The Importance Of Stakeholder Theory

1085 Words5 Pages
The stakeholder theory initially developed by Freeman (1984), Perez, Martinez and Rodriguez (2013). They defined stakeholders as those groups or individuals who can affect or are affected by the achievement of the organization’s objectives or those with direct or indirect interest in the company. According to Freeman (1984), when companies doing business, they need to consider the interest of their stakeholders (as cited in Öberseder, Schlegelmilch, & Murphy, 2013). This view is supported by Perez (2013), where he addressed that companies need to satisfy the stakeholders because they are the main target of audience. Typically, stakeholders include employees, customers, suppliers (McWilliams, Siegel, & Wright, 2006), shareholders, non- governments…show more content…
Khojastehpour and Johns (2014) emphasized that implement CSR activities appropriately should result in an increase of profitability because CSR is appropriated to the society. Implementation of CSR will also increase the brand image of a company and influence the consumers’ purchasing behavior. Gupta (2012) highlighted that organizational survival and success are depending on satisfying of both economic and non-economic objectives by meeting the needs and wants of the stakeholders. The economic objective can be profits maximization, whereas the non-economic objective can be corporate social responsibility. Thus, stakeholder theory is important and appropriate for this research which explains the effect of economic concern on the consumers’ purchasing…show more content…
Corporate governance refers to the public and private institutions, including laws, regulations and accepted business practices, which together govern the relationship between the corporate managers and the entrepreneurs in the market economy (OECD, 2001). In other word, corporate governance theory can be defined as a set of rules and regulations according to which the behavior of a company is affected. Corporate governance defined as “a process through which shareholders induce management to act in their interest, providing a degree of confidence that is necessary for capital markets to function effectively” (Rezaee, 2009). According to Mohd Sulaiman and Bidin (2002), they defined corporate governance as an expression used to describe the way of companies are directed and
Open Document