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    Stakeholder Theory - Presentation

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    Muhammad Khurram Shabbir
    Stakeholder theory proposes that organizations should consider the interests of all stakeholders, not just shareholders. Stakeholders are individuals or groups affected by or able to affect the organization, and can be internal like employees, or external like suppliers and community members. The theory takes a descriptive view of balancing stakeholder needs, an instrumental view that considering stakeholders leads to success, and a normative view that stakeholders have legitimate interests in the organization. Managers should identify important stakeholders, establish relationships with them, and decide how much authority to give them in decisions.

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    Stakeholder Theory - Presentation

    Uploaded by

    Muhammad Khurram Shabbir
    473 views12 pages
    Stakeholder theory proposes that organizations should consider the interests of all stakeholders, not just shareholders. Stakeholders are individuals or groups affected by or able to affect the organization, and can be internal like employees, or external like suppliers and community members. The theory takes a descriptive view of balancing stakeholder needs, an instrumental view that considering stakeholders leads to success, and a normative view that stakeholders have legitimate interests in the organization. Managers should identify important stakeholders, establish relationships with them, and decide how much authority to give them in decisions.

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    Stakeholder theory proposes that organizations should consider the interests of all stakeholders, not just shareholders. Stakeholders are individuals or groups affected by or able to affect the organization, and can be internal like employees, or external like suppliers and community members. The theory takes a descriptive view of balancing stakeholder needs, an instrumental view that considering stakeholders leads to success, and a normative view that stakeholders have legitimate interests in the organization. Managers should identify important stakeholders, establish relationships with them, and decide how much authority to give them in decisions.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    473 views12 pages

    Stakeholder Theory - Presentation

    Uploaded by

    Muhammad Khurram Shabbir
    Stakeholder theory proposes that organizations should consider the interests of all stakeholders, not just shareholders. Stakeholders are individuals or groups affected by or able to affect the organization, and can be internal like employees, or external like suppliers and community members. The theory takes a descriptive view of balancing stakeholder needs, an instrumental view that considering stakeholders leads to success, and a normative view that stakeholders have legitimate interests in the organization. Managers should identify important stakeholders, establish relationships with them, and decide how much authority to give them in decisions.

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    © All Rights Reserved
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    Download as pptx, pdf, or txt
    of 12

    STAKEHOLDER THEORY

    - JEFFREY A. MILES

    Presentation by:
    Muhammad Khurram
    STAKEHOLDERS
    DEFINITION:

    Stakeholders are individuals or groups who can affect, or are


    affected by, the actions and results of an organization
    (Freeman,1984).

    .
    Main ideas in stakeholder theory

     Organizations should also focus on their social performance.

     The needs of all stakeholders in the organization should also be


    understood and met.

     Involving stakeholders in corporate decisions is considered an


    ethical requirement and a strategic resource.
    Sirgy (2002) developed a list of three categories of
    stakeholders:

     Internal:
    Include employees, executive staff, firm departments, and the
    board of directors.

     External:
    Include shareholders, suppliers, creditors, the local community
    and the environment.

     Distal:
    Include rival firms, consumer and advocacy groups, government
    agencies, voters and labor unions.
    A central idea of stakeholder theory

     Some corporate decision-making power and benefits should


    be taken away from the shareholders and given to the
    stakeholders (Stieb, 2008).
    Stakeholder theory can be categorized from three
    points of view:

     Descriptive perspective:
    This involves balancing the needs of organizations with the needs
    of stakeholders.

     Instrumental perspective:
    Firms that consider their stakeholders’ interests will be more
    successful than those that do not.

     Normative perspective:
    stakeholders are individuals or groups who have legitimate
    interests in substantive aspects of the firm
    Stakeholder integration
    Research also has focused on aspects of stakeholder
    integration:
     Such as knowledge of stakeholders and their demands

     Interaction among stakeholders and the firm

     Making decisions that account for stakeholders’ demands

     Uncovering salient stakeholders and prioritizing their


    demands
    Criticism of the Theory
     It has not been operationalized in such a way that it allows
    scientific inspection (Key, 1999).

     Shortcoming of the theory is the problem of identifying


    stakeholders (Freeman, 2004).

     Managers may be unable to attend to all stakeholder needs


    Clifton and Amran (2011)

     Critics of the theory have condemned the notion that corporate


    profits must be sacrificed in order to meet various stakeholder
    needs.
    Suggestions for Further Research

     when firms sacrifice too much financially for the sake of


    stakeholder interests.

     How stakeholders assess value created for them by


    organizations.

     How stakeholder interests are subordinated to the firm’s


    interests.

     Conflicts and similarities between stakeholder and shareholder


    interests.
    Implications of the Theory for Managers
     Organizations should strive to meet the needs of both
    shareholders and stakeholders

     Identifying the most important and relevant stakeholders

     Establish a relationship and dialogue with the relevant


    stakeholders

     Decide how much power and authority you want to give to


    your stakeholders
    Conclusion

    Thus, stakeholder theory gives an insight towards the


    understanding of the organization's stakeholders and their
    rights, especially for the organizational managers. Furthermore,
    theory contains the balance between economics and ethics
    issues and produces several advantages.
    THANK YOU!!

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