Stakeholder theory has traditionally been illustrated as a nested model of three inter-related parts, namely descriptive, instrumental and normative aspects, where the descriptive and instrumental aspects are dependent on the normative core. Attempts to provide a reason why corporations should take into account stakeholder interests, Used to interpret the function of the corporation, including the identification of moral or philosophical guidelines for the operation and management of corporations. It is concerned with what managers and organizations actually do. Freeman, Harrison and Zyglidopoulos discuss the foundation concepts and implementation of stakeholder management as well as the advantages this approach provides to firms and their managers. The instrumental stakeholder theory deals with how managers should act if they want to favour and work for their own interests. That view is in opposition to the long-held shareholder theory proposed by economist Milton Friedman that in capitalism, the only stakeholders a company should care about are its shareholders - and thus, its bottom line. In normative stakeholder theory, the stakeholders have some guidelines on what is expected of them, and they are basing on ethical principle. About the Stakeholder Theory The theory argues that a firm should create value for all stakeholders, not just shareholders. It suggests that shareholders are merely one of many stakeholders in a company. What does Mitchell et al. Attempts to answer the question of whether it is beneficial for the corporation to take into account stakeholder interests. A comprehensive foundation for stakeholder theory, written by many of the most respected and highly cited experts in the field. Stakeholder theory is a doctrine that holds companies accountable to their stakeholders. This book – the first of a two-volume series – argues that, today, stakeholder thinking has evolved into the study of interactive, mutually engaged and responsive relationships that establish the very context of doing modern business, ... Presents a new way of analyzing and treating problems of organizational behavior and deicision making. This theory ascertains whether or how corporations actually do take into account stakeholder interests. This new text and reference focuses on stakeholder theory applied to event management and goes beyond traditional approaches by treating event management as an applied field. Hence, descriptive stakeholder theory is particularly concerned about how managers and stakeholders actually behave and view their actions and roles. The Stakeholder Theory of the Corporation. The descriptive stakeholder theory focuses on describing the operations of an organisation. A dissertation submitted to the . Another approach to the stakeholder concept is the so called descriptive stakeholder theory. Literature Review ASSIGNMENT BRIEF In the 1980s, Freeman introduced stakeholder theory, which led to the development of the notion of the response organization and, it is argued, ultimately, the introduction of the concept of corporate social responsibility (CSR). Found inside – Page 687This, according to them, is clear in stakeholder theory, as theorists started viewing organizations as needing to consider the interests of stakeholders involved. ... They consider stakeholder theory as being unarguably descriptive. Others provide an extensive treatment of stakeholder theory Normative claims, without which, stakeholder theory collapses (Donaldson and Preston, 1995). Click here to navigate to respective pages. The decision whether to believe in God is . The stakeholder model, backed as it is by its simplicity and clear visual presentation, has stirred debates in the academic literature. In addition one can only argue for shareholder theory on moral grounds of property ownership whereby managers are morally obligated as fiduciaries to advance their interests, by introducing a normative element the theory is open to change as society changes its norms. Stakeholder management:theoreticalbackground SM has its roots in the stakeholder theory, formalized by Freeman in 1984. Donaldson and Preston's instrumental thesis is the view that stakeholder theory establishes a framework for examining the connections, if any, between the practice of stakeholder management and the achievement of various corporate performance goals.
We integrate theory and research from disparate areas to develop a descriptive stakeholder theory. Meanwhile, stakeholder theory was originally developed - Limited to describing stakeholders; it does not specifically identify stakeholders who will be salient to management but states only that stakeholders who possess more attributes will be perceived as more salient than those possess fewer attributes. This article and the others in this special issue aim to help fill that void. Learn about our remote access options, Centre for Business in Society, School of Business, Economics and Law, University of Gothenburg, Gothernburg, Sweden, Department of Philosophy, Linguistics and Theory of Science, University of Gothenburg, Gothenburg, Sweden. A project, especially for one in China, usually involves many organizations and each organization may have multiple projects. Academy of management review, 26 (3), 397-414. has been cited by the following article: This book provides an academic introduction to, and presentation and defence of stakeholder theory as a model for the strategic management of businesses and corporations, as well as of public organizations and institutions. Schindler's transformation of vision and business mission in this article demonstrate the characteristics and connection of layers in descriptive, instrumental and normative stakeholder theory in the concept of "normative, instrumental and descriptive stakeholder theory" according to Donaldson and Peterson. To ensure that in both theory and practice, business and ethics ought to never be "contemplated apart from one another" again (Wempe. contrast, descriptive stakeholder theory uses the stakeholder model as a tool for describing the activities and interests of the firm. The overall mission of this book is to provide a comprehensive understanding and coverage of the various theories and models used in IS research. Normativity is the phenomenon in human societies of designating some actions or outcomes as good or desirable or permissible and others as bad or undesirable or impermissible.
