ofstakeholders does not imply that
executives have to focus equal quantities of attentionon each of
their components (Dentchev and Heene, 2003; Chamberlin et al.,
2010;Devlin, 2010). In the stakeholder categories, the level of
attention and obligation mayvary (Mitchell et al., 1997; Phillips,
2003; Neville et al., 2004). However, the originalgraphical
representation of the stakeholder model may be at the root of this
erroneousinterpretation of equality among all stakeholders given
how, for reasons of simplicityand clarity, each stakeholder
category is attributed a symbol (oval or rectangular) ofidentical
size. Perhaps, to better reflect reality, symbols of different
sizes, shapes andintensities are needed in accordance with the
relative importance of the respectiveparticipant categories
(Fassin, 2008). These examples do demonstrate that theliterature
requires a new and more robust model.
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In addition to questioning of the model, the application and
usage of stakeholdertheory also raises doubts. For example, Jensen
(2002) calls into question the theoryrelating to two aspects: the
non-specific Theory on how managers should handleconflictual
interests, with a lack of objective criteria for decision making
andperformance evaluation, and the impossibility of an organization
attaining success whenchasing multiple objectives as inherently
attempting to achieve many objectivessimultaneously corresponds to
having no overall objective. Companies adoptingstakeholder theory,
in general, experience managerial confusion, conflict,
inefficienciesand even a weakening of the corporation (Abreu et
al., 2010; Martinez-Gomez et al., 2010).
Taking a similar line, Dufrene and Wong (1996) question the
validity of stakeholdertheory for its failure to provide clear
management objectives. Baggio and Cooper (2010)maintain that
stakeholder interests are frequently mutually incompatible, a
factnecessarily preventing any clear decision by the management.
This same position wasused by Stieb (2009), who criticized the
power sharing defended by Freeman (2002,2008). The author
questioned just how you might face suppliers, the local
communityand clients as management and in control of the
organization? This would seem, at theminimum, unviable.
Another doubt as to the practical application of stakeholder
theory was posed bythe work of Sundaram and Inkpen (2004). These
authors defend the purpose of thecompany being the maximization of
shareholder value. Hence, they criticize studiescalling for the
needs of multiple stakeholders to be met with the objective of
gainingcompetitive advantages as is the case, for example, with the
works by Jones (1995),Donaldson and Preston (1995), and Altman
(1998) and Mathew (2010). Sundaram andInkpen (2004) emphasized that
the relationship between stakeholders and companyperformance is
either refutable or inconclusive in various empirical works, with
thestudies by Griffin and Mahon (1997), Agle et al. (1999), Berman
et al. (1999) identified,among others. Hence, more research on the
relationship between stakeholdermanagement and organizational
performance is clearly needed.
Finally, according to Key (1999), stakeholder theory does not
meet the requirementsof a scientific theory. Trevino and Weaver
(1999) stressed that despite progress therehas yet to be any
theoretical convergence between the instrumental, descriptive
andnormative perspectives even taking into account the efforts of
research in this field,such as that of Jones and Wicks (1999).
According to Trevino and Weaver (1999), thereis a lack of
sufficient empirical evidence.
Furthermore, as Lepineux (2005) affirmed, stakeholder theory is
affected bycountless problems and imperfections. In summary, they
are:
. the definition of its object of study remains
controversial;
. the stakeholder spectrum and its classification is
variable;
. the balancing of their respective interests causes
problems;
. there is a lack of solid normative foundations;
. the normative and empirical flows are very commonly separated;
and
. the role and the positioning of civil society as a stakeholder
is neither clear norprecise.
Considering these aspects, many authors doubt whether
stakeholder theory justifies itsstatus as a theory, a position
taken by Trevino and Weaver (1999), for example.
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Considering the questions and issues set out here, it may safely
be said that there isstill much to do. Despite being a still
relatively recent theory, it has gained inpopularity and attracted
the interest of researchers in countless areas. These
criticismsserve only to help in fostering the development of
stakeholder theory, over timemoving towards the status representing
a new paradigm for the organizational field.According to Friedman
and Miles (2006), any attempt to converge around a justifiedand
consistent theory remains premature. There are questions to
resolve, such asstakeholder focused decision making processes
(which to choose?), the managerialstructure appropriate to focusing
on stakeholders, the role of intermediaries in thisrelational
interaction, the real legitimacy of stakeholders, the means of
relating andinteracting between the organization and each of its
stakeholders. These are thequestions worthy of the attention of
researchers in this field.
7. Conclusion: a suggested research agendaOut of this analysis
of the literature, it may be understood that stakeholder theory
hasspilled over into different fields. According to Carroll (1994),
the theory holds relevanceto strategic management, marketing,
production, financial management, humanresource management,
research and development, organizational ethics,
corporativegovernance, business performance, healthcare management,
information technologysystem management, among others. Although not
the leading theory in any of thesefields, stakeholder theory
provides a means of combining ethical questions withcomplex
operational environments and encapsulating details within a general
vision.That is, this is a theory that proves its relevance to
organizations in general terms,nevertheless, as explained above,
further research of an empirical nature is required,especially
descriptive approaches (Friedman and Miles, 2006). Such empirical
anddescriptive research would enable the organizational reality to
be cross-referenced withthe theoretical assumptions. The sheer
quantity of shortcomings presented heresuggests that the
theoretical approach remains within the domain of supposition
withmany of the assumptions underlying stakeholder theory never
subject to testing, whichhas led researchers into raising doubts as
to the validity of this theoretical approach, aspresented
above.
Therefore, it becomes important to seek out solutions
(qualitative and quantitative)to the diverse questions raised by
research into stakeholder theory. Correspondinglyone natural option
involves systematizing issues critical to the theory and developing
aresearch agenda that seeks to respond to the aforementioned
imperfections.
