The term "stakeholder" is a powerful one. this is due, to a significant degree, to its conceptual breadth. The term means many different things to many different people and hence evokes praise or scorn for a wide variety of scholars and practitioners of myriad academic disciplines and backgrounds. Such breadth of interpretation, though one of stakeholder theory's greatest strengths, is also one of its most prominent theoretical liabilities as a topic of reasoned discourse. Much of the power of stakeholder theory is a direct result of the fact that, when used unreflectively, its managerial prescriptions and implications are nearly limitless. When discussed in its "instrumental" variation (i.e., that managers should attend to stakeholders as a means to achieving other organizational goals such as profit or shareholder wealth maximization) stakeholder theory stands virtually unopposed.
The goal of the current paper is like that of a controlled burn that clears away some of the underbrush of misinterpretation in the hope of denying easy fuel to the critical conflagration that would attempt to raze the theory. The aim is to attempt to narrow its technical meaning for greater facility of use in management and organizational studies. By elaborating a number of common misinterpretations of the theory, we hope to render a stronger and more convincing stakeholder theory as a starting place for future research.
Copyright © 2007 SAGE Publications, Inc. This book chapter first appeared in Corporate Social Responsibility.
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Phillips, Robert, R. Edward Freeman, and Andrew C. Wicks. "What Stakeholder Theory Is Not." In Corporate Social Responsibility, edited by Andrew Crane and Dirk Matten, 119-39. Los Angeles, CA: SAGE, 2007.