Stakeholder Theory and Application in Non-Profit Organizations

This annotated bibliography explores the application of stakeholder theory within the context of non-profit organizations, focusing on how this theory can contribute to their growth and effective management. The bibliography comprises an introduction and ten journal articles, each summarized and evaluated. The articles cover various aspects, including the impact of stakeholder theory on competitive advantage, accountability reporting, organizational effectiveness, and the relationship between non-profits and their stakeholders. The analysis also includes discussions on the influence of stakeholder theory on governance, decision-making, and the role of non-profits in sustainable development. The student's work provides a comprehensive overview of the theory and its practical implications for non-profit leadership and management, offering valuable insights into stakeholder engagement and organizational performance. The bibliography highlights the importance of managing stakeholder interests, ensuring accountability, and fostering collaboration for the long-term success of non-profit entities. The student has followed the assignment brief, providing a detailed overview of each source and its relevance to the topic, demonstrating a solid understanding of the core concepts and their application in the field.

Running head: ANOTATED BIBLIOGRAPHY.
Leading and Managing Non-Profit Organization.
Name of the Student
Name of the University
Author note

1Leading and Managing Non-Profit Organization
The stakeholder theory was coined by Edward Freeman, which stated that the
stakeholders of a company includes to be in the position right above any other individual
directly or indirectly affecting the company and how the working is done in it. In opposition
to the stakeholder theory, there is another elongated theory of stakeholder coined by Milton
Friedman, an economist. He stated that in the capitalism market, only the stakeholders of a
company are the ones who shall take care of the company and whatever is happening with
other stakeholders in regards to forming the bottom line for the company. As per Friedman’s
view, compelled profit are supposed to be made by the company that not only satisfies the
shareholders but also focuses on a positive growth. The groups of employees, customers,
suppliers, environmental groups, political groups, media groups, local communities,
government groups, and financial institutions form the stakeholders of a company. Everyone
has their own contributions towards the company that is considered as a wholesome effort
needed to let a company expand and grow positively. This particular view for the
stakeholders paints the world of corporate organizations like an ecosystem of groups related
to each other where every small or big sector needs satisfaction and consideration that is
required to keep an organization healthy and make it successful in the long run. In this paper,
an annotated bibliography on the stakeholder theory will discussed and how the application
of stakeholder theory on non-profit organization helps it grow and expand.
The theory of stakeholders says that a group of people or any individual affecting the
objectives of the organization or gets affected by the same is a stakeholder. It is generally a
concept of redefining an organization. The stakeholders of a company decides how the
company should be and how it can be conceptualized. As per Friedman, any organization in
itself should be considered as a group of stakeholders and the organization’s purpose is to
manage the viewpoints, interests and the requirements of stakeholders. The management of
stakeholders is thought to get consummate by managers of the firm. On the other hand, the

2Leading and Managing Non-Profit Organization
corporation should be managed by the managers which benefits the stakeholder and ensure
their participation and rights in the decision making process. The management also acts an
agent of stakeholder in regards to ensure survival of organization along with safeguarding
stakes of every group for long term.
Jones, T. M., Harrison, J. S., & Felps, W. (2018). How applying
instrumental stakeholder theory can provide sustainable competitive
advantage. Academy of Management Review, 43(3), 371-391.
This article examines the application of stakeholder theory that can provide an
advantage of sustainable competition to the nonprofit organizations. The managers of an
organization are the ones who make the everyday decisions that need to be undertaken for
functioning of the firm. Other than the owner and the managers, other people are also
involved into activities of the non-profit organizations. According to Steinberg, a theory of
principle- agent is applied to some non-profit organizations. It concludes that when multiple
number of principles are present with varying objectives, it hinders potentiality of the agency
in regards to stakeholder theory. Keeping this view in line, the stakeholder theory is more
comprehensive on management and governance of the non-profit organizations.
Greiling, D., Stötzer, S., & STOETZER, S. (2016). Accountability
Reporting in Austrian Non-Profit Organizations-More Than a
Compliance Instrument?. Public Administration Quarterly, 256-287.
This article examines the fact that in effectiveness and efficient terms, the non-profit
organizations everywhere is increasing in number and they are also bound to demonstrate
performance. As per (Greiing, Stotzer & Stotzer, 2016.) Introduction for the measurement
system of performance gets highly advocated towards not only for external promotion of

