Governance & Policy

Stakeholder Theory

Meaning statusEstablishedSource recordDirect source requestedWhy these are different

Definition

Stakeholder theory, developed by R. Edward Freeman in Strategic Management: A Stakeholder Approach (1984), holds that a firm is a nexus of relationships with all groups who can affect or are affected by it — employees, customers, suppliers, financiers, communities, regulators and, by extension, the environment — and that managing for their joint interests, rather than maximising shareholder returns alone, is both ethically required and strategically superior. It provides the theoretical foundation for stakeholder capitalism, CSR and ESG.

References

Source organisationSupporting reference

This reference provides supporting context for how “Stakeholder Theory” is defined and used.

www.cambridge.orgBulk import source

Source imported for editorial provenance.

Overview

How it is used

The theory structures corporate purpose debates, stakeholder governance in benefit corporations, ESG frameworks and the normative analysis of business responsibility.

Why it matters

Stakeholder theory is the intellectual charter of the entire sustainability-in-business project: the claim that firms belong to everyone they touch.