Found inside156 yet use[s] this theory in fundamentally different ways' (2010: 36). Most research utilizes Donaldson and Preston's (1995) taxonomy of normative, descriptive, or instrumental aspects of stakeholder theory. The normative aspect deals ... Another approach to the stakeholder concept is the so called descriptive stakeholder theory. Stakeholders are identified by their interests in the corporation, whether the corporation has any corresponding functional interest in them. The view of legitimacy theory is that organisations stakeholders is analysed.
This paper starts to clarify this definitional confusion by distinguishing between three different ways in which different lines of stakeholder research are connected with descriptive and instrumental stakeholder theory. Jones and A.C. Wicks, "Convergent Stakeholder Theory," Academy of Management . In addition those that claim that business decisions can be made without regard for the consequence they have on other stakeholders are demonstrating the separation fallacy. Click here to navigate to parent product. We integrate theory and research from disparate areas to develop a descriptive stakeholder theory. Proposes a non-descriptive version of stakeholder theory. About the Stakeholder Theory. Stakeholder theory is one of the most influential theories in business ethics. Freeman's theory suggests that a company's real success lies in satisfying all its stakeholders, not just those who might profit from its stock. Instrumental stakeholder theory (Expanded). Friedman's view is that companies are compelled to make a profit, to satisfy their shareholders, and to continue positive growth. PROACTIVE STAKEHOLDER MANAGEMENT: A DESCRIPTIVE AND INSTRUMENTAL ANALYSIS . Found inside – Page 362Since few review articles exist on the subject of stakeholder theory , we base conclusions regarding agreement or ... and descriptive / empirical - makes explicit some traits that early formulations of stakeholder theory left implicit . Descriptive stakeholder theory. take into account stakeholder interests c. Descriptive stakeholder theory: attempts to provide a reason why corporations should take into account stakeholder interests d. None of these e. All of these. It addresses morals and values in managing an organization, such as those related to corporate social responsibility, market economy, and social contract theory. This volume is a timely and insightful exploration into the issues of corporate governance and the impact of corporate governance practices on investments in developing countries. Contemporary researches define stakeholder theory as groups or persons with key roles in the organization. According to them, "The stakeholder Found inside – Page 46Towards an Economic Theory on Stakeholder Governance Maarten Hage. and Meckling ( 1976 ) , North ( 1980 ) ... First both Stakeholder Theory and the Theory of the Firm , or NIE , are not purely descriptive . Both theories provide some ... Stakeholder theory of the firm stakeholder model, What are the three aspects of stakeholder theory? In general, instrumental stake-holder theory seems to fit the needs of performance-oriented investors better than other approaches. Shows how elements of this strategic management theory have spread to other fields, including political science, international relations, political and moral philosophy, and organizational studies. Strategic Management: A Stakeholder Approach was first published in 1984 as a part of the Pitman series in Business and Public Policy. This book analyses the relationship between stakeholder engagement practices and organizational sustainability across sectors and disciplines.
Found inside – Page 93Descriptive approach Descriptive stakeholder theory identifies the reality of what is now going on in the business . Fundamentally , a stakeholder approach explains how strategic thinking is practised in business operations and work ...