3Leading and Managing Non-Profit Organization
liability but also towards purposes of coordination internally. However, the studies are
concentrating on the utilization of performance with the system of measurement inside the
nonprofit organizations. The concentration is also towards how they need to balance out both
external accountability with that on internal management compiling together to report to
report obligation faced within the implemented measurement of performance systems that are
scarce. Furthermore, this gap needs to be narrowed by considering this particular question in
regard to the nonprofit organization in Australia.
Willems, J., Jegers, M., & Faulk, L. (2016). Organizational effectiveness
reputation in the nonprofit sector. Public Performance &
Management Review, 39(2), 454-475.
From this article it is examined that the number of public organization is increasing in
number, which relies on the partners or stakeholders of nonprofit organization for delivering
services to the public. As per (Willems, Jegers & Faulk, 2016.) It has become a trend which
is making assessments of performance important for this nonprofit organization to allocate
resources received from government. However, these nonprofit organizations engage with the
multiple stakeholders leading to a complicated set of goals for the organization. The theory of
stakeholder makes it easier for organization to keep a record on the entire thing happening
inside it. This provides a wholesome understanding for everyone to understand better the
requirements of nonprofit organizations and which the areas that need to be improved.
However, a model based on literature has been developed by this organization in order to
understand the assessment that are subjective for the organizational performance when it
comes to the stakeholders those are considered together for consisting an efficient reputation
for the nonprofit organization.

4Leading and Managing Non-Profit Organization
Yuesti, A., Novitasari, L. G., & Rustiarini, N. W. (2016). Accountability of
non-government organization from the perspective of stakeholder
theory. International Journal, 4(2), 98-119.
This article examines the accountability for nonprofit organization from stakeholder
theory’s perspective. Various articles of criticism are highlighted by media in regards to the
accountability of stakeholder theory to nonprofit organization that get more intensified when
it comes to the issues of disbursement. In particular, the obligations and rights of this
organization more specifically are applied in the functioning applying the stake holder theory.
As per (Yuesti, Novitasari and Rustiarini, 2016) Weakness in accountability can be found
when the financial reports mismatch and submitted like that to the higher authorities.
Therefore, the stakeholder theory needs to be applied in order to keep a track about the
reports and every activity of the happenings in nonprofit organization. This not only
organizes the workload but also helps in maintaining a proper record for avoiding chaos in
future.
Coule, T. M. (2015). Nonprofit governance and accountability: Broadening
the theoretical perspective. Nonprofit and Voluntary Sector Quarterly, 44(1),
75-97.
This article discusses about the accountability of position as a straightforward and
beginning of government function. If looked from a perspective of critical management,
conceptualizing the relationship amongst accountability and governance in regards to issues
of belief and power about any organization, integral features and social relations. As per
(Coule, 2015) The above article clears the principle agent of assuming governance focusing
on a unitairsm logic that can make narrow based interpretations about accountability of stake
holder theory into nonprofit organizations. This kind of an approach which are at odd when

5Leading and Managing Non-Profit Organization
the embedded values of social missions are concerned, many nonprofit organization prioritize
the smaller stakeholder sections.
Fassin, Y., De Colle, S., & Freeman, R. E. (2017). Intra‐stakeholder
alliances in plant‐closing decisions: A stakeholder theory
approach. Business Ethics: A European Review, 26(2), 97-111.
The above article discusses the decision taken by enterprises which are multinational
when they have an approach of stakeholder theory. Particularly, the focus is on disclosure of
the application of the stakeholder theory in as an internal alliance basis. As per (Fassin, Colle
& Freeman, 2017) It has been analyzed in this article, that the arrival of stakeholder
association in regards to terminating decision of MNE for terminating the local production
and then discuss its influence on customer is sensible. The application of stakeholder theory
in organizations that are nonprofit makes it easier to analyze and take actions accordingly
which are to be considered as important for the organization.
Harangozó, G., & Zilahy, G. (2015). Cooperation between business and
non-governmental organizations to promote sustainable
development. Journal of Cleaner Production, 89, 18-31.
According to the above article, the policy of international environment has been
recognized in the business and civil sectors both. Importance of the organizations that are
civil are more stressed in the above mentioned policy. Nerveless, there is a common
understanding for how the nonprofit organizations has influence of stakeholder theory into
corporate environment. As per (Harangozo & Zilahi, 2015) The relationship between
governmental and non-governmental organizations are based on a business of stakeholder
theory. Their results prove that the medium and long sized enterprises which are nonprofit

