4. What is it?
Stakeholder theory is
an idea that businesses
should not function
only for financial
benefit; they should run
for the benefit of both
their owners and
stakeholders.
5. What is it?
The idea is that when businesses pay attention to
their stakeholders-
customers, suppliers, employees, and investors-
they will make a larger overall profit.
6. Who introduced it?
Edward Freeman
He began work on the
Stakeholder Theory in 1984
Freeman received a B.A. in
mathematics and philosophy
from Duke.
7. Who uses it?
Businesses, organizations, and even the
Government! Anyone who values morals and the
relationship between the consumer and
corporation.
8. So what?
The theory is important because it acts as a way to
understand Corporate Social responsibility, or how a
business regulates itself.
It promotes the ideology that businesses making a profit
are dependent on behaving honorably and with morals.
10. Criticism
Has to be narrowed down
to be useful
Some businesses can
make more of a profit
while disregarding the
opinions of the
public/stakeholders
Out of date and
there have been too
many revisions to
keep track of
11. Example- Greenpeace
Organization
It was created in 1971.
Realignment of the organization in
1985 created a less antagonistic
group towards organizations, in
order to be seen as a group to the
people.
Membership in 1985 was around 2
million; following the realignment
period, Greenpeace gained 5
million members by 1990.
It’s all about the people!
12. To Wrap it Up…
Good business is a balance between the
relationship of companies and stakeholders, as well
as the motivation to earn a profit.
