1he stakeho|der theory ls a Lheory of organlzaLlonal managemenL and buslness eLhlcs LhaL

addresses morals and values ln managlng an organlzaLlon lL was orlglnally deLalled by 8

Ldward lreeman ln Lhe book 5ttoteqlc Moooqemeot A 5tokebolJet Apptoocb and ldenLlfles
and models Lhe groups whlch are sLakeholders of a corporaLlon and boLh descrlbes and
recommends meLhods by whlch managemenL can glve due regard Lo Lhe lnLeresLs of Lhose
groups ln shorL lL aLLempLs Lo address Lhe rlnclple of Who or WhaL 8eally CounLs
ln Lhe LradlLlonal vlew of Lhe flrm Lhe shareholder vlew (Lhe only one recognlzed ln buslness
law ln mosL counLrles) Lhe shareholders or sLockholders are Lhe owners of Lhe company and
Lhe flrm has a blndlng flduclary duLy Lo puL Lhelr needs flrsL Lo lncrease value for Lhem ln older
lnpuLouLpuL models of Lhe corporaLlon Lhe flrm converLs Lhe lnpuLs of lnvesLors employees
and suppllers lnLo usable (salable) ouLpuLs whlch cusLomers buy Lhereby reLurnlng some
caplLal beneflL Lo Lhe flrm 8y Lhls model flrms only address Lhe needs and wlshes of Lhose four
parLles lnvesLors employees suppllers and cusLomers Powever sLakeholder Lheory argues
LhaL Lhere are oLher parLles lnvolved lncludlng governmenLal bodles pollLlcal groups Lrade
assoclaLlons Lrade unlons communlLles assoclaLed corporaLlons prospecLlve employees
prospecLlve cusLomers and Lhe publlc aL large SomeLlmes even compeLlLors are counLed as
sLakeholders
1he sLakeholder vlew of sLraLegy ls an lnsLrumenLal Lheory of Lhe corporaLlon lnLegraLlng boLh
Lhe resourcebased vlew as well as Lhe markeLbased vlew and addlng a soclopollLlcal level
1hls vlew of Lhe flrm ls used Lo deflne Lhe speclflc sLakeholders of a corporaLlon (Lhe normaLlve
Lheory (uonaldson) of sLakeholder lJeotlflcotloo) as well as examlne Lhe condlLlons under whlch
Lhese parLles should be LreaLed as sLakeholders (Lhe descrlpLlve Lheory of sLakeholder solleoce)
1hese Lwo quesLlons make up Lhe modern LreaLmenL of SLakeholder 1heory
uonaldson and resLon offer four cenLral Lheses relaLed Lo sLakeholder Lheory
1 SLakeholder 1heory ls descrlpLlve ln LhaL lL offers a model of Lhe corporaLlon
2 SLakeholder 1heory ls lnsLrumenLal ln offerlng a framework for lnvesLlgaLlng Lhe llnks
beLween convenLlonal flrm performance and Lhe pracLlce of sLakeholder
managemenL
3 AlLhough SLakeholder 1heory ls descrlpLlve and lnsLrumenLal lL ls more fundamenLally
normaLlve SLakeholders are ldenLlfled by Lhelr lnLeresLs and all sLakeholder lnLeresLs
are consldered Lo be lnLrlnslcally valuable
4 SLakeholder 1heory ls managerlal ln LhaL lL recommends aLLlLudes sLrucLures and
pracLlces and requlres LhaL slmulLaneous aLLenLlon be glven Lo Lhe lnLeresLs of all
leglLlmaLe sLakeholders



Diagram/schematic of theory