In the traditional view of the firm, the shareholder view, the shareholders or stockholders are the owners of the company, and the firm has a binding financial obligation to put their needs first, to increase value for them. However, stakeholder theory argues that there are other parties involved, including governmental bodies, political groups, trade associations, trade unions, communities, financiers, suppliers, employees, and customers. Sometimes even competitors are counted as stakeholders—their status being derived from their capacity to affect the firm and its other stakeholders. There have been many definitions of stakeholders.
R. Edward Freeman originally detailed the Stakeholder theory of organizational management and business ethics that addresses morals and values in managing an organization. His award-winning book Strategic Management: A Stakeholder Approach originally published in 1984 and reprinted by Cambridge University Press in 2010 identifies and models the groups which are stakeholders of a corporation, and both describes and recommends methods by which management can give due regard to the interests of those groups. It has served to define a starting point for subsequent scholars and executives on the topic.
In 2008, Freeman and his colleagues wrote Managing for Stakeholders, setting out the managerial framework for companies to implement a stakeholder approach. And in 2010, Freeman and his colleagues published Stakeholder Theory: The State of the Art (Cambridge University Press) that summarizes the body of research that has accumulated and made the case that business is about creating value for stakeholder.
Ed has also published business case studies and technical notes on this topic. His most recent note, Managing for Stakeholders, published January 2013 by Darden Business Publishing, explains managing for stakeholders, and examines why the dominant model is no longer viable in today’s business world; then goes on to define the basic ideas of managing for stakeholders (and why it solves some of the problems of the dominant model), and to sketch three primary arguments from ethical theory for adopting managing for stakeholders.
Contact Ed to book a speaking engagement or schedule an interview about Stakeholder Management.