Abstract

Stakeholder theory is concerned with the relationships between the firm and stakeholders, as well as how these relationships affect processes and outcomes for all parties involved (Jones and Wicks 1999). Rather than only adhering to the demands of shareholders, stakeholder theory is founded upon the idea that all stakeholders have inherent worth that should be considered during managerial decision making (Donaldson and Preston 1995) and this multifaceted focus will potentially result in different decisions made than if only shareholders were important. A significant amount of research has been conducted on stakeholder theory and the variety of academic work by scholars from multiple disciplines has resulted in some authors continuing to disagree upon how to use the theory to explain performance, be it economic, social, environmental, etc. (Mitchell et al. 1997). Where authors do agree is companies have an assortment of relationships with groups of individuals who are affected by and can affect decisions made by the firm (Freeman 1984). These groups of individuals are called stakeholders.