Hostname: page-component-745bb68f8f-b95js Total loading time: 0 Render date: 2025-02-04T20:00:57.978Z Has data issue: false hasContentIssue false
  • English
  • Français

Stakeholder Theory, Value, and Firm Performance

Published online by Cambridge University Press:  23 January 2015

Jeffrey S. Harrison  and
Andrew C. Wicks
Jeffrey S. Harrison
Affiliation:
University of Richmond
Andrew C. Wicks
Affiliation:
University of Virginia
Get access Rights & Permissions [Opens in a new window]

Abstract:

This paper argues that the notion of value has been overly simplified and narrowed to focus on economic returns. Stakeholder theory provides an appropriate lens for considering a more complex perspective of the value that stakeholders seek as well as new ways to measure it. We develop a four-factor perspective for defining value that includes, but extends beyond, the economic value stakeholders seek. To highlight its distinctiveness, we compare this perspective to three other popular performance perspectives. Recommendations are made regarding performance measurement for both academic researchers and practitioners. The stakeholder perspective on value offered in this paper draws attention to those factors that are most closely associated with building more value for stakeholders, and in so doing, allows academics to better measure it and enhances managerial ability to create it.

Keywords

valueperformance measurementcorporate performancestakeholder theoryhappiness
Type
Articles
Information
Business Ethics Quarterly , Volume 23 , Issue 1 , January 2013 , pp. 97 - 124
Copyright
Copyright © Society for Business Ethics 2013