6Leading and Managing Non-Profit Organization
rank in importance similarly as the larger enterprises but with a different stakeholder theory.
However, it is seen that the main concern here is the presence of stakeholder theory is a part
of the structure.
Rezaee, Z. (2016). Business sustainability research: A theoretical and
integrated perspective. Journal of Accounting Literature, 36, 48-64.
The investors of global demand disclose the sustainability and require regulators in
performance of information. The scholar of this article have started a research on how the
performance, assurance and reporting happens. As per (Rezaee, 2016) The main aim of any
firm with a creation of value can get achieved when the management considers rate of
interests for all the stakeholders integrating all the economic, social, governance,
environmental and ethical sides of performing sustainably. The application of stakeholder
theory in this sort of firm helps in integration and creating a balance into the business models,
reporting and corporate culture. However, the application of stakeholder theory is a part of
nonprofit firms.
Liket, K. C., & Maas, K. (2015). Nonprofit organizational effectiveness:
Analysis of best practices. Nonprofit and Voluntary Sector Quarterly, 44(2),
268-296.
According to the above article, when the pressure of accountability increases,
nonprofit organizations search for some ways to showcase their effectiveness. Signifivant
tools for evaluating the effectiveness of nonprofit organizations are absent largely. However,
an extensive body is present to determine the effectiveness. As per (Liket & Mass, 2015) In
the above article, it is studied that that increase the value of practical and comparative
exercise, an assessment is conveyed on the application for stakeholder theory. The managers
were the ones to conduct this and later on it was identified that to lead improvements for

7Leading and Managing Non-Profit Organization
increasing the effectiveness of organization, the introduction of stakeholder theory acts as a
common and easier tool that will increase the effective of nonprofit organizations like this.
Herlin, H. (2015). Better safe than sorry: Nonprofit organizational
legitimacy and cross-sector partnerships. Business & Society, 54(6), 822-
858.
The above article states that the influence of stakeholder theory influences the
partnership of cross sector of the nonprofit organizations. For providing a strategic direction,
there is a cross sector approach of stakeholder theory in partnership. As per (Herlin, 2015)
Five kind of theoretical propositions got developed on the basis of stakeholder theory to
identify the legitimacy and identity of the organization. Due to asymmetry of power in favor
towards the company, the risk of legitimacy is quite serious for partnerships that are
integrative as compared with the transactional and philanthropic theory. However, it is
concluded that the implication of stakeholder theory will resolve these kind of problems in
nonprofit organization.
Therefore, it is concluded from the above discussion that the stakeholder theory any
organization in itself should be considered as a group of stakeholders and the organization’s
purpose is to manage the viewpoints, interests and the requirements of stakeholders. The
management of stakeholders is supposed to get wholesome by the managers of firm. On the
other hand, the corporation should be managed by the managers which benefits the
stakeholder and ensure their participation and rights in the process of decision making. When
this theory is applied on nonprofit organization, it help them to function in a more efficient
way with every stakeholder in order to avoid future chaos.

8Leading and Managing Non-Profit Organization
Bibliography
Coule, T. M. (2015). Nonprofit governance and accountability: Broadening the theoretical
perspective. Nonprofit and Voluntary Sector Quarterly, 44(1), 75-97.
Fassin, Y., De Colle, S., & Freeman, R. E. (2017). Intra‐stakeholder alliances in plant‐closing
decisions: A stakeholder theory approach. Business Ethics: A European
Review, 26(2), 97-111.
Greiling, D., Stötzer, S., & STOETZER, S. (2016). Accountability Reporting in Austrian
Non-Profit Organizations-More Than a Compliance Instrument?. Public
Administration Quarterly, 256-287.
Harangozó, G., & Zilahy, G. (2015). Cooperation between business and non-governmental
organizations to promote sustainable development. Journal of Cleaner
Production, 89, 18-31.
Herlin, H. (2015). Better safe than sorry: Nonprofit organizational legitimacy and cross-
sector partnerships. Business & Society, 54(6), 822-858.
Jones, T. M., Harrison, J. S., & Felps, W. (2018). How applying instrumental stakeholder
theory can provide sustainable competitive advantage. Academy of Management
Review, 43(3), 371-391.
Liket, K. C., & Maas, K. (2015). Nonprofit organizational effectiveness: Analysis of best
practices. Nonprofit and Voluntary Sector Quarterly, 44(2), 268-296.
Rezaee, Z. (2016). Business sustainability research: A theoretical and integrated
perspective. Journal of Accounting Literature, 36, 48-64.

9Leading and Managing Non-Profit Organization
Willems, J., Jegers, M., & Faulk, L. (2016). Organizational effectiveness reputation in the
nonprofit sector. Public Performance & Management Review, 39(2), 454-475.
Yuesti, A., Novitasari, L. G., & Rustiarini, N. W. (2016). Accountability of non-government
organization from the perspective of stakeholder theory. International Journal, 4(2),
98-119.