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Disadvantages Of Stakeholder Theory

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The stakeholder theory has become an established foundation which identifies and examines the effect of corporations on its stakeholders, stakeholder “is any group or individual who can affect, or is affected by the achievement of the organisation’s objectives (Sternberg .E 1997: 3). The stakeholder theory is “a conceptual framework of business ethics and organisational management which addresses moral and ethical values in the management of organisation” (Wikipedia, 2014). The theory has been used to discuss the following corporate issues: corporate governance, business ethics, corporate social responsibility, strategic management and organizational effectiveness.

The stakeholder theory started with the question posed by the noble price winning …show more content…

ADVANTAGES AND DISADVANTAGES OF STAKEHOLDER THEORY
5.1. Advantages
• The main advantages of stakeholder theory are that the theory is not only a single model to resolve the problem of identifying the proper objective of corporations, but also considers economic and ethics issues that make companies take social responsibilities and to present fairness to everyone involved in business.
• The theory is a good combination between economy and ethic that enables the corporation to grow and promote social wealth as a whole.
• The theory suggests that if the interests of shareholders are concerned by directors, not only stakeholder’s value will be increased but also the social wealth will be enhanced ultimately.
• A great social wealth will be produced as companies win the loyalty from their shareholders.
• The theory presents a moral basis for respecting human rights and promoting efficiency. Directors who communicate with stakeholders are encouraged to take care of the interest of shareholders
5.2. …show more content…

Bibliography
1. . Phillips, R., Robert; Edward Freeman (2003). Stakeholder Theory and Organizational Ethics. Berrett- Koehler Publishers.
2. Freeman, R, Edward (1984) Strategic Management: A stakeholder approach. Boston: Pitman.
3. Donaldson, Thomas, Preston, & Lee E.(1997) The stakeholder theory of the corporation: Concepts, Evidence, and Implications Academy of Management Review (Academy of Management) 20 (1):
4. Mitchell, R. K.; Agle, B. R.; Wood, D. J. (1997) towards a theory of stakeholder Identification and Salience: Defining the principle of who and What Really Counts.
5. KRETZSCHMAR, L. et al. (2012) Ethics. 3rd Ed. Oxford University Pres: south Africa
6. George, D. C., John, H. K. (1993) An Introduction to Business Ethics. TJ International Ltd, Padstow: Hong Kong
7. Lauora, P. H., Desjardins, J. Business Ethics. (2008) . 2nd Ed.McGraw-Hill: Americas, New York, NY

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