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

REFERENCES

Adams, J.S. 1965. Inequity in social exchange. In Berkovitz, L.(Ed.), Advances in experimental social psychology, vol.2 267–99. New York: Academic Press 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, 42 507–25. http://dx.doi.org/10.2307/256973.Google Scholar
Akerlof, G.A. 1982. Labor contracts as partial gift exchange. Quarterly Journal of Economics 97 543–69. http://dx.doi.org/10.2307/1885099.Google Scholar
Argandoña, A. 2011. Beyond contracts: Love in firms. Journal of Business Ethics 99 77–85. http://dx.doi.org/10.1007/s10551-011-0750-z.Google Scholar
Ashforth, B.E.& Mael, F. 1989 Academy of Management Review, 14: 20–39.Google Scholar
Atkinson, A.A., Waterhouse, J.H.& Wells, R.B. 1997 A stakeholder approach to strategic performance measurement.Sloan Management Review, 38(3) 25–37.Google Scholar
Barney, J.B. 2011. Gaining and sustaining competitive advantage. (4th ed.). Upper Saddle River NJ: Pearson Education, Inc. 10.Google Scholar
Barney, J.B.& Hansen, M.H. 1994 Trustworthiness as a source of competitive advantage. Strategic Management Journal, 15 (special issue): 175–90. http://dx.doi. org/10.1002/smj.4250150912.Google Scholar
Becker, L. 1986. Reciprocity. Chicago: University of Chicago Press. 10.Google Scholar
Bentham, J. 1970. An introduction to the principles of morals and legislation. Burns, J.H. and Hart, H.L.A.(Eds.)London: The Athlone Press. 10.Google Scholar
Berle, A.A.& Means, G.C. 1932. The modern corporation and private property. New Brunswick, NJ: Transaction Publishers. 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. SAcademy of Management Journal, 42 488–506. http://dx.doi.org/10.2307/256972.Google Scholar
Bewley, T.F. 1998 Why not cut pay?. European Economic Review, 42 459–90. http://dx.doi.org/10.1016/S0014-2921(98)00002-6.Google Scholar
Blanchflower, D.G.&Oswald, A.J. 2011. International happiness: A new view on the measure of performance. Academy of Management Perspectives, 25 1 (February) 6–22 http://dx.doi.org/10.5465/AMP.2011.59198445.Google Scholar
Blau, P.M.& 1964. Exchange and power in social life. New York: Wiley. Google Scholar
Bosse, D.A., Phillips, R.A.& Harrison, J.S. 2009 Stakeholders, reciprocity and firm performance. Strategic Management Journal, 30 447–56. http://dx.doi.org/10.1002/ smj.743.Google Scholar
Cameron, K. 1980 Critical questions in assessing organizational effectiveness. Organizational Dynamics, 9 2 (Autumn): 66–80. http://dx.doi.org/10.1016/0090-2616(80)90041-8.Google Scholar
Campbell, A. 1997 Stakeholders: The case in favour. Long Range Planning, 30 446–49. http://dx.doi.org/10.1016/S0024-6301(97)00003-4.Google Scholar
Chakravarthy, B.S. 1986 Measuring strategic performance. Strategic Management Journal, 7 437–58. http://dx.doi.org/10.1002/smj.4250070505.Google Scholar
Chatterji, A.& Levine, D. 2006 Breaking down the wall of codes: Evaluating non-fi-nancial performance measurement. California Management Review, 48 2 29–51 http://dx.doi.org/10.2307/41166337.Google Scholar
Choi, J.& Wang, H. 2009 Stakeholder relations and the persistence of corporate finan-cial performance. Strategic Management Journal, 30 895–907 http://dx.doi.org/10.1002/smj.759.Google Scholar
Cialdini, R.B. 1984. Influence: The psychology of persuasion. New York: William Morrow and Company.Google Scholar
Colquitt, J.A, Conlon, D.E., Wesson, M.J., Porter, C.O.L.H.& Ng, K.Y. 2001 Justice at the millennium: A meta analytic review of 25 years of justice research. Journal of Applied Psychology, 86 424– 45. http://dx.doi.org/10.1037/0021-9010.86.3.425.Google Scholar
Connolly, T., Conlon, E.J.& Deutsch, S.J. 1980. Organizational effectiveness: A multi-ple-constituency approach. Academy of Management Review, 5 211– 17.Google Scholar
Cropanzano, R., & Mitchell, M.S. 2005. Social exchange theory: An interdisciplinary review. Journal of Management, 31 874– 900. http://dx.doi. org/10.1177/0149206305279602.Google Scholar
Deiner, E., Lucas, R.E.& Oishi, S. 2002. Subjective well-being: The science of happiness and life satisfaction. In Snyder, C.R.& Lopez, S.J. (Eds.), Handbook of positive psychology, 63– 73. New York: Oxford University Press.Google Scholar
