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Stakeholder Theory

Nigel de Bussy


Subject Economics
Communication Studies » Strategic Communication and PR

DOI: 10.1111/b.9781405131995.2008.x


Extract

Stakeholder theory has provoked controversy for more than 70 years, even though the term “stakeholder” is itself of more recent origin. The theory raises a highly contentious question: in whose interests should a business corporation or other type of organization be run? Opponents stress the primacy of shareholder rights. Supporters claim corporations have wider responsibilities toward a broad range of groups and individuals with a “stake,” whether financial or otherwise, in the operations of the business. In the contemporary world, strategic stakeholder communication has become a key driver of →  corporate reputation . Hence the stakeholder concept is a central concern for the field of →  Public Relations (→  Organizational Image ; Trust of Publics ). The origins of the stakeholder debate can be traced to scholarly disputes in the 1930s between Harvard law professor E. Merrick Dodd and management theorist Adolf Berle. Dodd contended corporate powers were held in trust for the entire community, while Berle argued the same powers should be held in trust for shareholders. In the 1950s, Berle conceded the argument to Dodd. The word “stakeholder” first appeared in the management literature in an internal memorandum at the Stanford Research Institute in 1963. It was originally defined as “those groups without whose support the organization would cease to exist” ( Freeman 1984 , 31). ... log in or subscribe to read full text

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