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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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374 citations


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

  • ...Many recent instrumental studies of corporate social responsibility, all of which make explicit or implicit reference to stakeholder perspectives, use conventional statistical methodologies (Aupperle, Carroll, & Hatfield, 1985; Barton, Hill, & Sundaram, 1989; Cochran & Wood, 1984; Cornell & Shapiro, 1987; McGuire, Sundgren, & Schneeweis, 1988; Preston & Sapienza, 1990; Preston, Sapienza, & Miller, 1991)....

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  • ...There is some evidence, based on analysis of the Fortune corporate reputation surveys, that the satisfaction of multiple stakeholders need not be a zero sum game (i.e., that benefits to one stakeholder group need not come entirely at the expense of another) ( Preston & Sapienza, 1990 )....

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Journal ArticleDOI
TL;DR: In this paper, a broad developmental view of thinking in the field of social issues in management (SIM) is presented, where conceptual developments and empirical research in the context of the emerging theory of corporate social performance are reviewed.

368 citations

Journal ArticleDOI
TL;DR: In this article, the authors present a current account of how a cross-section of managers and executives deal with values in the workplace, including organizational goals they pursue most vigorously, the kind of people they admire most as colleagues, and the way they approach ethical dilemmas.
Abstract: What are the key values that guide American managers—the organizational goals they pursue most vigorously? the kind of people they admire most as colleagues? the way they approach ethical dilemmas in the workplace? This article presents a current account of how a cross-section of managers and executives deal with values in the workplace.

311 citations

Journal ArticleDOI
TL;DR: There exist distinct stakeholder groups perceived by directors, directors have high stakeholder orientations, and directors view some stakeholders differently depending on their occupation and type.
Abstract: Based on a survey of 2,361 directors in 291 of the largest companies of the Southeast States, this study empirically examined boards of directors' stakeholder orientations. The results indicate that (1) there exist distinct stakeholder groups perceived by directors, (2) directors have high stakeholder orientations, (3) directors view some stakeholders differently depending on their occupation (CEO directors v. non-CEO directors) and type (inside directors vs. outside directors).

282 citations


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

  • ...For example, stakeholder theory has been used to describe (a) the nature of the firm (Brenner & Cochran, 1991), (b) the way managers think about managing (Brenner & Molander, 1977), (c) how board members think about the interests of corporate constituencies ( Wang & Dewhirst, 1992 ), and (d) how some corporations are actually managed (Clarkson, 1991; Halal, 1990; Kreiner & Bhambri, 1991)....

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Journal ArticleDOI
TL;DR: The authors give an account of some of the current areas of research in business ethics and suggest how these areas may be relevant for scholars working in other business disciplines, and conclude with suggestions for some additional research questions.
Abstract: The purpose of this paper is to give an account of some of the current areas of scholarship in business ethics and to suggest how these areas may be relevant for scholars working in other business disciplines. We endeavor to paint a picture of a healthy discipline full of controversy, rich intellectual discussions, and the beginnings of several research traditions. To begin, we examine how it is common practice to think of ‘business’ and ‘ethics’ as separate entities, and suggest how such a ‘separation thesis’ can be used to diagnose problems in a host of business disciplines. We next examine the literature on corporate agency and responsibility that questions whether or not a corporation can be said to be normally accountable, in the same way that individual moral agents can be held accountable, and we look at an emerging research tradition of ‘stakeholder theory’ that cuts across the disciplines of business. We then explore two contemporary issues in business ethics: (1) International Business Ethics; and, (2) Environmental Ethics and Business, and we conclude with suggestions for some additional research questions.

266 citations