STAKEHOLDER_THEORY_

STAKEHOLDER THEORY: ISSUES TO RESOLVE

Emerson Wagner Mainardes (corresponding author)

University of Beira Interior (UBI) – Management and Economics Department – NECE –

Center for Studies in Management Science

E-mail adress: @; emainardes@

Helena Alves

University of Beira Interior (UBI) – Management and Economics Department – NECE –

Center for Studies in Management Science

E-mail adress: halves@

Mario Raposo

University of Beira Interior (UBI) – Management and Economics Department – NECE –

Center for Studies in Management Science

E-mail adress: mraposo@

Abstract

Purpose: The objective of this article is to collate and debate the main issues driving the

Stakeholder Theory academic debate.

Design/methodology/approach: First, a discussion of the stakeholder concept is set out

before moving onto the history and nature of Stakeholder Theory. The work proceeds with an

attempt to systematically bring together the points of divergence among researchers interested

in Stakeholder Theory and finally, there is a brief discussion of these theoretical loopholes in

conjunction with a proposed research agenda for the field.

Findings: Based upon the unification of the theoretically problematic issues, research agendas

are put forward with the objective of clarifying doubts and resolving the controversies

ongoing among academics. As regards the formulation of Stakeholders Theory, one question

requiring resolution is that of the stakeholder concept itself. Additionally, further research

should focus on the boundaries as to what constitutes a stakeholder group as well as defining

the criteria for attributing individual membership of one or another group. In practical

theoretical application, it is correspondingly necessary to target research on aspects such as

conflicts of interest between stakeholders and management difficulties in coping with

multiple objectives. Finally, there is a need for research that systematizes the knowledge

produced with the objective of attaining the theoretical convergence necessary for the

development of Stakeholder Theory.

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Originality/value: The main contribution of this article derives from the systematization of

the various shortcomings that need overcoming within the framework of Stakeholder Theory

and the identification of research agendas.

Keywords: Stakeholders; Stakeholder Theory; Stakeholder Concept; Normative Stakeholder

Theorizing; Analytical Stakeholder Theorizing; Criticism of Stakeholder Theory.

Paper type: Literature review

1. Introduction

Stakeholder Theory was put forward by Freeman (1984) as a proposal for the strategic

management of organizations in the late 20th century. Over time, this Theory has gained in

importance with key works by Clarkson (1994, 1995), Donaldson and Preston (1995),

Mitchell, Agle and Wood (1997), Rowley (1997) and Frooman (1999) enabling both greater

theoretical depth and development. From an initially strategic perspective, the Theory evolved

and was adopted as a means of management by many market based organizations.

Stakeholder Theory, given it remains a relatively recent addition to the management

field, has not been fully developed. According to Fassin (2008), the success of Stakeholder

Theory, both in management literature and in business practice, is due in large part to the

simplicity inherent to the model. However, over the years, some academics have criticized the

vagueness and ambiguity of this Theory. The stakeholder model, backed as it is by its

simplicity and clear visual presentation, has stirred debates in academic literature.

Indeed, very few management themes have generated as many published works in

recent decades as the underlying concept, the model and theories around stakeholders

(Donaldson and Preston, 1995, Gibson, 2000, Wolfe and Putler, 2002, Friedman and Miles,

2006). One of the most salient characteristics of this Theory is the diversity in the points of

view that have been expressed within its scope. Correspondingly, there is a low level of

theoretical integration whether in terms of the normative, instrumental or descriptive

dimensions as well as within the actual dimensions themselves (Lépineux, 2005).

Hence, the objective of this article is to bring together and discuss some of the

questions driving Stakeholder Theory academic debate. This research was motivated by the

sheer relevance of the Theory to various different areas, especially strategic management,

marketing, corporative governance, corporate social responsibility, business ethics, public

management, among others.

Similarly, the main contribution of this article derives primarily from the

systematization of some of the shortcomings that need overcoming within the framework of

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Stakeholder Theory. Based upon this unification of the theoretically problematic issues, we

then set out research agendas aiming to clarify the doubts and resolve the controversies that

have been ongoing among academics.

In order to achieve this objective, this paper is structured as follows: firstly, there is

discussion of the stakeholder concept before moving onto the history and nature of

Stakeholder Theory and presenting the three approaches that explain the Theory, the

normative, instrumental and descriptive approaches. The next stage attempts to systematically

bring together the points of divergence among researchers interested in Stakeholder Theory

and finally, there is a brief discussion of these theoretical loopholes in conjunction with a

suggested research agenda for the field.

2. The Stakeholder Concept

The origin of the stakeholder concept lies in the business science literature (Freeman,

1984), and may be traced back even as far as Adam Smith and his “The Theory of Moral

Sentiments”. Its modern utilization in management literature was brought about by the

Stanford Research Institute that introduced the term in 1963 so as to generalize and expand

the notion of the shareholder as the only group that management needed to be sensitive

towards (Jongbloed, Enders and Salerno, 2008). Within this perspective, Freeman (1984)

argued that business organizations should be concerned about the interests of other

stakeholders when taking strategic decisions.

Although a relatively longstanding term, the development of Stakeholder Theory was

set in motion by the work of Freeman (1984). The objective of his work was to delineate an

alternative form of strategic management as a response to rising competitiveness,

globalization and the growing complexity of company operations. As time went by, the

stakeholder concept has taken on greater importance due to public interest, greater coverage

by the media, concerns about corporative governance and its adoption as a policy within the

scope of the Third Way (Hutton, 1999, Greenwood, 2008).

Meanwhile, in accordance with Friedman and Miles (2006), the term stakeholder has

been deployed indiscriminately in the last two decades. The term is highly popular with

businesses, governments, non-governmental organizations and even with the media. Despite

this widespread usage, many who adopt the term neither define the concept nor provide any

particularly clear understanding of what they mean as regards what a stakeholder actually is.

Even in academic circles, countless definitions of stakeholder have been put forward without

any of those suggested ever gaining consensus and hence there is no single, definitive and

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generally accepted definition for stakeholder. The works of Bryson (2004), Buchholz and

Rosenthal (2005), Pesqueux and Damak-Ayadi (2005), Friedman and Miles (2006) and Beach

(2008) amount to a total of 66 different concepts for the term stakeholder.

Although each researcher defines the concept differently, they do as a rule reflect the

same principle to a greater or lesser extent: the company should take into consideration the

needs, interests and influences of peoples and groups who either impact on or may be

impacted by its policies and operations (Frederick, Post and St. Davis, 1992). Hence,

according to Clarkson (1995), the stakeholder concept contains three fundamental factors: the

organization, the other actors and the nature of the company-actor relationships.