Relationship between manager and stakeholder is based on morals and normative commitments. Shareholder theorists must admit to arguments on moral grounds, Essentially one cannot separate the moral and ethical implications of business decisions from the usefulness of those decisions to maximise shareholder value, therefore the argument that when making decisions only the shareholder should considered is fundamentally flawed in what is known as the separation fallacy. Found insideIn order to avoid confusion, this book mainly adopts Professors Donaldson and Preston's categorisation of descriptive, normative and instrumental aspects of the theory,89 as developed from Professors Mitchell, Agle and Wood's ... Answer=a Feedback: Donaldson & Preston (1995) distinguish between three forms of stakeholder theory: normative, descriptive and instrumental. The article ends with the discussion of results and suggestions for future developments, and limitations are proposed. The full text of this article hosted at iucr.org is unavailable due to technical difficulties. The perception of legitimate stakeholders is based on the personal ethics of the owner-manager. These are determined by the owner-manager's preference for a certain normative core and his stage of cognitive moral development. Property rights justification (Friedman, 1970) Managers have fiduciary duties to shareholders. First, the behaviour vs. rationale tension in the definition of 'stakeholder management' is equally present in . Human Relations and Stakeholders in Contemporary Organisations. Keywords - stakeholder theory, stakeholder management, international research, effective management, business ethics, ethical decision mak ing The model brings together the communication and motivation theories. This presentation style makes the otherwise technical tools of systems thinking and modelling accessible to a wide range of people.The book is intended as a text for students in business, management, management and information systems, ... Stakeholder-focused research seeks to explain relationships among firms and stakeholders, using approaches that predominantly follow normative, instrumental, or descriptive pathways. Descriptive stakeholder theory Stakeholder management: behaviour vs. rationale There are considerable similarities between the above distinctions regarding instrumental stakeholder theory and descriptive stakeholder theory. What is Stakeholder Theory? stakeholder theory, the "descriptive", "instru mental", and "normative". We (1) show that at any given organizational life cycle stage, certain stakeholders, because of their potential to satisfy critical organizational needs, will be more important than others; (2) identify specific stakeholders likely to become more or less important as an organization evolves from . Third, a distinction is made between research that interprets Donaldson & Preston's central concept of ‘stakeholder management’ as either behaviour or rationale. This theory gives justifications why corporations should take into account stakeholder interest. It also establishes a balance between the diverging interests between stakeholders. Following circulation of the 1963 Stanford Memo and the 1984 publication of Freeman, the stakeholder perspective has become a sizable area of research in diverse fields, with growing influence in the business . Second, a distinction is made between research that interprets descriptive and instrumental stakeholder theories as either hypotheses or research areas. Keywords: government-2-government, stakeholder theory, dialectics, municipal cooperation, Over 100 articles were published on 'stakeholder theory' by 1995 (Donaldson and Preston 1995, p. 65), with many more published since. Any group or individual who can affect, or is affected by, the achievement of the organisations objectives, Who is a stakeholder? Instrumental Stakeholder Theory. 7th edition . Stakeholder theory was first described by Dr. F. Edward Freeman, a professor at the University of Virginia, in his landmark book, "Strategic Management: A Stakeholder Approach." It suggests that shareholders are merely one of many stakeholders in a company. Why is normative stakeholder theory necessary? The term that BEST describes the mandate of confidentiality of patient information and also holds the practitioner to remain faithful to the patient's BEST interest is: The position that rejects the claim that abortions are almost never permissible as well as the notion that they are almost always permissible is the.
First, a distinction is made between research connected with descriptive and with instrumental stakeholder theory as defined by Donaldson & Preston in the narrow or broad sense. Stakeholders should be given importance while taking decisions. However, over the years, some academics have criticized the vagueness and ambiguity of this theory. At the core is the normative. See, e.g., Ronald M. Green, The Ethical Manager (1994), Joseph W. Weiss, Business Ethics: A Managerial, Stakeholder Approach (1994 . Corporations practicing stakeholder management will, other things being equal, be relatively successful in conventional performance terms (profitability, stability, growth, etc. Originality/value - Research on stakeholder theory in an international context is both lacking and sorely needed. It is perhaps not surprising that a theory as popular as stakeholder theory should be used in different ways, but when t. There are also descriptive versions of the stakeholder theory, which describe actual behavior of managers, and instrumental versions, which predict outcomes (for example, higher profits) if managers behave a certain way. J. Sousa, in International Encyclopedia of Housing and Home, 2012 Defining the Term Stakeholder. 