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Journal ArticleDOI

The Stakeholder Theory of the Corporation: Concepts, Evidence, and Implications

01 Jan 1995-Academy of Management Review (Academy of Management)-Vol. 20, Iss: 1, pp 65-91
TL;DR: In this article, the authors examine three aspects of the stakeholder theory and critique and integrate important contributions to the literature related to each, concluding that the three aspects are mutually supportive and that the normative base of the theory-which includes the modern theory of property rights-is fundamental.
Abstract: ?The stakeholder theory has been advanced and justified in the management literature on the basis of its descriptive accuracy, instrumental power, and normative validity. These three aspects of the theory, although interrelated, are quite distinct; they involve different types of evidence and argument and have different implications. In this article, we examine these three aspects of the theory and critique and integrate important contributions to the literature related to each. We conclude that the three aspects of stakeholder theory are mutually supportive and that the normative base of the theory-which includes the modern theory of property rights-is fundamental. If the unity of the corporate body is real, then there is reality and not simply legal fiction in the proposition that the managers of the unit are fiduciaries for it and not merely for its individual members, that they are . . . trustees for an institution [with multiple constituents] rather than attorneys for the stockholders.
Citations
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Journal ArticleDOI
TL;DR: In this paper, a theory of stakeholder identification and saliency based on stakeholders possessing one or more of three relationship attributes (power, legitimacy, and urgency) is proposed, and a typology of stakeholders, propositions concerning their saliency to managers of the firm, and research and management implications.
Abstract: Stakeholder theory has been a popular heuristic for describing the management environment for years, but it has not attained full theoretical status. Our aim in this article is to contribute to a theory of stakeholder identification and salience based on stakeholders possessing one or more of three relationship attributes: power, legitimacy, and urgency. By combining these attributes, we generate a typology of stakeholders, propositions concerning their salience to managers of the firm, and research and management implications.

10,630 citations

Journal ArticleDOI
TL;DR: This article conducted a meta-analysis of 52 studies and found that corporate virtue in the form of social responsibility and, to a lesser extent, environmental responsibility is likely to pay off, although the operationalizations of CSP and CFP also moderate the positive association.
Abstract: Most theorizing on the relationship between corporate social/environmental performance (CSP) and corporate financial performance (CFP) assumes that the current evidence is too fractured or too variable to draw any generalizable conclusions. With this integrative, quantitative study, we intend to show that the mainstream claim that we have little generalizable knowledge about CSP and CFP is built on shaky grounds. Providing a methodologically more rigorous review than previous efforts, we conduct a meta-analysis of 52 studies (which represent the population of prior quantitative inquiry) yielding a total sample size of 33,878 observations. The meta-analytic findings suggest that corporate virtue in the form of social responsibility and, to a lesser extent, environmental responsibility is likely to pay off, although the operationalizations of CSP and CFP also moderate the positive association. For example, CSP appears to be more highly correlated with accounting-based measures of CFP than with market-based ...

6,493 citations


Cites background from "The Stakeholder Theory of the Corpo..."

  • ...The performance of business organizations is affected by their strategies and operations in market and non-market environments (Baron 2000)....

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  • ...Instrumental stakeholder theory (for example, Clarkson 1995; Cornell and Shapiro 1987; Donaldson and Preston 1995; Freeman 1984; Mitchell et al. 1997 (the classification of these studies as exemplifying ‘instrumental stakeholder theory’ was made ex post)) suggests a positive relationship between…...

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  • ...According to this theory, the satisfaction of various stakeholder groups is instrumental for organizational financial performance (Donaldson and Preston 1995; Jones 1995)....

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Journal ArticleDOI
TL;DR: In this article, the authors outline a supply and demand model of corporate social responsibility (CSR) and conclude that there is an "ideal" level of CSR, which managers can determine via cost-benefit analysis.
Abstract: We outline a supply and demand model of corporate social responsibility (CSR). Based on this framework, we hypothesize that a firm's level of CSR will depend on its size, level of diversification, research and development, advertising, government sales, consumer income, labor market conditions, and stage in the industry life cycle. From these hypotheses, we conclude that there is an “ideal” level of CSR, which managers can determine via cost-benefit analysis, and that there is a neutral relationship between CSR and financial performance.

6,305 citations


Cites background from "The Stakeholder Theory of the Corpo..."

  • ...According to Donaldson and Preston (1995), three aspect of this theory-normative, instrumental, and descriptive-are "mutually supportive....

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Journal ArticleDOI
TL;DR: The authors argue that companies are increasingly asked to provide innovative solutions to deep-seated problems of human misery, even as economic theory instructs managers to focus on maximizing their shareholders' wealt.
Abstract: Companies are increasingly asked to provide innovative solutions to deep-seated problems of human misery, even as economic theory instructs managers to focus on maximizing their shareholders' wealt

4,666 citations

Journal ArticleDOI
TL;DR: In this paper, the authors propose an institutional theory of corporate social responsibility consisting of a series of propositions specifying the conditions under which corporations are likely to behave in socially responsible ways, and argue that the relationship between basic economic conditions and corporate behavior is mediated by several institutional conditions: public and private regulation, the presence of nongovernmental and other independent organizations that monitor corporate behaviour, institutionalized norms regarding appropriate corporate behavior, associative behavior among corporations themselves, and organized dialogues among corporations and their stakeholders.
Abstract: I offer an institutional theory of corporate social responsibility consisting of a series of propositions specifying the conditions under which corporations are likely to behave in socially responsible ways. I argue that the relationship between basic economic conditions and corporate behavior is mediated by several institutional conditions: public and private regulation, the presence of nongovernmental and other independent organizations that monitor corporate behavior, institutionalized norms regarding appropriate corporate behavior, associative behavior among corporations themselves, and organized dialogues among corporations and their stakeholders. Concerns about corporate social responsibility have grown significantly during the last two decades. Not only has the issue become commonplace in the business press and among business and political leaders (Buhr & Graf

3,806 citations


Cites background from "The Stakeholder Theory of the Corpo..."