However, Mitchell, Agle and Wood (1997) propose that these concepts represent

phenomena in themselves, including: the relationship between the company and the

stakeholders (as in Freeman, 1994), the position of the stakeholder towards the company (for

example, Starik, 1994), the company as dependent upon stakeholders (see Freeman and Reed,

1983), the stakeholder wielding power over the company (according to Brenner, 1995), the

stakeholder as dependent on the company (as is the case in Langtry, 1994), the company as

holding power over the stakeholder (see Carroll, 1993), the company and stakeholder as

mutually dependent (for example, Wicks, Gilbert Jr. and Freeman, 1994), the company and

the stakeholder as engaged in contractual relations (as in Hill and Jones, 1992), the

stakeholder as holding a right on the company (see Evan and Freeman, 1988), the stakeholder

as running some kind of risk (see Clarkson, 1994), the stakeholder as having a moral right

over the company (according to Carroll, 1989), or the stakeholder as having an interest in the

company (see Clarkson, 1995). In summary, whether broader or more restrictive, these are

understandings of the stakeholder concept as connected to organizations and which, according

to Mitchell, Agle and Wood (1997), may guide the actions of a specific organization.

However, despite the countless definitions and differing emphasizes, which may result

in distorted conceptual interpretations (Friedman and Miles, 2006), a large majority of studies

adopt the definition idealized by Freeman (1984) that individuals or groups may influence or

be influenced by the scope of organizational objectives. Within this concept, a person, an

informal group, an organization or an institution may all be stakeholders. Mitchell, Agle and

Wood (1997) state that the Freeman (1984) definition is so broad that it opens up an infinite

scope for stakeholders as even climatic factors may play this role. Hence, there is a need to

establish limits to the extent of stakeholders. To this end, Freeman and Evan (1990) reduce

the organizational environment to a multilateral agreement between an organization and its

stakeholders.

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3. History and Nature of Stakeholder Theory

The origins of Stakeholder Theory draw on four key academic fields: sociology,

economics, politics and ethics, and especially the literature on Corporate Planning, Systems

Theory, Corporate Social Responsibility and Organizational Theory. Freeman (1984), over

the course of his work entitled Strategic Management: a Stakeholder Approach, generally

accepted as launching the Stakeholder Theory concepts, defines how stakeholders with

similar interests or rights form a group. What Freeman (1984) was seeking to explain was the

relationship between the company and its external environment and its behavior within this

environment. The author set out his model as if a chart in which the company is positioned at

the centre and is involved with stakeholders connected with the company.

In this model, the company-stakeholder relationships are dyadic and mutually

independent (Frooman, 1999). According to Fassin (2009), the model proposed by Freeman

(1984) may have been inspired by a tool drawn from sociology, the sociogram, which

visualizes the frequency of interactions between individuals or groups. The model design was

influenced by the traditional capitalist organizational production model in which the company

is related only to four groups: the suppliers, employees and shareholders supplying the basic

resources that the company transforms into products or services for the fourth group, that is,

the clients. Nevertheless, Freeman (1984) also added other groups influenced by company

activities and saw the organization as the centre of a series of interdependent relationships

(Crane and Matten, 2004).

The ideas of Freeman (1984), which culminated in Stakeholder Theory, emerged out

of an organizational context in which the company was perceived as not being self-sufficient

and actually dependent on the external environment made up of groups external to the

organization, as Pfeffer and Salancik (1978) had earlier observed. These were the external

groups that Freeman (1984) termed stakeholders. This situation was later handled by Frooman

(1999) as resource dependency.

According to Jones and Wicks (1999) and Savage, Dunkin and Ford (2004), the basic

premises of Stakeholder Theory are:

• the organization enters into relationships with many groups that influence or are

influenced by the company, stakeholders in accordance with Freeman’s (1984)

terminology,

• the Theory focuses on the nature of these relationships in terms of processes and results

for the company and for stakeholders,

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• the interests of all legitimate stakeholder are of intrinsic value and it is assumed that there

is no single prevailing set of interests as Clarkson (1995) and Donaldson and Preston

(1995) pointed out,

• the Theory focuses upon management decision making,

• the Theory explains how stakeholders try and influence organizational decision making

processes so as to be consistent with their needs and priorities,

• as regards organizations, these should attempt to understand and balance the interests of

the various participants.

Taking these premises into consideration, and according to Clarkson (1995),

Donaldson and Preston (1995), Rowley (1997), Scott and Lane (2000) and Baldwin (2002),

the concept of stakeholder management was developed so that organizations could recognize,

analyze and examine the characteristics of individuals or groups influencing or being

influenced by organizational behavior. Thus, management is carried out over three levels: the

identification of stakeholders, the development of processes identifying and interpreting their

needs and interests and the construction of relationships with the entire process structured

around the organization’s respective objectives. On the other hand, stakeholders define their

expectations, experience the effects of the relational experience with the organization,

evaluate the results obtained and act in accordance with these evaluations, strengthening or

otherwise their ties with the company (Polonsky, 1996, Post, Preston and Sachs, 2002,

Neville, Bell and Mengüç, 2005).

While Freeman (1984) limited his own intentions to providing an approach to the

subject, generalizing and testing the taking of strategic management decisions, Stakeholder

Theory earned its wings, both among academics and among practitioners, as a new Theory of

the Firm (Key, 1999). Within this framework, stakeholder literature breaks down into two

main branches: one strategic and one moral (Goodpaster, 1991, Frooman, 1999). The strategic

literature emphasizes the active management of stakeholder interests while literature in the

moral field is primarily interested in a balance between stakeholder interests.

Freeman and McVea (2001) clarified how Stakeholder Theory was originally

developed within a framework of four distinct lines of organizational management research,

as demonstrated by Freeman (1984): Strategic Organizational Planning, Systems Theory,

Corporate Social Responsibility and Organizational Theory:

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• within the Strategic Organizational Planning line, the concept is that successful strategies

correspond to the integration of all stakeholder interests (contrary to the maximization of

one group’s position to the detriment of others),

• both Systems Theory and Organizational Theory focus upon the idea that organizations

are open systems that interact with diverse third parties and thus it is necessary to set out

collective strategies that perfect the system as a whole beyond the actual recognition of all

the relationships on which companies depend for their own survival,

• Corporate Social Responsibility is not considered a formalized theoretical group but rather

a series of business case studies and empirical analyses seeking to demonstrate the

importance of building up strong and trustworthy relationships and maintaining a good

reputation with all groups external to the organization for its ongoing success.

Within the broad context of this Theory, it may be stated that diverse stakeholder

groups interact with a company. According to Clarkson (1995), these groups may be

subdivided into two: the primary (those with formal or official contractual relationships with

the company, such as clients, suppliers, employees, shareholders, among others), and the

secondary (those without such contracts, such as government authorities or the local

community). In this way, we may configure a company as a set of relationships, explicit or

implicit, across both the internal and external environments. However, with the emergence

and advance of Stakeholder Theory, attention began to be paid to the interests of these distinct

groups of individuals and not only to the shareholders or owners of the company (Argandoña,

1998, Gibson, 2000).