Donaldson, T., & Preston, L.E. 1995. The stakeholder theory of the corporation: Concepts, evidence, and implications. Academy of Management Review, 20 65– 91. Google Scholar
Dossi, A., & Patelli, L. 2010. You learn from what you measure: Financial and non-finan-cial performance measures in multinational companies. Long Range Planning, 43 498– 526. http://dx.doi.org/10.1016/j.lrp.2010.01.002. Google Scholar
Dyer, J.H., & Singh, H. 1998. The relational view: Cooperative strategy and sources of interorganizational competitive advantage. Academy of Management Review, 23 660– 79. http://dx.doi.org/10.1016/j.lrp.2010.01.002. Google Scholar
Economist. 2011. Don't worry, be happy. March19 49.Google Scholar
Ekeh, P.P., 1974. Social exchange theory. Cambridge, MA: Harvard University Press.. Google Scholar
Elkington, J., 1999. Triple bottom-line reporting. Australian CPA. 69(2): 18– 21. Google Scholar
Fama, E.F., & Jensen, M.C. 1983. Separation of ownership and control. Journal of Law and Economics, 16 301– 25. http://dx.doi.org/10.1086/467037. Google Scholar
Fehr, E., & Gachter, S. 2000. Fairness and retaliation: The economics of reciprocity. Journal of Economic Perspectives, 14(3) 159– 81. http://dx.doi.org/10.1257/jep.14.3.159. Google Scholar
Frederick, W., Post, J.& Davis, K. 1992. Business and society: Corporate strategy, public policy, ethics. (7th ed). New York: McGraw-Hill. Google Scholar
Freeman, R.E., 1984. Strategic management: A stakeholder approach. (7th ed). Boston: Pitman. Google Scholar
Freeman, R.E., 1994. The politics of stakeholder theory: Some future directions. Business Ethics Quarterly. 4: 409– 21. http://dx.doi.org/10.2307/3857340.Google Scholar
Freeman, R.E., Harrison, J.S.& Wicks, A.C. 2007. Managing for stakeholders: Sur-vival, reputation, and success. New Haven, CT: Yale University Press. Google Scholar
Freeman, R.E., Harrison, J.S.& Wicks, A.C. 2010. Stakeholder theory: The state of the art. Cambridge: Cambridge University Press. Google Scholar
Freeman, R.E., Harrison, J.S.& Wicks, A.C. & Parmar, B. 2004. Stakeholder theory and «the corporate objective revisited«. Organization Science. 15: 364– 69. http://dx.doi.org/10.1287/ orsc.1040.0066.Google Scholar
Frey, B.S., & Stutzer, A. 2002. What can economists learn from happiness research?. Journal of Economic Literature. 40: 402– 35. http://dx.doi.org/10.1257/002205102320161320.Google Scholar
Friedman, M., 1970. The social responsibility of business is to increase its profits. NewYork Times Magazine. September13: 32– 33, 122-24. Google Scholar
Gilbert, D., 2005. Stumbling on happiness. New York: First Vintage Books. Google Scholar
Goodpaster, K., & Holloran, T. 1994. In defense of a paradox. Business Ethics Quarterly. 4: 423– 30. http://dx.doi.org/10.2307/3857341.Google Scholar
Habermas, J., 1990. Reconstruction and interpretation in the social sciences. In Habermas, J. Moral consciousness and communicative action. 21– 42. Cambridge, MA: MIT Press. Google Scholar
Haidt, J., 2006. The happiness hypothesis: Finding modern truth in ancient wisdom. New York: Basic Books. Google Scholar
Harrison, J.S., Bosse, D.A. & Phillips, R.A. 2010. Managing for stakeholders, stakehold-er utility functions and competitive advantage. Strategic Management Journal. 31: 58– 74. http://dx.doi.org/10.1002/smj.801. Google Scholar
Hartman, E.M., 2011. Freeman: Win-win and the common good. In Phillips, R.A. (Ed.), Stakeholder theory: Impact and prospects. 76– 98. Cheltenham: Edward Elgar Publishing, Ltd. Google Scholar
Hausman, D.M., & McPherson, M.S. 2006. Economic analysis, moral philosophy, and public policy. (2nd ed.). New York: Cambridge University Press. Google Scholar
Hillman, A.J., & Keim, G.D. 2001. Shareholder value, stakeholder management, and social issues: What's the bottom line?. Strategic Management Journal. 22: 125–39. http://dx.doi.org/10.1002/1097-0266(200101)22:2<125::AID-SMJ150>3.0.CO;2-H. 3.0.CO;2-H.>Google Scholar
Hogg, M.A., & Turner, J.C. 1985. Interpersonal attraction, social identification and psy-chological group formation. European Journal of Social Psychology. 15: 51– 66. http://dx.doi.org/10.1002/ejsp.2420150105.Google Scholar
Jensen, M.C., 2001. Value maximization, stakeholder theory and the corporate objective function. European Financial Management. 7: 297– 317. http://dx.doi.org/10.1111/1468-036X.00158.Google Scholar
