By Jay Barney & Jeff Harrison

Those of us who do work on stakeholder theory were excited last year when the Business Roundtable, a large group of top US CEOs, published a signed statement declaring that the purpose of the corporation is to serve its stakeholders. The statement is a reflection of a major tide change in the U.S. and across the globe. Indeed, it was only about 20 years ago that this same group declared that the purpose of the corporation is to serve its shareholders.

Stakeholder theory has come a long way since Edward Freeman (1984) published Strategic Management: A Stakeholder Approach. The theory has been applied in areas as diverse as marketing, law, public policy, accounting, operations, strategic management and many others (Freeman, Harrison, Wicks, Parmar, & de Colle, 2010; Harrison, Barney, Freeman, & Phillips, 2019).

The profusion of work on the stakeholder concept has brought with it a wide variety of perspectives and little widely accepted dogma. Indeed, stakeholder theory is at a crossroads, and there is a need to address some fundamental questions. For example, is it really a theory or merely a perspective? Is the primary objective to satisfy stakeholder needs or is it joint value creation? To what extent is the theory about creating value for the firm versus creating value for all stakeholders? How can common ground be found among stakeholders when they have competing interests? In what contexts does stakeholder theory work the best?

This special issue was created to deal with some of these “tensions.” However, in the first article (Blog commentary), Edward Freeman, Robert Phillips and Rajendra Sisodia suggest that most of the tensions are actually a result of the differing perspectives of the scholars who work in the stakeholder area rather than competing propositions that need to be resolved. They observe that stakeholder theory was developed based on observations about how the business world really works. In the next article (Blog commentary) Flore Bridoux and Pushpika Vishwanathan deal with the tension that often exists between powerful stakeholders and managers. Then Bret Crane discusses how the actions of a firm towards one stakeholder can influence the level of trust of other stakeholders.

The special issue also contains a fascinating case study of how the king crab industry came into being. Sharon Alvarez, Susan Young, and Jennifer Woolley find evidence that when the outcome of a venture is highly unpredictable, attracting new stakeholder to engage in it can be facilitated through trust building, flexible use of human capital, bootstrapping, and forming a collective view of the venture.

The final two articles deal with some widely acknowledged tensions. David Hatherly, Ronald Mitchell, Robert Mitchell and Jae Hwan Lee (Blog commentary) examine tensions between people and profits, and “reimagine” how a firm can benefit stakeholders and society without dropping the focus on profits. Finally, Stephanie Graham (Blog commentary) deals with the tensions that exist in the food industry supply chain, and finds that a firm’s strategy can translate external pressures into practical environmental responses.

The articles in this special issue point to the fact that there is a lot more work to be done in refining what stakeholder theory is, what it does, and what it doesn’t do. They are also evidence of the increasing importance of the stakeholder approach to management – firms that don’t get on board now are going to be left behind.

References:

Freeman, R. E. (1984). Strategic management: A stakeholder approach. Marshfield, MA: Pitman.

Freeman, R. E., Harrison, J. S., Wicks, A. C., Parmar, B., & de Colle, S. (2010). Stakeholder theory: The state of the art. Cambridge, UK: Cambridge University Press.

Harrison, J. S., Barney, J. B., Freeman, R. E., & Phillips, R. A. (2019). The Cambridge handbook of stakeholder theory. Cambridge, UK: Cambridge University Press.

Harrison, J.S., Phillips, R.A. and Freeman, R.E. On the 2019 Business Roundtable Statement on the Purpose of a Corporation. Journal of Management, forthcoming, DOI: 10.1177/0149206319892669.