Indeed, history now states it was Freeman (1984) who was the first researcher to

clearly identify the strategic importance of other groups and individuals to the company,

different to the traditional groups of clients, suppliers, employees and shareholders. In fact, he

saw these groups as highly disparate, such as local community, environmentalist and

consumer defense organizations as well as government authorities, special interest groups and

with even competitors and the media as legitimate stakeholders (Clement, 2005). Given there

were so many stakeholder groups listed by Freeman (1984), over time the need to group them

was encountered within the scope of efforts to reduce managerial complexity. For example,

Gibson (2000) proceeded to group stakeholders into institutional (involving laws,

regulations), economic (actors in the marketplace) and ethical (environment and social

pressure groups) categories. Furthermore, for Lépineux (2005), these became shareholders,

internal stakeholders, operational partners and community.

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However, in accordance with Freeman and Liedtka (1997), Stakeholder Theory was

bound up with an already longstanding tradition that perceived business as an integral part of

society and not as some separate and purely economic institution. Radin (1999) affirmed that

Stakeholder Theory means recognizing that organizations hold responsibilities towards people

and entities beyond their stockholders. Stakeholder Theory draws on analytical mechanisms

from Systems Theory, for example, regarding the interdependence and integration of actors

making up a system and in seeking to explain the interrelationship between them (Campbell,

1997). Hill and Jones (1992) had already utilized Agency Theory, which approaches the

company as the nexus of contracts between stakeholders and managers as if some central

node. This operates as the means to explain how managers bear responsibility for conciliating

divergent interests, taking strategic decisions and allocating strategic resources in whatever

form proves most coherent with the demands of the other stakeholders.

Thus, the Theory of Freeman (1984) came against a scenario of rising awareness as to

the importance of business to society and along with the beginnings of the globalization of

markets and the development of information technologies and means of communication

followed by the later heightening of social pressures applied by governments, trade unions,

political groups and communities in general. Stakeholder Theory arrived in time to explain

and predict how organizations should act by taking into consideration the influences of

stakeholders hitherto left out of the range of analysis, such as the local community and the

media, among others.

Many have already posited that the destiny of Stakeholder Theory is to topple the

dominant paradigm, the economic model of the company (Key, 1999). The aforementioned

Theory seeks to set down attitudes and organizational practices for the company to survive

and prosper (Brenner, 1993). Given this situation, the influence of stakeholders in

organizational strategy requires responses on behalf of the company reflecting the potential

power, whether to threaten or to cooperate, of each stakeholder within a context of mutually

exchanging interests and benefits.

Without doubt, the appearance of Stakeholder Theory proved a counterbalance to the

key actor approach, based upon Agency Theory, in its presentation of a more collectivist

vision of organizations as a social vehicle for human development. Within this framework,

Clarkson (1995) stated that the survival and sustainable profitability of organizations

depended upon their capacity to comply with the economic and social purpose defined as

creating and distributing sufficient wealth or value to ensure that each group of primary

stakeholders continues to be a part of the company’s system. Hence, an organization may be

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seen as a set of interdependent relationships between primary stakeholders, a perspective that

has seen significant research in the field of organizational strategy (Evan and Freeman, 1988,

Hill and Jones, 1992, Kotter and Heskett, 1992, Harrison and St. John, 1994, Donaldson and

Preston, 1995, Jones, 1995, Greenley and Foxall, 1996, Hillman and Keim, 2001).

After the Theory took shape and over time, stakeholders slowly moved in from the

periphery of organizational activities towards a more central position. Andriof et al. (2002)

explains that the stakeholder concept, its involvement and relationship with the organization

is now positioned as characteristic of the most modern companies. In the last two decades,

there has been a perceivable rise in the number of research publications dealing with the

strategy and positioning of stakeholders in organizational decision making (Asher, Mahoney

and Mahoney, 2005). Various studies point to the utilization of Stakeholder Theory for

analyzing the circumstances faced by contemporary organizations (Freeman and Liedtka,

1997, Metcalfe, 1998, Clarke, 2005).

This emphasis may have come about, according to Clement (2005), given the greater

level of pressures on organizations currently facing demands for responses from distinct

groups of stakeholders. As these stakeholders are in constant interaction with the company,

they may provide them with contributions or important resources while each also represents

interests needing to be satisfied. Correspondingly, analyzing who the stakeholders are,

identifying their interests and how they act is fundamental to contemporary organizations and

especially in terms of those stakeholders of greatest importance to organizational survival and

being able to meet their respective needs (Hill and Jones, 1998).

4. Normative Aspects of Stakeholder Theory

As Donaldson and Preston (1995) affirmed, Stakeholder Theory cannot be considered

a single Theory but rather a set of theories for the management of stakeholders. This

theoretical set is divided into three (Friedman and Miles, 2006): the descriptive approach

(which sets out how the organization operates in terms of stakeholder management), the

instrumental approach (which demonstrates how to attain organizational objectives through

stakeholder management), and the normative approach (which defines how businesses should

operate, especially in relation to moral principles). We now take up this third theme.

The normative approach is based upon moral premises about how actors and

organizations should go about their activities. According to Donaldson and Preston (1995),

stakeholder oriented policies are justifiable based upon the supposition that they do hold

legitimate interests in the company activities that should be taken into consideration by

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managers as, from Freeman’s (1998) perspective, stakeholders should not be seen merely as

the means of raising organizational performance. Research within this framework evaluates

relationships in accordance with ethical and philosophic principles. Jones and Wicks (1999)

propose Stakeholder Theory as a normative ethic that should approach which obligations from

the stakeholder model rest upon the management and particularly the level of importance of

obligations attributed to some stakeholders over other stakeholder groups.

Within this perspective, Friedman and Miles (2006) draw an institutional vision of the

organization defined as an arena of competing, and on occasion conflicting, multiple interests.

This social space sees stakeholders acting from different positions of power depending on the

organizational sustainability of negotiations and the specific cooperative solutions agreed

upon.

Some studies have explicitly justified this normative dimension to Stakeholder Theory

(Freeman and McVea, 2001, Hansen, Bode and Moosmayer, 2004) making recourse to legal

arguments, such as property rights (Donaldson and Preston, 1995, Blair, 1998). Others deploy

the Rawlsian construct of a social contract (Freeman and Evan, 1990, Child and Marcoux,

1999, Phillips, 2003). There are, however, also economic arguments that incorporate

relationships of trust (Goodpaster, 1991, Boatright, 1994, Marcoux, 2003) or Agency Theory

(Shankman, 1999) and moral reasoning (Gibson, 2000), such as the equity principle (Phillips,

1997, Metcalfe, 1998), Kantian Theory, the right to be treated as an end (Evan and Freeman,

1988, Bowie, 1999) or through recourse to the concept of the common good (Argandoña,

1998).

