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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

913 citations


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

  • ..." Freeman and Evan (1993) emphasized the notion of fairness....

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  • ...Consider, for example, the simple hypothesis that corporations whose managers adopt stakeholder principles and practices will perform better financially than those that do not. This hypothesis has never been tested directly, and its testing involves some formidable challenges. (Clarkson's ongoing work is the only significant effort of this type known to us; cf. Clarkson, Deck, & Shiner, 1992.) The view that stakeholder management and favorable performance go hand in hand has, however, become commonplace in the management literature, both professional and academic. The earliest direct statement is probably that of General Robert E. Wood, then-CEO of Sears, in 1950: "All I can say is that if the other three parties named above [customers, employees, community] are properly taken care of, the stockholder will benefit in the long pull" (quoted in Worthy, 1984: 64). A recent effort to introduce practicing managers to the stakeholder concept and to improve their ability to implement stakeholder management practices is the work by Savage, Nix, Whitehead, and Blair (1991). Brummer (1991) cited not only Freeman (1989) but also Ackoff; Manning; Maslow; Peters and Waterman; Starling; Sturdivant; and others in support of stakeholder theory's instrumental base....

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Posted Content
TL;DR: The Nature of the Firm as discussed by the authors was a ground-breaking paper which raised fundamental questions about the concept of the firm in economic theory and its relevance to economic theory today, and has been widely cited as a seminal work in economics.
Abstract: In 1937, Ronald H. Coase published The Nature of the Firm, a ground-breaking paper which raised fundamental questions about the concept of the firm in economic theory. In this volume, leading business economists commemorate Coase's classic article and consider its relevance to economic theory today. The book includes a reprint of The Nature of the Firm, together will three lectures by Coase from 1987, which provide an account of the origins and development of his thought. The new paperback includes the first publication of the lecture which Coase delivered on winning the Nobel Prize for Economics in 1991.

685 citations

Book
01 Jan 1982

557 citations

Book ChapterDOI
TL;DR: In this paper, it was shown that the managers of a corporation are fiduciaries for the unit and not merely for its individual members, in Mr. Young's phrase, trustees for an institution rather than attorneys for the stockholders.
Abstract: Directors and managers of modern large corporations are granted all sorts of novel powers by corporation statutes and charters, and are free from any substantial supervision by stockholders by reason of the difficulty which the modern stockholder has in discovering what is going on and taking effective measures even if he has discovered it. 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, in Mr. Young's phrase, trustees for an institution rather than attorneys for the stockholders. It may well be that any substantial assumption of social responsibility by incorporated business through voluntary action on the part of its managers cannot reasonably be expected.

543 citations

Book
01 Jan 1984

492 citations


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

  • ...Aoki's (1984) cooperative game theory of the firm attempts to explain internal governance, particularly the balance between owners' and workers' interests....

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