As regards the formulation of stakeholder theory, one question
requiring resolutionis that of the stakeholder term itself. The
profusion of definitions hindersunderstanding as to what the term
actually represents. Establishing boundaries tothe concept would go
a long way towards resolving a series of issued posed byresearchers
in this field. Might it prove feasible that company objectives
serve to guidethe definition of these boundaries? In accordance
with a unified concept of thestakeholder term, the theoretical
approach referred to here would render conceptualclarity and an
enhanced definition, generating important academic interpretations
(andbetter focused research) and practices (better management
understanding as to whotheir stakeholders actually are). As a
guideline for empirical research (or for practicalapplications),
prior to embarking on stakeholder theory field research,
academicsshould determine the individuals under analysis understand
the term. One of the
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problems encountered by researchers in relation to this theory
relates to the different(where not erroneous) perceptions of the
term stakeholder. Staging focus groups mayaid in unifying
understandings as to the concept.
Further research would focus on the boundaries as to what
constitutes a group ofstakeholders as well as defining the criteria
for attributing individual membership toone or another group. This
definition should justify the logic binding the variables
inaddition to clarifying the criteria adopted for choosing one or
another stakeholder asthe main beneficiary of a specific
organizational action in contrast to conceiving as tohow to benefit
all equally, which does not, after all, seem a feasible objective.
Clearlydefining what makes up a stakeholder group may focus not
only academic research butalso its deployment within the business
environment. In this case, the proposal putforward by Rowley (1997)
emerges as the most logical with its interest basedstakeholder
groups rather than definitions around individuals. For example, a
specificindividual might simultaneously be an organizational client
and supplier. The personremains the same even where his/her
interests differ. Thus, in practice, from theorganizational
perspective, stakeholder groups are collective individual interests
andnot specifically the individuals themselves.
A more critical aspect of stakeholder theory is its theoretical
mixture. This clearlydemonstrates the lack of demarcation to its
theoretical borders and which results in thetheory being
misrepresented as a technique or even as a support tool for other
theories.Thus, researching and determining the actual extent of
stakeholder theory,particularly in taking this approach as an
organizational theory rather than as anideological or political
concept, might result in an important contribution for academicsand
practitioners in this field. Complementarily, the static conception
of thesurrounding environment also needs dealing with.
Correspondingly, within the scopeof the theory, dynamism needs to
be introduced into this external environment. Hence,stakeholder
theory needs defining as a theory and not as some aggregation
ofsuppositions with diverse connotations. Thus, descriptive
research may prove able toascertain the scope of the theory.
As regards the instrumental question, the main utilization of
stakeholder theory bymanagement professionals, new models need
proposing and that are capable ofanswering the various challenges
set out by Carroll and Buchholtz (2006), and Fassin(2008, 2009),
among others. Despite the discussions regarding the
graphicalrepresentation of stakeholder theory, there is a shortage
of proposed models dealingwith aspects such as stakeholder
homogeneity, their respective independence, amongother criticisms
set out above. Some proposals are already to be found in the
literature(Fassin, 2008, 2009), nevertheless, they have yet to
stake their claim as the most robuststakeholder theory model. After
all, they have yet to be subject to empirical testing.Furthermore,
model focused research may also open up avenues for the resolution
ofmany other critical theoretical issues, especially through the
empirical testing of newmodels. Any new stakeholder theory model
would certainly bring progress towardsresolving some of the
weaknesses set out here, especially should such a model derivefrom
a unified definition of the stakeholder conceptual. Furthermore,
the main facet tothe company and each of its stakeholders would
appear to be the mutual influenceongoing between the parties. This
factor might yet prove the foundations for a newmodel.
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For practical theoretical applications, research, especially
descriptive analysis,needs to focus on aspects such as the ongoing
relationships, conflicts of interestbetween stakeholders and
management difficulties in coping with multiple objectives(decision
making, structures, intermediaries, etc.). Research into how
differing actors,when belonging to different groups, reconcile
their interests (which may be divergent)is essential. Furthermore,
as it is highly difficult to deal with everyone, we clearly
needrecommendations on how to attribute relevance to stakeholders,
as is the case with thestakeholder salience model (Mitchell et al.,
1997), thereby contributing to the practicalapplication of this
theory despite the long standing lack of thorough empirical
testing.It is perfectly feasible that the model proves to have
little practical utility. Indeed,measuring power, legitimacy and
urgency represents a challenging task and subject todoubts, as
proven by Agle et al. (1999) in their application of the
stakeholder saliencemodel where the results obtained registered
divergences between the theoretical modeland the organizational
reality. In addition, more studies are necessary on how to
relategood stakeholder management to organizational performance.
Perhaps the mosteffective theoretical application might actually be
in public or non-profit organizationsrather than the private sector
(Beach, 2009).
Finally, the need for research that systematizes the knowledge
produced should behighlighted with the objective of attaining the
theoretical convergence necessary forthe development of stakeholder
theory. There is clearly a very significant body of workacross a
range of areas but they have not yet been gathered and collectively
analyzedin order to extract the conclusions and adjustments
necessary for delimitating andadvancing the theory.
In summary, it is necessary to attain consistency within the
normative stakeholdertheory perspective, overcoming its still
incipient phase of development in terms of itsdescriptive
capacities while validating and broadening the descriptive base
supportingthe normative perspective. This holds particular
relevance given the descriptiveperspective may drive changes in the
actual normative perspective itself. However,there is much road
ahead of us. We particularly need to focus efforts on
definitivelyestablishing the foundations of stakeholder theory,
which does nevertheless prove atheoretically relevant approach both
in organizational and in social terms.
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