According to proponents of business ethics, the normative aspect of Stakeholder

Theory incorporates the following trends: Evan and Freeman (1983) and Bowie (1994)

identify Kantian capitalism, for Phillips (1997) justice, according to Freeman (1994) fair

contracts, while Freeman and Gilbert Jr. (1988) propose personal projects and, in accordance

with Wicks, Gilbert Jr. and Freeman (1994), the feminist approach.

In summary, these theories guide the thinking behind Stakeholder Theory, orienting its

principles towards the application of Theory as a proposed relationship between the company

and its stakeholders within a fair, ethical and morally correct framework (deontological

principles), where interests are not purely economic (utilitarian principles), thereby justifying

both the actions of management as well as the results obtained. The theories cited, according

to Friedman and Miles (2006), act as influential inputs into Stakeholder Theory normative

thinking.

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Therefore, the normative facet to Stakeholder Theory may serve to generalize the

understanding of how organizational behaviors may be shaped and fashioned. In other words,

the efforts of management need to be focused on grasping why the company needs to satisfy

its stakeholders and how to achieve this as well as prescribing values for the undertaking of

normative research projects (Freeman, 1999, Radin, 1999).

Complementarily, McVea and Freeman (2005) propose that stakeholders should be

understood as real, and not abstract, individuals as only thus can managers gain awareness

about the options they take and considering the moral and ethical aspects to each

organizational decision. Stakeholder Theory should focus on the creation of value, decision

making processes and relationships with real individuals. This represents an individualization

of the company-stakeholder relationship.

Many researchers involved in Stakeholder Theory agree that the normative dimension

depends upon the other dimensions (descriptive and instrumental) and these should not be

underestimated. When positing certain types of behavior, it is important to compare the

desirable with the real. Rowley (1997) explained that any understanding of this Theory

requires not only explaining the influences wielded by stakeholders but also how the company

responds to these influences. In addition, Stakeholder Theory needs to describe and predict

how organizations are to operate under diverse and different conditions. More recent revisions

of the normative facet of Stakeholder Theory suggest three categories for stakeholder

participation: moderate, that is dealing with parties with respect, intermediary, thus

incorporating some stakeholder interests into organizational management and demanding,

hence with the full participation of such actors in corporate decision making processes

(Hendry, 2001, Flak, Nordheim and Munkuold, 2008).

5. Analytic Aspects of Stakeholder Theory

The analytical perspective to Stakeholder Theory covers two dimensions: the

descriptive perspective and the instrumental perspective. Both were discussed in the study by

Donaldson and Preston (1995), and later renamed by Reed (2002) as positive and strategic.

Despite this proposal, the original terminology (descriptive and instrumental) has prevailed in

the literature. According to Friedman and Miles (2006), these perspectives should be centered

on the organization, on the organization-stakeholder relationship, or directly on the

stakeholder.

The instrumental perspective, proposed initially by Jones (1995) and later furthered by

Donaldson and Preston (1995), explores how the stakeholder model may be used to attain the

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performance objectives of an organization as a tool to be deployed in strategic decision

making, where certain results derive from enacting certain behaviors (Jones and Wicks,

1999). This relates primarily to the relational management of specific stakeholder groups

(Freeman, 1984). For example, Berman et al. (1999) proposed a strategic stakeholder

management model based on the premise that companies address the concerns of stakeholders

when believing this will boost company financial performance and is hence an instrumental

approach. The instrumental perspective of Stakeholder Theory is based upon organizational

economics, especially Agency Theory, Transaction Cost Theory and Corporate Behavioral

Ethics (Jones, 1995). From Starik’s (1994) perspective, that which became the instrumental

aspect enables organizations to personalize relationships with stakeholders, particularize their

interests and raise managerial awareness of organizational decisions, processes and policies.

Studies adopting the instrumental Theory normally use statistical methodologies and

focus principally upon the relationship between the pressures that stakeholders may apply and

the process by which organizational strategy is formulated (for example, Weaver, Treviño and

Cochran, 1999) and derive from the relationship between financial and social performance (as

with the studies by Cochran and Wood, 1984, Cornell and Shapiro, 1987, McGuine, Sundgren

and Schneeweis, 1988, Barton, Hill and Sundaram, 1989, Preston and Sapienza, 1990,

Preston, Sapienza and Miller, 1991). In general, they explore causes and effects.

As regards the descriptive perspective, this seeks to describe and/or explain

characteristics and organizational behaviors relative to stakeholders. This perspective

discusses issues relating to the nature of the firm, how managers act and what they think

about the strategic components (Donaldson and Preston, 1995). Wood (1994) advocated that

the Descriptive Theory of Stakeholder should extend over two facets: describing the

organizational reality and describing the company-stakeholder relationships. This represents

the difference between inductive and deductive visions. According to this author, of these two

modes, neither is preferred and both approaches make significant contributions towards the

development of Stakeholder Theory as both contain factors important for any understanding

of organizational relationships with stakeholders.

The Descriptive Theory resulted out of the need to describe (and very often explain)

specific characteristics and behaviors, including the nature of firms (Brenner and Cochran,

1991), how managers perceive their companies (Brenner and Molander, 1977), how

organizations are managed (Halal, 1990, Clarkson, 1991, Kreiner and Bhambri, 1991), the

diffusion of social information (Ullman, 1985), the concept of target-stakeholders (Mitchell,

Agle and Wood, 1997), and the meanings attributed to each stakeholder, varying in

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accordance with the phase reached in the respective company life cycle (Jawahar and

McLaughin, 2001). Research carried out under this approach is normally exploratory.

Of these two approaches, the instrumental perspective has received greatest attention

from researchers with its highlighting of stakeholder management as a factor for competitive

advantage and better performance. According to Donaldson and Preston (1995), the

effectiveness of stakeholder management is positively correlated with conventional

performance indicators.

The instrumental aspects of the Donaldson and Preston (1995) model were taken up

especially by Mitchell, Agle and Wood (1997), who researched manager perceptions on

stakeholder characteristics and their relevance, as regards facets such as power, legitimacy

and urgency, given how stakeholder management is of particular importance to business

projects taking place in institutionally demanding environments.

According to Aaltonen, Jaakko and Tuomas (2008), the existing research points to

management paying attention to stakeholders where these are deemed more important in

terms of power, legitimacy and urgency. The question of stakeholder relevance and the extent

to which managers attribute priority to competing stakeholder requests stretches beyond the

issue of stakeholder identification. Thus, it is correspondingly necessary to theoretically grasp

how stakeholder relevance may be able to explain where managers really should be applying

their attentions (Mitchell, Agle and Wood, 1997).