Johnson, H.T., & Kaplan, R.S. 1987. Relevance lost: The rise and fall of management accounting. Cambridge, MA: Harvard Business School Press. Google Scholar
Jones, T.M., 1995. Instrumental stakeholder theory: A synthesis of ethics and economics. Academy of Management Review. 20: 404–37.Google Scholar
Jones, T.M.& Wicks, A.C. 1999. Convergent stakeholder theory. Academy of Management Review. 24: 206–21.Google Scholar
Judge, T.A.& Kammeyer-Mueller, J.D. 2011. Happiness as a societal value. Academy of Management Perspectives. 25: (1 (February): 30–41. http://dx.doi.org/10.5465/AMP.2011.59198447.Google Scholar
Kahneman, D.& Kruger, A.B. 2006. Developments in the measurement of subjective well-being. Journal of Economic Perspectives. 20: (1) 3–24. http://dx.doi.org/10.1257/089533006776526030.Google Scholar
Kaplan, R.S.& Norton, D.P. 1992. The balanced scorecard: Measures that drive performance. Harvard Business Review. 70: (1) (January/February): 71–79. http://dx.doi.org/10.1257/089533006776526030.Google Scholar
Kerins, F., Smith, J.K.& Smith, R. 2004. Opportunity cost of capital for venture capital investors and entrepreneurs. Journal of Financial&Quantitative Analysis. 39: 385–405. http://dx.doi.org/10.1017/S0022109000003124.Google Scholar
KLD Research and Analytics 2008. Getting started with KLD stats and ratings definitions. Boston. Google Scholar
Krugman, P. 2009. How did economists get it so wrong? The New York Times. (September6): 36.Google Scholar
Lee, C., Lee, K.& Pennings, J.M. 2001. Internal capabilities, external networks, and per-formance: A study on technology-based ventures. Strategic Management Journal. 22: 615–40. http://dx.doi.org/10.1002/smj.181.Google Scholar
Mayer, R.C., Davis, J.H.&Schoorman, F.D. 1995. An integrative model of organizational trust. Academy of Management Review. 20: 709–34.Google Scholar
Mill, J.S., 1961. Utilitarianism. In Cohen, M. (Ed.), The philosophy of John Stuart Mill: 321–68. New York: Modern Library Google Scholar
Mitchell, R., Agle, B.R.& Wood, D.J. 1997. Toward a theory of stakeholder identification and salience: Defining the principles of who and what really counts. Academy of Management Review. 22: 853–86.Google Scholar
Molm, L.D., Collett, J.L.&Schaefer, D.R. 2007. Building solidarity through generalized exchange: A theory of reciprocity. American Journal of Sociology. 113: 205–42. http://dx.doi.org/10.1086/517900.Google Scholar
Nahapiet, J.& Ghoshal, S. 1998. Social capital, intellectual capital, and the organizational advantage. Academy of Management Review. 23: 242–66. http://dx.doi.org/10.1086/517900.Google Scholar
Nozick, R., 1974. Anarchy, state, and utopia: 321–68. New York: Basic Books Google Scholar
Pavot, W.& Deiner, E. 1993. The affective and cognitive context of self-reported mea-sures of subjective well-being. Social Indicators Research. 28: 1–20. http://dx.doi. org/10.1007/BF01086714.Google Scholar
Phillips, R.A., 2003. Stakeholder theory and organizational ethics. San Francisco: Berrett-Koehler Publishers Google Scholar
Phillips, R.A.& Freeman, R.E. 2008. Corporate citizenship and community stakeholders. In Scherer, A.G. & Palazzo, G. (Eds.), Handbook of research on global corporate citizenship. 99–115. Cheltenham: Edward Elgar Publishing, Ltd Google Scholar
Phillips, R.A., Freeman, R.E. & Wicks, A.C. 2003. What stakeholder theory is not. Business Ethics Quarterly, 13: 479–502. http://dx.doi.org/10.5840/beq200313434.Google Scholar
Pierce, J.L., Rubenfeld, S.A. & Morgan, S. 1991. Employee ownership: A conceptual model of process and effects. Academy of Management Review, 16: 121–44.Google Scholar
Porter, M.E.& Kramer, M.R. 2011. Creating shared value. Harvard Business Review, 89: (1/2): 62–77.Google Scholar
Portes, A. 1998. Social capital: Its origins and applications in modern sociology. Annual Review of Sociology, 24: 1–24. http://dx.doi.org/10.1146/annurev.soc.24.1.1.Google Scholar
Preston, L.E. & Sapienza, H.J. 1990. Stakeholder management and corporate performance. Journal of Behavioral Economics, 19: 361–75. http://dx.doi. org/10.1016/0090-5720(90)90023-Z.Google Scholar
Putnam, R.H. 2000. Bowling alone: The collapse and revival of American community. New York: Simon and Schuster Google Scholar
