Stakeholder Theory: Literature Review
I undertook several measures in selecting the final three articles analyzed in this paper. First was the use of key search words, including stakeholder theory, business stakeholders, value and performance measurement, stakeholder perspective, and corporate social responsibility. Each stage of the search was guided by three primary objectives: defining stakeholder theory, identifying stakeholder perspective, and the objective of stakeholder theory. As noted, the central theme in each article is the stakeholder perspective as defined by the theory.
In the present-day business world, stakeholder theory is a widely utilized concept. Specifically, the theory addresses the values and morals incorporated in the management of an organization by the said stakeholders that are characterized into internal and external stakeholders(Harrison and Wicks, 2013). In this regard, the internal stakeholders include employees, owners, and managers, whereas external stakeholders include customers, suppliers, creditors, shareholders, government, and society.
As follows, the theory holds that the value of any business is to create value for its stakeholders. The three journal articles provide diverse insight into the concept of stakeholder theory by exploring various themes and aspects of the theory, including stakeholder identification and salience, responses and actions of stakeholders, the performance of firms, firms’ responses and actions, and theory debate of the concept(Laplume, Sonpar, and Litz, 2008).
Harrison and Wicks’s first article, Stakeholder Theory, value, and firm performance, seeks to demystify the notion that stakeholders’ perspective of value in an organization is narrowed to economic returns. Following this school of thought, I determined that scholars have made consistent assumptions of the term value to mean economic gains for stakeholders when evaluating the stakeholder theory.
The theory, however, asserts that the stakeholder perspective of value includes stakeholder satisfaction obtained from the firm utility in the form of intangible and tangible factors (Harrison and Wicks, 2013). In this regard, the stakeholder perspective of value is based on four factors: utility associated with organizational justice, utility associated with actual services and goods, utility associated with perceived opportunity costs, and utility from affiliation.
In the second article, Stakeholder theory: Reviewing a theory that moves us by Laplume, Sonpar, and Litz, I identified the five themes of stakeholder theory as mentioned earlier. Like the previous article, the authors note that wealth maximization is the central objective of many shareholders in an organization (Laplume, Sonpar, and Litz, 2008).In this case, the incorporation of stakeholder theory is introduced in an attempt to challenge this mindset by introducing the theory’s diverse aspects that require managers to focus attention on a firm’s performance, actions, and responses, as well as stakeholder responses and actions.
The final article, Stakeholder Theory: How they influence business policy, draws attention to the role of stakeholders in influencing business policies within a firm. According to the theory, stakeholders’ ability to influence policymaking is defined by vested interests and power in a firm (Kristen, 2015). In this case, the more power and interest stakeholders show towards an organization, the greater their ability to influence business decisions. Thus, the theory seeks to identify stakeholders as the actual custodians of a company, hence, they play a critical role in policy formulation.
Harrison, J.S. and Wicks, A.C., 2013. Stakeholder theory, value, and firm performance. Business ethics quarterly, 23(1), pp.97-124.
Kristen, J., 2015. Stakeholders Theory-How They Influence The Business Policy. Scholedge International Journal of Business Policy & Governance ISSN 2394-3351, 2(4), pp.14-17.
Laplume, A.O., Sonpar, K. and Litz, R.A., 2008. Stakeholder theory: Reviewing a theory that moves us. Journal of Management, 34(6), pp.1152-1189.
A. PART I – LEARNING LOG 3.9 (500 Words):
In the 1980s, Freeman introduced stakeholder theory, which led to the development of the notion of the response organization and the introduction of the concept of corporate social responsibility (CSR).
You are to conduct a literature search for suitable papers on stakeholder theory:
- Use Google Scholar, or a search engine of your choice, to initially locate papers in this research area.
- Download the papers under (1) from the university Library catalogue or from the Internet (if available), “skim-read” these articles and narrow your search based on any theme or aspect of the research on stakeholder theory that you find interesting.
- Rank the importance of the best three papers that you end up with based on the rating of the journals they are published in from the Association of Business Schools Journal Quality Guide (ABS list). Select only papers from 3 or 4 rated journals on the ABS list.
For the learning log, you are required to provide a brief report of this investigation.
- Explain what steps you took to locate your final selection of papers. This should include the keywords you employed to narrow the list down and your objectives at each stage.
Provide a high level, summary of what you discovered from your search.
- Consider what the literature search revealed about stakeholder theory and what you learnt from the process of the search.
This activity requires creating a brief summary of the articles, but high marks will be awarded for:
- Analysis, critiquing, and synthesis.
- As a learning activity, what have you learnt about the process of doing a literature review.