With the objective of resolving this question, a three factor model was put forward

(power, urgency and legitimacy) by Mitchell, Agle and Wood (1997). Entitled Stakeholder

Salience, it was defined according to Friedman and Miles (2006) to bring about stakeholder

powers of negotiation, the legitimacy of relationships with organizations and urgency as

regards meeting the needs present. In the perspective of Mitchell, Agle and Wood (1997),

Stakeholder Salience suggests a dynamic model based on an identification typology enabling

the explicit recognition of the uniqueness of situations and a management perception

explaining how managers should prioritize relationships with stakeholders. The authors

demonstrated how the identification typology enabled forecasts of managerial behavior as

regards each class of stakeholder to be generated as well as predictions as to how stakeholders

change from one class to another and what that actually means to the management. This

model features three advantages: it is political (considering the organization as the result of

conflicting and unequal interests), is operational (qualifying the stakeholders), and is dynamic

(contemplating changes of interests in social space-time).

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The model proposed suggests that the strategic behavior of an organization is subject

to diverse groups located within its environment, given that its strategies should meet the

needs of these groups in accordance with their respective importance. This is defined by the

three factors listed below and which vary depending on the prevailing situation (Mitchell,

Agle and Wood, 1997):

• Power: the ability to make someone do something that would not otherwise have been

done, the power of the stakeholder over the organization may be coercive (strength or

threat), normative (legislative, the media) or utilitarian (holding resources or information),

• Legitimacy: the generalized perception that the actions of an entity are desirable or

appropriate in accordance with the socially constructed context and may be individual,

organizational or social,

• Urgency: the immediate need for action, determining the organizational response time

when receiving requests from stakeholders, should consider time sensitivity (the need for

speed in the organizational response) and the criticality (the importance of the request or

the company relationship with the stakeholder in question), with this factor rendering the

model dynamic.

According to Wartick (1994), power is the most critical dimension to stakeholder

management and hence he recommends great care in recognizing and monitoring

relationships with those stakeholders holding greatest power. After all, one of the basic tenets

of Stakeholder Theory is that stakeholders are not equal with their importance also varying

dependent on the prevailing context and organization. As Evan and Freeman (1983) detailed,

the essence of the company is to manage the interests of different stakeholders and including

changes in expectations and demands.

Mitchell, Agle and Wood (1997) held that the model proposed is dynamic for three

reasons: the three attributes are variable (and neither static nor stationary), the attributes are

socially constructed (and not objective) and not all stakeholders are aware that they possess

one or more attributes. These questions make the Stakeholder Salience model fairly dynamic

and subject to frequent change. Stakeholders may hold only one attribute today and acquire

another one or two attributes tomorrow.

Finally, in addition to the work of Mitchell, Agle and Wood (1997), focusing on

identifying and evaluating the salience of stakeholders, other studies stand out as important

within the instrumental and descriptive perspectives according to Friedman and Miles (2006).

However, it was the work of Mitchell, Agle and Wood (1997) which has proven of greatest

influence to the Stakeholder Theory literature.

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6. The Shortcomings of Stakeholder Theory

Following its original proposition, Stakeholder Theory underwent rapid growth in the

1990s with a lot of research ongoing and its adoption by researchers in the organizational

field. These works looked at a series of facets and expanded the Theory’s popularity among

both academics and management practitioners. Nevertheless, some questions still remain

outstanding. Throughout the first decade of the 21st century, it may be stated that the Theory

was commonly deployed but, on the other hand, in theoretical terms, there was very little

progress and the current reality of Stakeholder Theory demonstrates that little changed in the

last decade. Furthermore, that means a series of shortcomings still need resolution particularly

regarding aspects involving the theoretical formulation in itself, the normative, descriptive

and instrumental approaches, the application of Theory to organizational realities and the

development of the theoretical body of work.

One of the main questions raising discussions around Stakeholder Theory is not

criticism of the Theory in itself but rather targets the content of the term stakeholder, which is

essentially relatively vague (Jones and Wicks, 1999). Clarkson (1994) had earlier observed

that terms such as stakeholders, stakeholder models, stakeholder management and stakeholder

Theory were defined and used in different ways and in different approaches and

correspondingly based on a diverse range of evidence and contradictory arguments, as already

mentioned above in relation to the stakeholder concept.

Another relevant question for Key (1999) is that Freeman (1984) focused on the

technical rather than the theoretical. The presentation of identifiable actors provides a

valuable strategic tool, which was one of his intentions, but he did not provide a theoretical

base appropriate for explaining either the behavior of the company or that of individual actors

whether internal or external. He then correctly asserts that the economic model does not

describe company behavior with any precision and provides no alternative beyond rethinking

the company as an entity converting resources influenced by and influencing both internal and

external actors. According to Key (1999), Stakeholder Theory inadequately explains the

process, makes an incomplete interlinking between the internal and external variables, does

not pay enough attention to the system within which companies operate as well as those levels

of analysis within the system, and also inappropriately evaluates the environment. While in

the perspective of Voss, Voss and Moorman (2005), Stakeholder Theory does not respond to

the needs or demands of stakeholders given these are dynamic, latent or difficult to discern.

15

As regards the original proposal, the questions left open and the suggestions for

refinements cover some ground. One question discussed within Stakeholder Theory is that

Freeman (1984) put forward a new framework nevertheless lacking any logic of development

or the causality that would serve to connect the variables and does not provide any form of

testing or predicting the behavior of either the company or that of external actors. The first

steps to identify this logic were the work of Donaldson and Dunfee (1994) and Jones (1995).

They proposed Social Contract Theory as at the core of relationships with stakeholders

similar to the logic explaining the relationship between managers and shareholders within the

scope of economics even if there has been little subsequent development to the work of the

aforementioned authors.

Furthermore, Freeman (1984) included an incomplete connection between actors and

between internalities and externalities. Despite failing to identify the internal and external

interest groups, simply left incomplete, he provided for unlimited connections between these

groups and individual actors. To this end, an actor may be a member of a variety of groups,

hence, an employee may be a member of internal interest groups, shareholders and

employees, and external stakeholder groups, such as professional and consumer

organizations, environmental activist associations, parent or other community action entities

(Hsueh, Lin and Li, 2010, Wegner, Lee and Weiler, 2010). To try and resolve this, Rowley

(1997) suggested stakeholder networks. Freeman also describes relationships as if some kind

of network suggesting an even still greater complexity (Rowley, 1998). However, there has

been no empirical evaluation of this.

Within this line, the Freeman (1984) model suggests that stakeholder groups may be

clearly identified as separate entities, which would lead to a loss of complexity in their real

relationships (Rowley, 1997). It may be the case that stakeholder groups cannot be clearly

identified but the interests represented by the groups (internal versus external) are susceptible

to due identification (Connelly, 2010, Mas-Verdú, Soriano and Dobón, 2010). Hence, the

interests may prove to be the critical variable and not the interested parties in themselves.

Donaldson and Preston (1995) have argued in favor of stakeholders being identified by their

interests although this position has not gained any consensus in the literature.