Rabin, M. 1993. Incorporating fairness into game theory and economics. American Economic Review. 83: 1281.Google Scholar
Rabin, M. 1998. Psychology and economics. Journal of Economic Literature. 36: 11. 46.Google Scholar
Rappaport, A. 1986. Creating shareholder value. New York: The Free Press Google Scholar
Rawls, J. 1971, 1999. Justice as reciprocity In Freeman, S. (Ed.), John Rawls: Collected papers. 190– 224. Cambridge, MA: Harvard University Press Google Scholar
Rowley, T.J. 1997. Moving beyond dyadic ties: A network theory of stakeholder influences. Academy of Management Review. 22: 887– 910.Google Scholar
Sachs, S. & Rühli, E. 2011. Stakeholders matter: A new paradigm for strategy in society. Cambridge: Cambridge University Press Google Scholar
Sandvik, E., Deiner, E. & Seidlitz, L. 1993, Subjective well-being: The convergence and stability of self-report and non-self report measures. Journal of Personality. 61: 317– 42. http://dx.doi.org/10.1111/j.1467-6494.1993.tb00283.x.Google Scholar
Satz, D. 2010. Why some things should not be for sale. Oxford: Oxford University Press Google Scholar
Scherer, A.G. & Patzer, M. 2011. Where is the theory in stakeholder theory? A meta-anal-ysis of the pluralism in stakeholder theory. In Phillips, R.A. Stakeholder theory: Impact and prospects. 140– 62. Cheltenham: Edward Elgar Publishing Ltd Google Scholar
Sen, A.K. 1987. On ethics&economics. Malden, MA: Blackwell Publishing Google Scholar
Sen, A.K. 1999. The possibility of social choice. American Economic Review. 89. 349– 78. http://dx.doi.org/10.1257/aer.893.349.Google Scholar
Sharfman, M. 1996. The construct validity of the Kinder, Lydenberg&Domini social performance ratings data. Journal of Business Ethics. 15. (3): 287– 96. http://dx.doi. org/10.1007/BF00382954.Google Scholar
Sidgwick, H. 1981. The methods of ethics. Indianapolis: Hackett Publishing Google Scholar
Simon, L.S. 1966. Industrial reciprocity as a business stratagem. Industrial Management Review. 7(2): 27– 39.Google Scholar
Smith, A. 1776. An inquiry into the nature and causesof the wealth of nations. London: Strahan, W. and Cadell, T. Google Scholar
Solomon, R. 1992. Ethics and excellence. New York: Oxford University Press Google Scholar
Spiller, S.A. 2011. Opportunity cost consideration. Journal of Consumer Research. 38: 595– 610. http://dx.doi.org/10.1086/660045.Google Scholar
Stone, A.A., Shiffman, S.S. & DeVries, M.W. 1999. Ecological momentary assessment. In Kahneman, D., Diener, E. & Schwartz, N. (Eds.), Well being: The foundations of hedonic psychology: 26– 39. New York: Russell Sage Foundation Google Scholar
Susniene, D. & Vanagas, P. 2006. Development of stakeholder relationships by integrating their needs into organizations’ goals. Engineering Economics. 48. (3): 83– 87.Google Scholar
Vandewalle, D., Van Dyne, L. & Kostova, T. 1995. Psychological ownership: An empirical examination of its consequences. Group and Organization Management. 20. 210– 26. http://dx.doi.org/10.1177/1059601195202008.Google Scholar
Waddock, S. & Graves, S.B. 2006. The impact of mergers and acquisitions on corporate stakeholder practices. Journal of Corporate Citizenship. 22. 91– 109 Google Scholar
Wade-Benzoni, K.A. 2002. A golden rule over time: reciprocity in intergenerational allocation decisions. Academy of Management Journal. 45. 1011–28. http://dx.doi. org/10.2307/3069327.Google Scholar
Walsh, J.P. 2005. Taking stock of stakeholder management. Academy of Management Review. 30. 426–52. http://dx.doi.org/10.5465/AMR.2005.16387898.Google Scholar
Werhane, P.H. 1999. Moral imagination and management decision making. New York: OxfordUniversity Press.Google Scholar
Wicks, A. 1996. Overcoming the separation thesis: The need for a reconsideration of business and society research. Business and Society. 35: 89–118.Google Scholar
Williamson, O.E. 1985. The economic institutions of capitalism. New York: Free Press Google Scholar
Zajac, E.J., & Olsen, C.P. 1993. From transaction cost to transactional value analysis: Implications for the study of interorganizational strategies. Journal of Management Studies. 30. 131–45. http://dx.doi.org/10.1111/j.1467-6486.1993.tb00298.x.Google Scholar