'Stakeholders' includes a discussion of the concept of 'the stakeholder' in fields such as management, corporate governance, accounting and finance, strategy, sociology, and politics, and in public policy debate. stakeholder theory views a firm's behavior through an idealistic social or moral lens…how the firms "should" act. Graduate School-New Brunswick Found inside – Page 57reach beyond the descriptive level. Indeed, we claim that these consequences are crucial for normative stakeholder theory too. Normative theories are never independent from our descriptive accounts of human behaviour (Bowie, 1998: 48), ... A common definition of stakeholder refers to any group or individual who can affect or be affected by an organisation's objectives, policies, and subsequent actions. Descriptive value The stakeholder model is descriptive - it provides a language and concepts to describe corporations, the way they work and their impacts on the wider environment. Stakeholder Theory is instrumental in offering a framework for investigating the links between conventional firm performance and the practice of stakeholder management. Includes: descriptive stakeholder theory, instrumental stakeholder theory and normative stakeholder theory. 1.) 's 1997 model. 3. This book provides multiple case studies in aviation industry reflecting how large projects create dynamic contexts for stakeholder management and stakeholder behaviour as the project moves through different phases of its lifecycle. Put differently, if either thesis is "the critical underpinning" of stakeholder theory, it is the descriptive thesis. 2008). "Descriptive stakeholder theory" attempts to describe and sometimes explain aspects of corporate and stakeholder behavior. by . Click here to search products using title name,author name and keywords. There are many challenges that still remain when it comes to establishing responsible leadership both in theory and practice. The descriptive aspect to stakeholder theory is its use to "describe, and sometimes to explain" the nature and operations of companies (p. 70). A norm in this normative sense means a standard for evaluating or making judgments about behavior or outcomes. Found inside – Page 131A 'descriptive' stakeholder theory posits a model that describes what a corporation is. Such a theory may be tested for descriptive accuracy and serve as a framework for testing any empirical claims relevant to the stakeholder concept. Stakeholder theory has three strands (descriptive, instrumental and normative) - descriptive is least researched and normative has little empirical support Later sessions will look at main stakeholder groups in more detail Key reading Carroll, A.B., Buchholtz, A.K. True or false: according to the Due Process Clause of the Fourteenth Amendment to the U.S. Constitution, no state shall "deprive any person of life, liberty, or property, without due process of law. What does Instrumental stakeholder theory propose? Found inside – Page 17While these stakeholding paradigms have been presented as if they are independent of each other, Donaldson and Preston (1995:66) conclude that the three approaches to stakeholder theory – i.e. descriptive, instrumental and normative ... Instrumental Stakeholder Theory. It outlines how senior position personnel should act and behave themselves in the organisational space. We (1) show that at any given organizational life cycle stage, certain stakeholders, because of their potential to satisfy critical organizational needs, will be more important than others; (2) identify specific stakeholders likely to become more or less important as an organization evolves from one stage to the next; and (3) propose that the strategy an organization uses to deal with each stakeholder will depend on the importance of that stakeholder to the organization relative to other stakeholders. The article focuses on a proposal concerning convergent stakeholder theory. Found inside – Page 66Donaldson and Preston117 attempt to bring greater clarity and rigor to stakeholder theory by arguing for a taxonomy consisting of descriptive, instrumental, and normative varieties of research. Descriptive stakeholder research analyzes ... Registered in England & Wales No. 5 Evidence for this may be found not only in the inordinately large percentage of business ethics journal articles that discuss the stakeholder theory favorably, but in the increasing number of textbooks that are being written from the stakeholder perspective. It . 4.3.1 Participative Management—One Best Way. 30990675 Howick Place | London | SW1P 1WG © 2021 Informa UK Limited. These three aspects of the theory, although interrelated, are quite distinct; they involve different types of evidence and argument and have different implications. Found inside – Page 233holder theory is normative when it accepts that 'stakeholders are persons and/or groups with legitimate interests in a corporation' ... Stakeholder theory is descriptive because it presents a model to describe what the corporation is, ... 's 1997 model propose? On the surface stakeholder theory of firm is fairly straight forward to grasp, a corporation simply identifies all the parties they are responsible for in the course of running the corporation. Provides the following classifications based on degree of each attribute: What stakeholder classes does Mitchell et.al.