Another question posed by Key (1999) refers to the fact that Stakeholder Theory

incorrectly approaches the environment as something static, focused upon the company and

made up only of stakeholder groups. Considering that the system and processes sustaining the

system are not totally overcome, the company image at any specific time is fixed. Therefore,

the element of change that takes place over time is not explainable through recourse to

16

Freeman’s (1984) model with very few propositions for the resolution of this problem having

been put forward thus far. While part of the strategic management approach set out by this

author includes evaluating the environment for the identification of stakeholder groups, there

is no provision for understanding how to manage change. Curiously, the work of Freeman

(1984) is based on his own evaluation of climate change and how this impacted upon the

company to such an extent that it became necessary to respond to groups other than

shareholders. One contribution towards this thinking was made by Rowley (1998), who used

network analysis so as to evaluate the environmental influence on the relationship between a

company and its stakeholders.

From another line of rationale, more philosophic, Antonacopoulou and Méric (2005)

concluded that Stakeholder Theory is more of an ideological product than something

scientific. They considered that the Theory in question is based upon psychology and

socialization and preaches more moral behavior to market organizations as a counterbalance

to capitalism and the financial and economic objectives of firms. They point to the lack of

scientific thoroughness in the propositions set out by Stakeholder Theory researchers. Much

of the Theory is presented in very utilitarian terms, trusting in Kantian ideas and attributing

intrinsic value to the stakeholder (Martin, Picazo and Navarro, 2010). The Theory lacks the

production of knowledge able to explain the complex and multi-faceted social relationships

between the company and its stakeholders (Meliá, Pérez and Dobón, 2010, Un and Montoro-Sanchez, 2010).

Within the same context, Stoney and Winstanley (2001) label Stakeholder Theory as

in fact being a political pluralism Theory. Adopting Marxist criticism of pluralism, these

authors argue that this Theory supplies an excessively simplistic conceptualization of power

as a good that may be negotiated between the organization and the groups of stakeholder and,

therefore, very limited in its explanation of the means by which different stakeholder group

interests emerge and are generated by society. Without the capacity to distinguish between the

divergent organizational stakeholder interests, Stakeholder Theory may easily be subverted to

a unitary concept (Bonet, Peris-Ortiz and Gil-Pechuan, 2010, Comeche and Loras, 2010).

Stieb (2009) complemented this in affirming that the pretensions of stakeholder

theorists as to their Theory evolving to replace capitalist theories were unfounded. It is simply

not possible to create value for all stakeholders in any equalitarian fashion (distributive

justice). This author holds that Stakeholder Theory has not proven a solution for the economic

ills afflicting society. Given this, and taking into consideration the positions of Stoney and

Winstanley (2001), Antonacopoulou and Méric (2005), Stieb (2009) and Sanyang and Huang

17

(2010), we may thus perceive of the need to define Stakeholder Theory within the field of

organizational management and avoid the Theory spilling over into other fields such as

philosophy, sociology and psychology.

These critical questions, involving philosophical and theoretical points of view, were

closely analyzed and broadly commented upon in the scientific literature (Donaldson and

Dunfee, 1994, Donaldson and Preston, 1995, Weiss, 1995, Sternberg, 1996, Key, 1999,

Moore, 1999, Gibson, 2000, Kaler, 2003, Fassin, 2008, Rubalcaba, Gallego and Hertog,

2010). There have also been attempts to integrate the Theory into research from different

areas so as to advance the state of Stakeholder Theory (Jawahar and McLaughlin, 2001,

Andriof et al., 2002, Venkataraman, 2002; Koelling, Neyer and Moeslein, 2010, Sebora and

Theerapatvong, 2010). Nevertheless, there remains much work still to be done.

According to Fassin (2009), a juridical interpretation, strengthening the philosophical

input, based upon rights and contracts means stakeholders have demands and companies have

obligations and duties. On the other hand, the managerial approach, stemming from

Organizational Theory and sociology, is more pragmatic and emphasizes the relational

aspects between interested parties and the company. These two opposing visions of the

stakeholder concept reflect totally different questions. This mixture, in constant evolution,

overlapping and combining utilizations of both definitions (Kaler, 2003), has boosted the

perception of uncertainty surrounding the model and demanding theoreticians take up their

positions as regards which problem they aim to resolve.

Specifically from the instrumental perspective, according to Sternberg (1999), the

meaning and applicability of the stakeholder doctrine depends on what is involved in

balancing out the benefits generated. Nevertheless, this idea has also come in for critical

analysis. Firstly, Stakeholder Theory does not provide any orientation as regards how to

benefit all parties equally and justly. Were all stakeholders able to affect or be affected by the

organization, the number of groups whose benefits were to be included in the calculation

would be infinite. For any balance to be reached, the number or type of stakeholder would

have to be restricted in some way or another (Ramírez, Orejuela and Vargas, 2010, Tihula and

Huovinen, 2010). However, Stakeholder Theory at this stage does not provide any orientation

as to the way in which stakeholder groups should be selected or defined.

Remaining with instrumental issues, the stakeholder model structure visually

illustrates the relationships between the different groups of actors surrounding a company.

However, it is necessary to be aware that all representations, models and layouts are social

constructions that inevitably simplify and reduce reality. This observation naturally holds

18

valid for Stakeholder Theory (Pesqueux and Damak-Ayadi, 2005) as well. The recent

literature on the theme puts forward an impressive range of perfections and improvements but

there still lacks a clarification and thorough definition of the model’s nature (Jones and

Wicks, 1999, Lépineux, 2005).

Also questioning the model, Carroll and Buchholz (2006) highlight the reciprocal

interaction between stakeholders and society. The stakeholder model graphically represents

the relationship between the stakeholders and the company by means of a bi-directional

arrow. These arrows depict not only a relationship but also express dependence and

reciprocity (Tortosa-Edo, Sánchez-Garcia and Moliner-Tena, 2010). The relationships

between them are reciprocal given that each may impact on the other in terms of losses and

gains as well as rights and duties (Evan and Freeman, 1988). However, not all relationships

are equal: the intensity of interaction in each direction might be quite different depending on

the power and the sensitivity to influence (Post, Preston and Sachs, 2002, Phillips, 2003). The

intensity may be seen as a point on a continuum and this may be expressed in different arrow

widths, as in a sociogram, with possible width differences in either direction, a solution

uncommon to studies on Stakeholder Theory.

Complementarily and as already observed, one interpretation of Stakeholder Theory

incorrectly perceives that a company should take into account the aspirations of all

participants and that they should all be treated equally, independent of the fact that some

clearly contribute more than others to the organization (Gioia, 1999, Marcoux, 2003, Phillips,

2004; Tortosa-Edo, Sánchez-Garcia and Moliner-Tena, 2010). However, the management of

stakeholders does not imply that executives have to focus equal quantities of attention on each

of their components (Dentchev and Heene, 2003; Chamberlin, Doutriaux and Hector, 2010,

Devlin, 2010). In the stakeholder categories, the level of attention and obligation may vary

(Mitchell, Agle and Wood, 1997, Phillips, 2003, Neville, Bell and Whitwell, 2004). However,

the original graphical representation of the stakeholder model may be at the root of this

erroneous interpretation of equality among all stakeholders given how, for reasons of

simplicity and clarity, each stakeholder category is attributed a symbol (oval or rectangular)

of identical size. Perhaps, to better reflect reality, symbols of different sizes, shapes and

intensities are needed in accordance with the relative importance of the respective participant

categories (Fassin, 2008). These examples do demonstrate that the literature requires a new

and more robust model.

