Edward freeman, a professor at the university of virginia, in his landmark book, strategic management. This book examines this body of research and assesses its relevance for our understanding of modern business. The stakeholder perspective is an alternative way of understanding how companies and people create value and trade with each other. One of the most important developments of the theory is usually referred back to r. It is a practical theory because all firms have to manage stakeholders whether they are good at managing them is another issue. A brief history of the development of this approach is followed by a summary and an assess. Edward freeman born december 18, 1951 is an american philosopher and professor of business administration at the darden school of the university of virginia, particularly known for his work on stakeholder theory 1984 and on business ethics.
Stakeholder theory by freeman 1984 provides us with a framework that can be used to map out the stakeholders of all different types of businesses. Ian mitroff, in his 1983 book stakeholders of the organizational mind, originally laid out the concept. Stakeholder theory promotes a practical, efficient, effective, and ethical way to manage organizations in a highly complex and turbulent environment freeman, 1984. Stakeholder theory and value creation the key idea about capitalism is that the entrepreneur or manager creates value by capturing the jointness of the interests of the stakeholders. Edward freeman the purpose of this paper is to revisit the development of the stakeholder management approach developed in strategic management. Stakeholder theory six principles of stakeholder theory. The stakeholder theory is now widely circulated and is included in iso 26000, the international standards providing guidelines for corporate social responsibility. Subsequently, some advocates have moved a bit too quickly and without proper definition or argument.
Stakeholder theory emphasizes the importance of groups that have a direct or indirect stake in the business freeman, 1984. A stakeholder approach 1984, the stakeholder theory originated by r. They have exceeded freemans intentions which are more libertarian and free. Pdf a stakeholder approach to strategic management laileh. Implementing and monitoring stakeholder strategies part iii. Ed freemans 1984 award winning book, strategic management. Examining stakeholder theory through practice in order to both present the development of a technique and also ground it in the relevant literature, the presentation of each technique is introduced by a consideration of the existing literature. 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. A stakeholder approach is widely cited in the field as being the foundation of stakeholder theory, although freeman himself credits several bodies of literature in the development of his.
Examine social responsibility and how it influences stakeholder management differentiate between the systems theory, social network theory, collaboration theory and social exchange theory. In line with this theory, proponents of the valuecreation approach argue that some of the financial benefits of socially responsible activities. This is only a partial representation of ed freeman s published works on stakeholder theory. Assessing freemans stakeholder theory springerlink. A stakeholder approach to strategic management by r. A stakeholder approach was reprinted in 2010 by cambridge university press. A stakeholder approach identifies and models the groups which are stakeholders of a corporation. However, evans and freeman 1988 search normative foundations of stakeholder theory, which reflect the normative dimension of the theory.
Theory and practice fran ackermann and colin eden this article explores how top management teams can increase the robustness of their strategies by attending to important concepts emerging from the stakeholder literature. Stakeholder theory is a theory of management that concerns itself with matters related to morals and ethics in running a business. Concepts, evidence, and implications thomas donaldson georgetown university lee e. Evans brako ntiamoah, priscilla oforiwaa egyiri, michael kwamega. This book has served to define a starting point for subsequent scholars and executives and continues to inspire scholars and students concerned with a more practical view of how business. Corporate social responsibility and stakeholder theory. A stakeholder approach published by pitman publishing in 1984. Analysis of three themes emanating from this literature leads to the development of. Corporate social responsibility awareness, firm commitment and organizational performance.
Lets take a look at freeman s thesis, and see just how different they are. Stakeholder theory and the corporate objective revisited. The stakeholder ecosystem, this theory says, involves anyone invested and involved. The stakeholder theory is a theory of organizational management that states that companies could archive better performance by taking all stakeholders into account, not only shareholders. By extension, the theory highlights the importance of investing in. We then suggest that traditionally the stakeholder approach to strategic management has several related characteristics that serve as distinguishing features. Since the 1980s stakeholder theory has developed the thesis that the organisation has a moral relationship with groups other than shareholders freeman, 1984. Stakeholders are clients, suppliers, employees, the government and the society where the company operates. Freeman 1984 and the authors of subsequent developments in stakeholder theory e. Stakeholder theory and the corporate objective revisited 366 organization science 153, pp. The stakeholder concept and strategic management 3.
They are delineated by differences in the csr obligations of busi. Edward freeman originally detailed the stakeholder theory of organizational management and business ethics that addresses morals and values in managing an organization. A stakeholder approach, a work that set the agenda for what we now call stakeholder theory. 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. Though the term stakeholder has been coeval with business, the use of the term stakeholder in business was first noted in the 1960s. When edward freeman first published his book about stakeholder theory in 1984, it raised awareness of the relationships and the rippleeffect of a company and its many stakeholders. A stakeholder approach was first published in 1984 as a part of the pitman series in business and public policy. The premise of stakeholder concept is that corporations are not responsible. Stakeholder theory augments resource based theory by. Stakeholder theory an overview sciencedirect topics. Freeman is also a researcher who prefers teaching to purely research work. Csr freeman, 1984, but have never accepted the chicago school ideology, we want to use this brief essay to propose some more helpful ideas about when the idea of csr can be useful, its relationship to stakeholder theory, and how we can dissolve, in a. Im sure that you remember friedmans thesis, but here it is as a reminder.
A stakeholder approach identifies and models the groups which are stakeholders of a corporation, and both describes and. Mar 16, 2001 we begin by developing a brief history of the concept. Numerous articles and books written on stakeholder theory generally credit freeman as the father of stakeholder theory. The theory that youve just read about is significantly different from the stockholder theory that we saw from friedman. Freeman doesnt cite mitroff as a source, rather he attributes stakeholder theory to discussions at the stanford research institute. Teori stakeholder stakeholder theory ramizes dalam bukunya cultivating peace, mengidentifikasi berbagai pendapat mengenai stakeholder.
This is based on the assumption that an organisations as well as individuals, possess. A stakeholder approach, cambridge university press, new york. Stakeholder theory argues that better longterm financial performance can be driven by how well a firm conducts its relationships with related parties freeman, 1984. It suggests that shareholders are merely one of many stakeholders in a company. Freeman has engrossed much of the business ethics literature. Its publication proved to be a landmark moment in the development of stakeholder theory.
This theory emphasises the importance of the involvement of stakeholders in the business in order to create value parmar et al, 2010. Pdf a stakeholder approach to strategic management. Youll notice right off that freeman s stakeholder theory replaces the. In this regard, researchers on both topics are quick to point out that csr and stakeholder theory are not the same thing. It suggests that a companys stakeholders include people like employees, customers, community members, competitors, vendors, contractors, and shareholders.
For most business firms, which are the focus of this element, primary stakeholders include customers, employees, suppliers of tangible goods and services, suppliers of capital including share holders if the is a corporation or similar fom, and the communities in which the firm operates. Edward freeman published his landmark book, strategic management. Sep 24, 2008 at least since the publication of the monumental strategic management. A stakeholder approach points out the groups which. It was edward freeman 1984 who is credited for developing and bringing the theoretical approach to this term in business. This is only a partial representation of ed freemans published works on stakeholder theory. In the intervening years, the literature on stakeholder theory has become vast and diverse.
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