Skip to main content
SpringerLink
Log in

Stakeholder Theory and Managerial Decision-Making: Constraints and Implications of Balancing Stakeholder Interests

  • Published:
Journal of Business Ethics Aims and scope Submit manuscript

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.

This is a preview of subscription content, log in via an institution to check access.

Access this article

Log in via an institution

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Similar content being viewed by others

References

  • R. L. Ackoff (1999) Ackoff’s Best: His Classic Writings on Management Wiley New York

    Google Scholar 

  • B. R. Agle R. K. Mitchell J. A. Sonnenfeld (1999) ArticleTitle‘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 

  • P. D. Allison (1978) ArticleTitle‘Measures of Inequality’ American Sociological Review 43 865–880

    Google Scholar 

  • S. T. Allison L. R. McQueen L. M. Schaerfl (1992) ArticleTitle‘Social Decision-Making Processes and the Equal Partitionment of Shared Resources’ Journal of Experimental Social Psychology 28 23–42 Occurrence Handle10.1016/0022-1031(92)90030-N

    Article  Google Scholar 

  • J. Anderson A. Frankle (1980) ArticleTitle‘Voluntary Social Report: An Iso-beta Portfolio Analysis’ Accounting Review 55 468–479

    Google Scholar 

  • C. I. Barnard (1938) Functions of the Executive Harvard University Press Cambridge, MA

    Google Scholar 

  • A. Belkaoui (1976) ArticleTitle‘The Impact of the Disclosure of the Environmental Effects of Organizational Behavior on the Market’ Financial Management 5 26–31

    Google Scholar 

  • S. L. Berman A. C. Wicks S. Kotha T. M. Jones (1999) ArticleTitle‘Does Stakeholder Orientation Matter? The Relationship between Stakeholder Management Models and Firm Financial Performance’ Academy of Management Journal 42 488–506

    Google Scholar 

  • J. R. Boatright (1994) ArticleTitle‘Fiduciary Duties and the Shareholder Management Relation: or, what’s so Special about Shareholders?’ Business Ethics Quarterly 4 393–407

    Google Scholar 

  • N. E. Bowie (1999) Business Ethics: A Kantian Perspective Blackwell Malden, MA

    Google Scholar 

  • E. Bowman (1978) ArticleTitle‘Strategy, Annual Reports, and Alchemy’ California Management Review 20 64–71

    Google Scholar 

  • W. Buckley (Eds) (1968) Modern Systems Research for the Behavioral Scientist Aldine Chicago

    Google Scholar 

  • A. B. Carroll (1989) Business and Society: Ethics and Stakeholder Management South-Western Cincinnati, OH

    Google Scholar 

  • S. J. Cavanagh D. J. Fritzsche (1985) ‘Using Vignettes in Business Ethics Research’ L. Preston (Eds) Research in Corporate Social Performance and Policy NumberInSeries7 JAI Press Greenwich, CT 279–293

    Google Scholar 

  • J. Cohen (1988) Statistical Power Analysis for the Behavioral Sciences EditionNumber2 Academic Press NY

    Google Scholar 

  • M. B. E. Clarkson (Eds) (1998) The Corporation and its Stakeholders: Classic and Contemporary Readings University of Toronto Press Toronto, Canada

    Google Scholar 

  • M. E. Dodd (1932) ArticleTitle‘For whom are Corporate Managers Trustees?’ Harvard Law Review 45 1145–1163

    Google Scholar 

  • T. Donaldson L. Preston (1995) ArticleTitle‘The Stakeholder Theory of the Corporation: Concepts, Evidence, and Implications’ Academy of Management Review 20 65–91

    Google Scholar 

  • W. Evan R. Freeman (1993) ‘A Stakeholder Theory of the Modern Corporation: Kantian Capitalism’ T. Beauchamp N. Bowie (Eds) Ethical Theory and Business Prentice Hall Englewood Cliffs, CA 97–106

    Google Scholar 

  • M. Ezzamel R. Watson (1997) ‘Wearing Two Hats: The Conflicting Control and Management Roles of Nonexecutive Directors’ K. Keasey S. Thompson M. Wright (Eds) Corporate Governance Oxford University Press Oxford 54–79

    Google Scholar 

  • W. Frederick D. Wasieleski (2002) ArticleTitle‘Evolutionary Social Contracts’ Business and Society Review 107 283–308 Occurrence Handle10.1111/1467-8594.00138

    Article  Google Scholar 

  • R. E. Freeman (1984) Strategic Management: A Stakeholder Approach Pitman Boston

    Google Scholar 

  • J. Frooman (1999) ArticleTitle‘Stakeholder Influence Strategies’ Academy of Management Review 24 191–205

    Google Scholar 

  • G. Garvey P. Swan (1994) ArticleTitle‘The Economics of Corporate Governance’ Journal of Corporate Finance 1 139–174 Occurrence Handle10.1016/0929-1199(94)90001-9

    Article  Google Scholar 

  • K. E. Goodpaster (1991) ArticleTitle‘Business Ethics and Stakeholder Analysis’ Business Ethics Quarterly 1 53–73

    Google Scholar 

  • O. Hart (1995) ArticleTitle‘Corporate Governance: Some Theory and Implications’ Economic Journal 105 678–689