se and synthesis? The position that managers ought to put shareholder interests "over and above" other interests, with the primary purpose of maximising shareholder value, arguably fails to do this. The Descriptive Stakeholder Theory focuses on describing how organisations manage or interact with stakeholders.The Normative Stakeholder Theory prescribes how organisations Use the link below to share a full-text version of this article with your friends and colleagues. It is perhaps not surprising that a theory as popular as stakeholder theory should be used in different ways, but when the disparity between different uses becomes too great, it is questionable whether all the 'stakeholder research' refers to the same underlying theory. The Stakeholder Management Theory is categorised into normative, descriptive and instrumental theories (Donaldson & Preston, 1995; Scholl, 2001). The term stakeholder has its origins in management theory and is widely used in corporate analysis. W.Warner Burke, in Encyclopedia of Applied Psychology, 2004. This book provides: - Definitions - Examples in the field of management studies - Criticisms and possible future directions Engagingly written by specialists in each area, this dictionary will be the definitive and essential companion to ... Business Ethics is designed to meet the scope and sequence requirements of the single-semester business ethics course. Stakeholder Theory is a view of capitalism that stresses the interconnected relationships between a business and its customers, suppliers, employees, investors, communities and others who have a stake in the organization. Descriptive decision theory takes into consideration outside factors that influence an actor's decisions toward less optimal, less rational ends. Instrumental Stakeholder Theory . The stakeholder theory is a theory of organizational management and business ethics that accounts for multiple constituencies impacted by business entities like employees, suppliers, local communities, creditors, and others. This theory answers the questions how it is beneficial for the corporation to . Set firmly in a European context, the book spans the range of subjects in business ethics, including: theories of ethics; capitalism and free enterprise; marketing; employment; and the greening of business. 1. Although Stakeholder Theory is descriptive and instrumental, it is more fundamentally normative. stakeholder concept and stakeholder theory are highlighted by Spitzeck and Hansen (2010:380), and include the instrumental, descriptive and normative views of stakeholder theory as conceptualised by Donaldson and Preston (1995:66). These distinctions are drawn crisply in T.M. A model based on the salience of individual stakeholders based on the attributes: power, legitimacy and urgency. One cannot argue the seperation thesis and hold a normative argument based on moral grounds at the same time. The Relation between CSR and Stakeholder Theory Whenever one talks about business ethics - either in terms of scholarship, or the discipline taught in business schools, or organizational norms applied in companies - both CSR and stakeholder theory come as two major concepts.
The descriptive stakeholder theory explained that during the organization's life cycle stage, some stakeholders will be more crucial than other stakeholders, however, as the organization moves from one stage to another, the importance of a stakeholder may increase or decrease accordingly to satisfy the organization's needs. stakeholder theory relate to each other. We modify existing IST by . [1] It addresses morals and values in managing an organization, such as those related to corporate social responsibility, market economy, and social contract theory. theory forms the next layer, supporting th e descriptive thesis through predictive power.
(Crane & Matten, P62), An Individual or group which either: is harmed by, or benefits from, the corporation; or whose rights can be violated, or have to be respected by the corporation, More precise definition of 'affects' vs 'affected by' (Evan and Freeman, 1993), - Principle of corporate rights - the corporation has the obligation not to violate the rights of others, The corporation has the obligation not to violate the rights of others, Companies are responsible for the effects of their actions on others. Toward a descriptive stakeholder theory: An organizational life cycle approach. Based on an analysis of the social network, as a methodology that can be used to explain the . THE STAKEHOLDER THEORY OF THE CORPORATION: CONCEPTS, EVIDENCE, AND IMPLICATIONS THOMAS DONALDSON Georgetown University LEE E. PRESTON University of Maryland The stakeholder theory has been advanced and justified in the man- agement literature on the basis of its descriptive accuracy, instrumen- tal power, and normative validity. stakeholder theory (NST), Descriptive stakeholder theory (DST) and Instrumental stakeholder theory (IST) - have not yielded the desired results. Enter your email address below and we will send you your username, If the address matches an existing account you will receive an email with instructions to retrieve your username, I have read and accept the Wiley Online Library Terms and Conditions of Use, https://doi.org/10.1111/j.1467-8608.2009.01577.x. (3) (Expanded). Key features of each chapter include: - Short chapter introduction and learning summaries - Discussion questions to share in the classroom - Annotated suggestions for further reading - Lists of key terms to consider This text is essential ... Summary of why one must accept stakeholder theory. Brenner and Cochran (1991) were the first to propose a descriptive stakeholder theory of the firm. See the answer See the answer See the answer done loading. Stakeholder Theory Interest in stakeholders has grown considerably since Freeman's (1984) seminal work Strategic Management: A Stakeholder Approach was published . stakeholder theory, both in the management literature and in business practice, is due in large part to the simplicity inherent to the model. The act of making profit driven decisions that are insulated from value judgements serves to dehumanise managerial decision making and can lead to undesirable behaviours such as environmental degradation and lack of compassion for others. This theory answers the questions how it is beneficial for the corporation to . Which principle is, according to Dr. Reilly, the most fundamental principle of rationality? In this article, we examine these three aspects of the theory . Finally, the paper discusses the implications of these differences for empirical research into stakeholder theory.
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