Stakeholder Theory: A Review of Influences on Business Policy

This paper presents a literature review of stakeholder theory, exploring its influence on business policy and corporate social responsibility. The review begins by defining stakeholder theory, emphasizing the importance of both internal and external stakeholders in creating value for a business. It analyzes three journal articles focusing on stakeholder identification and salience, stakeholder actions and responses, firm performance, and the ongoing debate surrounding the theory. The articles highlight that stakeholder value extends beyond economic returns to include factors like organizational justice, service utility, opportunity costs, and affiliation. The review also addresses how stakeholders influence business policies through their vested interests and power within a firm, positioning them as key custodians in policy formulation.

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STAKEHOLDER THEORY
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City and State
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Stakeholder Theory
I undertook several measures in selecting the final three articles analyzed in this paper.
First, was the use of key search words including stakeholder theory, business stakeholders, value
and performance measurement, stakeholder perspective, and corporate social responsibility. Each
stage of the search was guided by three primary objectives namely defining stakeholder theory,
identifying stakeholder perspective, and objective of stakeholder theory. As noted, the central
theme in each article is stakeholder perspective as defined by the theory.
In the present day business world, stakeholder theory is a widely utilized concept.
Specifically, the theory addresses the values and morals incorporated in the management of an
organization by the said stakeholders that are characterized into internal and external
stakeholders(Harrison, and Wicks, 2013). In this regard, the internal stakeholders include
employees, owners, and managers, whereas external stakeholders include customers, suppliers,
creditors, shareholders, government, and society. As follows, the theory holds that the value of
any business is to create value for its stakeholders. The three journal articles provide diverse
insight into the concept of stakeholder theory by exploring various themes and aspects of the
theory including stakeholder identification and salience, responses and actions of stakeholders,
performance of firms, firms’ responses and actions, and theory debate of the concept(Laplume,
Sonpar, and Litz, 2008).
In the first article, Stakeholder theory, value, and firm performance by Harrison and
Wicks seeks to demystify the notion that stakeholder’s perspective of value in an organization is
narrowed to economic returns. Following this school of thought, I determined that scholars have
made consistent assumption of the term value to mean economic gains for stakeholders when
evaluating the stakeholder theory. The theory, however, asserts that stakeholder perspective of
value includes stakeholder satisfaction obtained from firm utility in the form of intangible and

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tangible factors (Harrison, and Wicks, 2013). In this regard, stakeholder perspective of value is
based on four factors namely utility associated with organizational justice, utility associated with
actual services and goods, utility associated with perceived opportunity costs, and utility from
affiliation.
In the second article, Stakeholder theory: Reviewing a theory that moves us by Laplume,
Sonpar, and Litz I was able to identify the five themes of stakeholder theory as mentioned
earlier. Like the previous article, the authors note that wealth maximization is the central
objective of many shareholders in an organization (Laplume, Sonpar, and Litz, 2008). In this
case, incorporation of stakeholder theory is introduced in an attempt to challenge this mindset by
introducing the diverse aspects of the theory that requires managers to focus attention on a firm’s
performance, actions, and responses as well as stakeholder responses and actions.
The final article, Stakeholder theory: How they influence business policy draws attention
to the role of stakeholders in influencing business policies within a firm. According to the theory,
stakeholders’ ability to influence policy making is defined by vested interests and power in a
firm (Kristen, 2015). In this case, the more power and interest stakeholders show towards an
organization, the greater their ability to influence business decisions. Thus, the theory seeks to
identify stakeholders as the actual custodians of a company, hence, they play a critical role in
policy formulation.

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Bibliography
Harrison, J.S. and Wicks, A.C., 2013. Stakeholder theory, value, and firm performance. Business
ethics quarterly, 23(1), pp.97-124.
Kristen, J., 2015. Stakeholders Theory-How They Influence The Business Policy. Scholedge
International Journal of Business Policy & Governance ISSN 2394-3351, 2(4), pp.14-17.
Laplume, A.O., Sonpar, K. and Litz, R.A., 2008. Stakeholder theory: Reviewing a theory that
moves us. Journal of management, 34(6), pp.1152-1189.