    Google Scholar 

  • J. Hasnas (1998) ArticleTitle‘The Normative Theories of Business Ethics: A Guide for the Perplexed’ Business Ethics Quarterly 8 19–42

    Google Scholar 

  • C. Hill T. Jones (1992) ArticleTitle‘Stakeholder-Agency Theory’ Journal of Management Studies 29 IssueID2 131–154

    Google Scholar 

  • J. Hosseini S. Brenner (1992) ArticleTitle‘The Stakeholder Theory of the Firm’ Business Ethics Quarterly 2 99–121

    Google Scholar 

  • T. Jones (1995) ArticleTitle‘Instrumental Stakeholder Theory: A Synthesis of Ethics and Economics’ Academy of Management Review 20 IssueID2 404–437

    Google Scholar 

  • T. M. Jones A. C. Wicks (1999) ArticleTitle‘Convergent Stakeholder Theory’ Academy of Management Review 24 206–221

    Google Scholar 

  • D. Katz R. L. Kahn (1978) The Social Psychology of Organizations EditionNumber2 Wiley NY

    Google Scholar 

  • J. Kay A. Silberston (1995) ArticleTitle‘Corporate Governance’ National Institute Economic Review. 3 84–97

    Google Scholar 

  • J. Kotter J. Heskett (1992) Corporate Culture and Performance Free Press New York

    Google Scholar 

  • H. J. Langholtz C. Gettys B. Foote (1993) ArticleTitle‘Resource-Allocation Behavior under Certainty, Risk, and Uncertainty’ Organizational Behavior and Human Decision Processes 54 IssueID2 203–224 Occurrence Handle10.1006/obhd.1993.1010

    Article  Google Scholar 

  • H. J. Langholtz A. T. Marty C. T. Ball E. C. Nolan (2003) Resource-Allocation Behavior Kluwer Academic Publishers Dordrecht, Netherlands

    Google Scholar 

  • M. B. Meznar D. Nigh C. C. Y. Kwok (1994) ArticleTitle‘Effect of Announcements of Withdrawal from South Africa on Stockholder Wealth’ Academy of Management Journal 37 1633–1648

    Google Scholar 

  • R. K. Mitchell B. R. Agle D. J. Wood (1997) ArticleTitle‘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 

  • P. Mussen N. Eisenberg-Berg (1977) Roots of Caring, Sharing, and Helping: The Development of Prosocial Behavior in Children W. H. Freeman San Francisco

    Google Scholar 

  • S. Ogden R. Watson (1999) ArticleTitle‘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 

  • J. M. Parks T. L. Boles D. E. Conlon E. DeSouza (1996) ArticleTitle‘Distributing Adventitious Outcomes: Social Norms, Egocentric Martyrs, and the Effects on Future Relationships’ Organizational Behavior and Human Decision Processes 67 181–200 Occurrence Handle10.1006/obhd.1996.0073

    Article  Google Scholar 

  • R. Phillips (2003) ArticleTitle‘Stakeholder Legitimacy’ Business Ethics Quarterly 13 25–42

    Google Scholar 

  • J. E. Post L. E. Preston S. Sachs (2002) ArticleTitle‘Managing the Extended Enterprise: The New Stakeholder View’ California Management Review 45 6–28

    Google Scholar 

  • L. Preston (1978) ArticleTitle‘Analyzing Corporate Social Performance: Methods and Results’ Journal of Contemporary Business 7 135–150

    Google Scholar 

  • P. M. Senge (1990) The Fifth Discipline Double Day NY

    Google Scholar 

  • M. Suchman (1995) ArticleTitle‘Managing Legitimacy: Strategic and Institutional Approaches’ Academy of Management Review 20 571–611

    Google Scholar 

  • K. Thomas (1992) ‘Conflict and Negotiation Processes in Organizations’ M. D. Dunnette L. M. Hough (Eds) Handbook of Industrial and Organizational Psychology EditionNumber2 NumberInSeries3 Consulting Psychologists Press Palo Alto, CA

    Google Scholar 

  • J. Weber (1992) ArticleTitle‘Scenarios in Business Ethics Research: Review, Critical Assessment and Recommendations’ Journal of Business Ethics 11 137–160

    Google Scholar 

Download references

Author information

Authors and Affiliations

  1. Business School, University of Washington, Box 353200, Seattle, WA, 98195-3200, U.S.A.

    Scott J. Reynolds, Frank C. Schultz & David R. Hekman

Authors
  1. Scott J. Reynolds
    View author publications

    You can also search for this author in PubMed Google Scholar

  2. Frank C. Schultz
    View author publications

    You can also search for this author in PubMed Google Scholar

  3. David R. Hekman
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to Scott J. Reynolds.

Rights and permissions

Reprints and permissions

About this article

Cite this article

Reynolds, S.J., Schultz, F.C. & Hekman, D.R. Stakeholder Theory and Managerial Decision-Making: Constraints and Implications of Balancing Stakeholder Interests. J Bus Ethics 64, 285–301 (2006). https://doi.org/10.1007/s10551-005-5493-2

Download citation

  • Issue Date:

  • DOI: https://doi.org/10.1007/s10551-005-5493-2

Keywords

Search

Navigation