Stakeholder Theory and Managerial Decision-Making: Constraints and Implications of Balancing Stakeholder Interests Article DOI:
Cite this article as: Reynolds, S.J., Schultz, F.C. & Hekman, D.R. J Bus Ethics (2006) 64: 285. doi:10.1007/s10551-005-5493-2 Abstract
Stakeholder theory is widely recognized as a management theory, yet very little research has considered its implications for individual managerial decision-making. In the two studies reported here, we used stakeholder theory to examine managerial decisions about balancing stakeholder interests. Results of Study 1 suggest that indivisible resources and unequal levels of stakeholder saliency constrain managers’ efforts to balance stakeholder interests. Resource divisibility also influenced whether managers used a within-decision or an across-decision approach to balance stakeholder interests. In Study 2 we examined instrumental and normative implications of these two approaches. We conclude by considering the contributions of this research.
Keywords stakeholder management ethical decision-making balancing stakeholder interests References Ackoff, R. L. 1999Ackoff’s Best: His Classic Writings on Management Wiley New York Google Scholar Agle, B. R., Mitchell, R. K., Sonnenfeld, J. A. 1999 ‘Who Matters to CEOs? An Investigation of Stakeholder Attributes and Salience, Corporate performance, and CEO Values’ Academy of Management Journal 42 507 525 Google Scholar Allison, P. D. 1978 ‘Measures of Inequality’ American Sociological Review 43 865 880 Google Scholar Allison, S. T., McQueen, L. R., Schaerfl, L. M. 1992 ‘Social Decision-Making Processes and the Equal Partitionment of Shared Resources’ Journal of Experimental Social Psychology 28 23 42 CrossRef Google Scholar Anderson, J., Frankle, A. 1980 ‘Voluntary Social Report: An Iso-beta Portfolio Analysis’ Accounting Review 55 468 479 Google Scholar Barnard, C. I. 1938Functions of the Executive Harvard University Press Cambridge, MA Google Scholar Belkaoui, A. 1976 ‘The Impact of the Disclosure of the Environmental Effects of Organizational Behavior on the Market’ Financial Management 5 26 31 Google Scholar Berman, S. L., Wicks, A. C., Kotha, S., Jones, T. M. 1999 ‘Does Stakeholder Orientation Matter? The Relationship between Stakeholder Management Models and Firm Financial Performance’ Academy of Management Journal 42 488 506 Google Scholar Boatright, J. R. 1994 ‘Fiduciary Duties and the Shareholder Management Relation: or, what’s so Special about Shareholders?’ Business Ethics Quarterly 4 393 407 Google Scholar Bowie, N. E. 1999Business Ethics: A Kantian Perspective Blackwell Malden, MA Google Scholar Bowman, E. 1978 ‘Strategy, Annual Reports, and Alchemy’ California Management Review 20 64 71 Google Scholar Buckley, W. eds. 1968Modern Systems Research for the Behavioral Scientist Aldine Chicago Google Scholar Carroll, A. B. 1989Business and Society: Ethics and Stakeholder Management South-Western Cincinnati, OH Google Scholar Cavanagh, S. J., Fritzsche, D. J. 1985 ‘Using Vignettes in Business Ethics Research’ Preston, L. eds. Research in Corporate Social Performance and Policy JAI Press Greenwich, CT 279 293 Google Scholar Cohen, J. 1988Statistical Power Analysis for the Behavioral Sciences2 Academic Press NY Google Scholar Clarkson, M. B. E. eds. 1998The Corporation and its Stakeholders: Classic and Contemporary Readings University of Toronto Press Toronto, Canada Google Scholar Dodd, M. E. 1932 ‘For whom are Corporate Managers Trustees?’ Harvard Law Review 45 1145 1163 Google Scholar Donaldson, T., Preston, L. 1995 ‘The Stakeholder Theory of the Corporation: Concepts, Evidence, and Implications’ Academy of Management Review 20 65 91 Google Scholar Evan, W., Freeman, R. 1993 ‘A Stakeholder Theory of the Modern Corporation: Kantian Capitalism’ Beauchamp, T. Bowie, N. eds. Ethical Theory and Business Prentice Hall Englewood Cliffs, CA 97 106 Google Scholar Ezzamel, M., Watson, R. 1997 ‘Wearing Two Hats: The Conflicting Control and Management Roles of Nonexecutive Directors’ Keasey, K. Thompson, S. Wright, M. eds. Corporate Governance Oxford University Press Oxford 54 79 Google Scholar Frederick, W., Wasieleski, D. 2002 ‘Evolutionary Social Contracts’ Business and Society Review 107 283 308 CrossRef Google Scholar Freeman, R. E. 1984Strategic Management: A Stakeholder Approach Pitman Boston Google Scholar Frooman, J. 1999 ‘Stakeholder Influence Strategies’ Academy of Management Review 24 191 205 Google Scholar Garvey, G., Swan, P. 1994 ‘The Economics of Corporate Governance’ Journal of Corporate Finance 1 139 174 CrossRef Google Scholar Goodpaster, K. E. 1991 ‘Business Ethics and Stakeholder Analysis’ Business Ethics Quarterly 1 53 73 Google Scholar Hart, O. 1995 ‘Corporate Governance: Some Theory and Implications’ Economic Journal 105 678 689 Google Scholar Hasnas, J. 1998 ‘The Normative Theories of Business Ethics: A Guide for the Perplexed’ Business Ethics Quarterly 8 19 42 Google Scholar Hill, C., Jones, T. 1992 ‘Stakeholder-Agency Theory’ Journal of Management Studies 29 131 154 Google Scholar Hosseini, J., Brenner, S. 1992 ‘The Stakeholder Theory of the Firm’ Business Ethics Quarterly 2 99 121 Google Scholar Jones, T. 1995 ‘Instrumental Stakeholder Theory: A Synthesis of Ethics and Economics’ Academy of Management Review 20 404 437 Google Scholar Jones, T. M., Wicks, A. C. 1999 ‘Convergent Stakeholder Theory’ Academy of Management Review 24 206 221 Google Scholar Katz, D., Kahn, R. L. 1978The Social Psychology of Organizations2 Wiley NY Google Scholar Kay, J., Silberston, A. 1995 ‘Corporate Governance’ National Institute Economic Review. 3 84 97 Google Scholar Kotter, J., Heskett, J. 1992Corporate Culture and Performance Free Press New York Google Scholar Langholtz, H. J., Gettys, C., Foote, B. 1993 ‘Resource-Allocation Behavior under Certainty, Risk, and Uncertainty’ Organizational Behavior and Human Decision Processes 54 203 224 CrossRef Google Scholar Langholtz, H. J., Marty, A. T., Ball, C. T., Nolan, E. C. 2003Resource-Allocation Behavior Kluwer Academic Publishers Dordrecht, Netherlands Google Scholar Meznar, M. B., Nigh, D., Kwok, C. C. Y. 1994 ‘Effect of Announcements of Withdrawal from South Africa on Stockholder Wealth’ Academy of Management Journal 37 1633 1648 Google Scholar Mitchell, R. K., Agle, B. R., Wood, D. J. 1997 ‘Toward a Theory of Stakeholder Identification and Salience: Defining the Principle of Who and What Really Counts’ Academy of Management Review 22 853 886 Google Scholar Mussen, P., Eisenberg-Berg, N. 1977Roots of Caring, Sharing, and Helping: The Development of Prosocial Behavior in Children W. H. Freeman San Francisco Google Scholar Ogden, S., Watson, R. 1999 ‘Corporate Performance and Stakeholder Management: Balancing Shareholder and Customer Interests in the U.K. Privatized Water Industry’ Academy of Management Journal 42 526 538 Google Scholar Parks, J. M., Boles, T. L., Conlon, D. E., DeSouza, E. 1996 ‘Distributing Adventitious Outcomes: Social Norms, Egocentric Martyrs, and the Effects on Future Relationships’ Organizational Behavior and Human Decision Processes 67 181 200 CrossRef Google Scholar Phillips, R. 2003 ‘Stakeholder Legitimacy’ Business Ethics Quarterly 13 25 42 Google Scholar Post, J. E., Preston, L. E., Sachs, S. 2002 ‘Managing the Extended Enterprise: The New Stakeholder View’ California Management Review 45 6 28 Google Scholar Preston, L. 1978 ‘Analyzing Corporate Social Performance: Methods and Results’ Journal of Contemporary Business 7 135 150 Google Scholar Senge, P. M. 1990The Fifth Discipline Double Day NY Google Scholar Suchman, M. 1995 ‘Managing Legitimacy: Strategic and Institutional Approaches’ Academy of Management Review 20 571 611 Google Scholar Thomas, K. 1992 ‘Conflict and Negotiation Processes in Organizations’ Dunnette, M. D. Hough, L. M. eds. Handbook of Industrial and Organizational Psychology2 Consulting Psychologists Press Palo Alto, CA Google Scholar Weber, J. 1992 ‘Scenarios in Business Ethics Research: Review, Critical Assessment and Recommendations’ Journal of Business Ethics 11 137 160 Google Scholar