In addition to questioning of the model, the application and usage of Stakeholder

Theory also raises doubts. For example, Jensen (2002) calls into question the Theory relating

19

to two aspects: the non-specific Theory on how managers should handle conflictual interests,

with a lack of objective criteria for decision making and performance evaluation, and the

impossibility of an organization attaining success when chasing multiple objectives as

inherently attempting to achieve many objectives simultaneously corresponds to having no

overall objective. Companies adopting Stakeholder Theory, in general, experience managerial

confusion, conflict, inefficiencies and even a weakening of the corporation (Abreu et al.,

2010, Martinez-Gomez, Baviera-Puig and Mas-Verdú, 2010).

Taking a similar line, Dufrene and Wong (1996) question the validity of Stakeholder

Theory for its failure to provide clear management objectives. Baggio and Cooper (2010)

maintain that stakeholder interests are frequently mutually incompatible, a fact necessarily

preventing any clear decision by the management. This same position was used by Stieb

(2009) who criticized the power sharing defended by Freeman (2002, 2008). The author

questioned just how you might face suppliers, the local community and clients as

management and in control of the organization? This would seem, at the minimum, unviable.

Another doubt as to the practical application of Stakeholder Theory was posed by the

work of Sundaram and Inpken (2004). These authors defend the purpose of the company

being the maximization of shareholder value. Hence, they criticize studies calling for the

needs of multiple stakeholders to be met with the objective of gaining competitive advantages

as is the case, for example, with the works by Jones (1995), Donaldson and Preston (1995),

and Altman (1998) and Mathew (2010). Sundaram and Inpken (2004) emphasized that the

relationship between stakeholders and company performance is either refutable or

inconclusive in various empirical works with the studies by Griffin and Mahon (1997), Agle,

Mitchell and Sonnenfeld (1999), Berman et al. (1999) identified, among others. Hence, more

research on the relationship between stakeholder management and organizational performance

is clearly needed.

Finally, according to Key (1999), Stakeholder Theory does not meet the requirements

of a Scientific Theory. Treviño and Weaver (1999) stressed that despite progress there has yet

to be any theoretical convergence between the instrumental, descriptive and normative

perspectives even taking into account the efforts of research in this field, such as that of Jones

and Wicks (1999). According to Treviño and Weaver (1999), there is a lack of sufficient

empirical evidence.

Furthermore, as Lépineux (2005) affirmed, Stakeholder Theory is affected by

countless problems and imperfections. In summary, they are: the definition of its object of

study remains controversial, the stakeholder spectrum and its classification is variable, the

20

balancing of their respective interests causes problems, there is a lack of solid normative

foundations, the normative and empirical flows are very commonly separated, the role and the

positioning of civil society as a stakeholder is neither clear nor precise. Considering these

aspects, many authors doubt whether Stakeholder Theory justifies its status as a Theory, a

position taken by Treviño and Weaver (1999) for example.

Considering the questions and issues set out here, it may safely be said that there is

still much to do. Despite being a still relatively recent Theory, it has gained in popularity and

attracted the interest of researchers in countless areas. These criticisms serve only to help in

fostering the development of Stakeholder Theory, over time moving towards the status

representing a new paradigm for the organizational field. According to Friedman and Miles

(2006), any attempt to converge around a justified and consistent Theory remains premature.

There are questions to resolve, such as stakeholder focused decision making processes (which

to choose?), the managerial structure appropriate to focusing on stakeholders, the role of

intermediaries in this relational interaction, the real legitimacy of stakeholders, the means of

relating and interacting between the organization and each of its stakeholders. These are the

questions worthy of the attention of researchers in this field.

7. Conclusion: A Suggested Research Agenda

Out of this analysis of the literature, it may be understood that Stakeholder Theory has

spilled over into different fields. According to Carroll (1994), the Theory holds relevance to

strategic management, marketing, production, financial management, human resource

management, research and development, organizational ethics, corporative governance,

business performance, healthcare management, information technology system management,

among others. Although not the leading Theory in any of these fields, Stakeholder Theory

provides a means of combining ethical questions with complex operational environments and

encapsulating details within a general vision. That is, this is a Theory that proves its relevance

to organizations in general terms, nevertheless, as explained above, further research of an

empirical nature is required, especially descriptive approaches (Friedman and Miles, 2006).

Such empirical and descriptive research would enable the organizational reality to be cross-referenced with the theoretical assumptions. The sheer quantity of shortcomings presented

here suggests that the theoretical approach remains within the domain of supposition with

many of the assumptions underlying Stakeholder Theory never subject to testing, which has

led researchers into raising doubts as to the validity of this theoretical approach, as presented

above.

21

Therefore, it becomes important to seek out solutions (qualitative and quantitative) to

the diverse questions raised by research into Stakeholder Theory. Correspondingly one natural

option involves systematizing issues critical to the Theory and developing a research agenda

that seeks to respond to the aforementioned imperfections.

As regards the formulation of Stakeholder Theory, one question requiring resolution is

that of the stakeholder term itself. The profusion of definitions hinders understanding as to

what the term actually represents. Establishing boundaries to the concept would go a long

way towards resolving a series of issued posed by researchers in this field. Might it prove

feasible that company objectives serve to guide the definition of these boundaries? In

accordance with a unified concept of the stakeholder term, the theoretical approach referred to

here would render conceptual clarity and an enhanced definition, generating important

academic interpretations (and better focused research) and practices (better management

understanding as to who their stakeholders actually are). As a guideline for empirical research

(or for practical applications), prior to embarking on Stakeholder Theory field research,

academics should determine the individuals under analysis understand the term. One of the

problems encountered by researchers in relation to this Theory relates to the different (where

not erroneous) perceptions of the term stakeholder. Staging focus-groups may aid in unifying

understandings as to the concept.

Further research would focus on the boundaries as to what constitutes a group of

stakeholders as well as defining the criteria for attributing individual membership to one or

another group. This definition should justify the logic binding the variables in addition to

clarifying the criteria adopted for choosing one or another stakeholder as the main beneficiary

of a specific organizational action in contrast to conceiving as to how to benefit all equally,

which does not, after all, seem a feasible objective. Clearly defining what makes up a

stakeholder group may focus not only academic research but also its deployment within the

business environment. In this case, the proposal put forward by Rowley (1997) emerges as the

most logical with its interest based stakeholder groups rather than definitions around

individuals. For example, a specific individual might simultaneously be an organizational

client and supplier. The person remains the same even where his/her interests differ. Thus, in

practice, from the organizational perspective, stakeholder groups are collective individual

interests and not specifically the individuals themselves.

