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Shareholder Theory And Stakeholder Engagement

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2.3: Stakeholder Theory and Stakeholder Engagement

Stakeholder theory states that corporations should use corporate resources not only to increase the wealth of shareholders, but also to serve other groups or constituents that are affected by its activities. The firm’s employees, the local community, and the broader society that provides it with the business environment to prosper, must also be given serious consideration by management in the conduct of the company’s activities. Stakeholder theory is integral to the concept of corporate social responsibility, which integrates social and environmental concerns with corporate operations and interaction with all stakeholders (Branco & Rodrigues, 2007).

While many sectors draw a demarcation between …show more content…

In most of the early studies, ‘sustainability assessments’ were restricted to the “green issues” while failing to include the socio-economic dimension. The necessity of including the sociological aspect of sustainability prompts the search for new measurements to assess this particular dimension. Chereja, et al. (2013) identified four principal stakeholder group, i.e. customers, employees, suppliers, and the community. The key factors this paper identifies as relevant for designing a stakeholder engagement framework are: the business areas in which the organization operates, its market position, and its organizational …show more content…

(2008). One viewpoint is the management perspective, which is concerned with the capture of knowledge, with increasing ownership of the project by its users, the minimization of conflict, the promotion of innovation, and facilitation of spin-off partnerships. The other is the ethical perspective, which aims for meaningful stakeholder engagement for the purpose of enhancing inclusive decision-making, promoting equity, enhancing local decision-making and building social capital. While these two viewpoints are important, Mathur, et al. (2008) suggest a third perspective, i.e., that of an opportunity for social learning, a “social process where diverse stakeholders share a common forum, learn about each other’s values, reflect upon their own values, and create a shared vision and shared objectives (p. 3). The later contrasts from the first two in that if favors a dialogue-oriented approach between and among stakeholders, not mainly the current one-way approach between the stakeholders and

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