  • ...Indeed, whole fields of economic inquiry, such as the study of economic regulation (e.g., Demsetz, 1968; Stigler,...

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  • ...Instead, most of the stakeholder literature focuses on four other issues (Donaldson & Preston, 1995)....

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References
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Journal ArticleDOI
TL;DR: In this article, the authors define corporate social performance (CSP) and reformulate the CSP model to build a coherent, integrative framework for business and society research, where principles of social responsibility are framed at the institutional, organizational, and individual levels; processes of social responsiveness are shown to be environmental assessment, stakeholder management, and issues management; and outcomes of CSP are posed as social impacts, programs, and policies.
Abstract: This article defines corporate social performance (CSP) and reformulates the CSP model to build a coherent, integrative framework for business and society research. Principles of social responsibility are framed at the institutional, organizational, and individual levels; processes of social responsiveness are shown to be environmental assessment, stakeholder management, and issues management; and outcomes of CSP are posed as social impacts, programs, and policies. Rethinking CSP in this manner points to vital research questions that have not yet been addressed.

4,690 citations


"The Stakeholder Theory of the Corpo..." refers background in this paper

  • ...(Significant recent examples include books by Alkhafaji, 1989; Anderson, 1989; and Brummer, 1991; and articles by Brenner & Cochran, 1991; Clarkson, 1991; Goodpaster, 1991; Hill & Jones, 1992; and Wood, 1991a, b; plus numerous papers by Freeman and various collaborators,...

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Posted Content
01 Jan 2012
TL;DR: The 2008 crash has left all the established economic doctrines - equilibrium models, real business cycles, disequilibria models - in disarray as discussed by the authors, and a good viewpoint to take bearings anew lies in comparing the post-Great Depression institutions with those emerging from Thatcher and Reagan's economic policies: deregulation, exogenous vs. endoge- nous money, shadow banking vs. Volcker's Rule.
Abstract: The 2008 crash has left all the established economic doctrines - equilibrium models, real business cycles, disequilibria models - in disarray. Part of the problem is due to Smith’s "veil of ignorance": individuals unknowingly pursue society’s interest and, as a result, have no clue as to the macroeconomic effects of their actions: witness the Keynes and Leontief multipliers, the concept of value added, fiat money, Engel’s law and technical progress, to name but a few of the macrofoundations of microeconomics. A good viewpoint to take bearings anew lies in comparing the post-Great Depression institutions with those emerging from Thatcher and Reagan’s economic policies: deregulation, exogenous vs. endoge- nous money, shadow banking vs. Volcker’s Rule. Very simply, the banks, whose lending determined deposits after Roosevelt, and were a public service became private enterprises whose deposits determine lending. These underlay the great moderation preceding 2006, and the subsequent crash.

3,447 citations

Book
07 Apr 1992
TL;DR: The power of culture and the role of top management is discussed in this article, where the authors focus on the roles of leaders in top management and the nature of low-performance cultures.
Abstract: The power of culture -- Strong cultures -- Strategically appropriate cultures -- Adaptive cultures -- The case of Hewlett-Packard -- The nature of low-performance cultures -- People who create successful change -- Leaders in action -- The case of ICI -- The case of Nissan -- On the role of top management.

3,271 citations


"The Stakeholder Theory of the Corpo..." refers background in this paper

  • ... Kotter and Heskett (1992) specifically observed that such highly successful companies as Hewlett-Packard, Wal-Mart, and Dayton Hudson-although very diverse in other ways-share a stakeholder perspective....

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  • ...Other studies are based on direct observation and interviews ( Kotter & Heskett, 1992; O'Toole, 1985; see also, O'Toole, 1991)....

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  • ... Kotter and Heskett (1992: 59) wrote that "[a]lmost all [their] managers care strongly about people who have a stake in the business-customers, employees, stockholders, suppliers, etc."...

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Journal ArticleDOI
TL;DR: This paper analyzed the relationship between perceptions of firms' corporate social responsibility and measures of their financial performance and found that a firm's prior performance, assessed by both stock-market returns and accounting-based measures, is more closely related to corporate social concern than is subsequent performance.
Abstract: Using Fortune magazine's ratings of corporate reputations, we analyzed the relationships between perceptions of firms’ corporate social responsibility and measures of their financial performance. Results show that a firm's prior performance, assessed by both stock-market returns and accounting-based measures, is more closely related to corporate social responsibility than is subsequent performance. Results also show that measures of risk are more closely associated with social responsibility than previous studies have suggested.

2,862 citations

Journal ArticleDOI
TL;DR: Although there has been considerable research into the relationship between corporate social responsibility and profitability, it has frequently reflected either an ideological bias or limited meth... as discussed by the authors, it has often reflected either a bias or a limited meth
Abstract: Although there has been considerable research into the relationship between corporate social responsibility and profitability, it has frequently reflected either an ideological bias or limited meth...

2,206 citations