A more critical aspect of Stakeholder Theory is its theoretical mixture. This clearly

demonstrates the lack of demarcation to its theoretical borders and which results in the Theory

being misrepresented as a technique or even as a support tool for other theories. Thus,

22

researching and determining the actual extent of Stakeholder Theory, particularly in taking

this approach as an organizational Theory rather than as an ideological or political concept,

might result in an important contribution for academics and practitioners in this field.

Complementarily, the static conception of the surrounding environment also needs dealing

with. Correspondingly, within the scope of the Theory, dynamism needs to be introduced into

this external environment. Hence, Stakeholder Theory needs defining as a Theory and not as

some aggregation of suppositions with diverse connotations. Thus, descriptive research may

prove able to ascertain the scope of the Theory.

As regards the instrumental question, the main utilization of Stakeholder Theory by

management professionals, new models need proposing and that are capable of answering the

various challenges set out by Carroll and Buchholz (2006), and Fassin (2008, 2009), among

others. Despite the discussions regarding the graphical representation of Stakeholder Theory,

there is a shortage of proposed models dealing with aspects such as stakeholder homogeneity,

their respective independence, among other criticisms set out above. Some proposals are

already to be found in the literature (Fassin, 2008, 2009), nevertheless, they have yet to stake

their claim as the most robust Stakeholder Theory model. After all, they have yet to be subject

to empirical testing. Furthermore, model focused research may also open up avenues for the

resolution of many other critical theoretical issues, especially through the empirical testing of

new models. Any new Stakeholder Theory model would certainly bring progress towards

resolving some of the weaknesses set out here, especially should such a model derive from a

unified definition of the stakeholder conceptual. Furthermore, the main facet to the company

and each of its stakeholders would appear to be the mutual influence ongoing between the

parties. This factor might yet prove the foundations for a new model.

For practical theoretical applications, research, especially descriptive analysis, needs

to focus on aspects such as the ongoing relationships, conflicts of interest between

stakeholders and management difficulties in coping with multiple objectives (decision

making, structures, intermediaries, etcetera). Research into how differing actors, when

belonging to different groups, reconcile their interests (which may be divergent) is essential.

Furthermore, as it is highly difficult to deal with everyone, we clearly need recommendations

on how to attribute relevance to stakeholders, as is the case with the Stakeholder Salience

model (Mitchell, Agle and Wood, 1997), thereby contributing to the practical application of

this Theory despite the long standing lack of thorough empirical testing. It is perfectly

feasible that the model proves to have little practical utility. Indeed, measuring power,

legitimacy and urgency represents a challenging task and subject to doubts, as proven by

23

Agle, Mitchell and Sonnenfeld (1999) in their application of the Stakeholder Salience model

where the results obtained registered divergences between the theoretical model and the

organizational reality. In addition, more studies are necessary on how to relate good

stakeholder management to organizational performance. Perhaps the most effective

theoretical application might actually be in public or non-profit organizations rather than the

private sector (Beach, 2009).

Finally, the need for research that systematizes the knowledge produced should be

highlighted with the objective of attaining the theoretical convergence necessary for the

development of Stakeholder Theory. There is clearly a very significant body of work across a

range of areas but they have not yet been gathered and collectively analyzed in order to

extract the conclusions and adjustments necessary for delimitating and advancing the Theory.

In summary, it is necessary to attain consistency within the normative Stakeholder

Theory perspective, overcoming its still incipient phase of development in terms of its

descriptive capacities while validating and broadening the descriptive base supporting the

normative perspective. This holds particular relevance given the descriptive perspective may

drive changes in the actual normative perspective itself. However, there is much road ahead of

us. We particularly need to focus efforts on definitively establishing the foundations of

Stakeholder Theory, which does nevertheless prove a theoretically relevant approach both in

organizational and in social terms.

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31

STAKEHOLDER THEORY: ISSUES TO RESOLVE

Authors

Author 1:

Full name: Emerson Wagner Mainardes*

Affiliation: University of Beira Interior (UBI) – Management and Economics Department –

NECE – Center for Studies in Management Science

E-mail adress: @; emainardes@

Full international contact details: Loteamento Ribeira de Flandres, lote 16, R/C dto, 6200-802

Covilhã, Portugal; Phone. + 351.275.334.404

Brief professional biography: Emerson Wagner Mainardes is Ph.D. student at the University

of Beira Interior (UBI), Covilhã, Portugal. His academic background includes a Master’s

degree in Management, specialization in Educational Management (FURB, 2007), and degree

in Electrical Engineering. He is a teacher and researcher in Management. He is a research

fellow in NECE – “Núcleo de Estudos em Ciências Empresariais”. Expertise: Educational

Management and Services Marketing.

* Corresponding author.

Author 2:

Full name: Helena Alves

Affiliation: University of Beira Interior (UBI) – Management and Economics Department –

NECE – Center for Studies in Management Science

E-mail adress: halves@

Full international contact details: Estrada do Sineiro, Pólo IV, 6200-209 Covilhã, Portugal;

Phone. +351.275.319.600 – Fax. +351.275.319.601

Brief professional biography: Helena Alves is Assistant Professor in the University of Beira

Interior, Portugal. She has a PhD in Management and she has been doing research in the area

of Educational Marketing. She has published some articles on this topic in The Service

Industries Journal, Total Quality Management and International Review on Public and Non

Profit Marketing. She is Managing Editor of the International Review on Public and Non

Profit Marketing. Expertise: Educational Marketing, Services Marketing and Relationship

Marketing.

Author 3:

Full name: Mario Raposo

Affiliation: University of Beira Interior (UBI) – Management and Economics Department –

NECE – Center for Studies in Management Science

E-mail adress: mraposo@

Full international contact details: Estrada do Sineiro, Pólo IV, 6200-209 Covilhã, Portugal;

Phone. +351.275.319.600 – Fax. +351.275.319.601

Brief professional biography: Mário Raposo is PhD in Management, Full Professor at

Management and Economic Department at University of Beira Interior, Scientific coordinator

of Research Unit in Business Science and of the PhD Programme in Marketing and Strategy.

He teaches subjects in the area of Marketing, Strategy and Entrepreneurship. In the recent past

was vice-rector of the University and head of the Liaison Office. Had been the chairman of

international conferences and had coordinate studies with significant impact. Have several

papers published, as author or co-author, in several international journals and belongs to

editorial boards. Now is Portugal vice-president of the ECSB - European Council of Small

Business.

Support

This research was supported by the Portuguese Science Foundation through NECE – Núcleo

de Investigação em Ciências Empresariais (Programa de Financiamento Plurianual das

Unidades de I&D da FCT - Fundação para a Ciência e Tecnologia, Ministério da Ciência,

Tecnologia e Ensino Superior/Portugal)