The Stakeholder Theory by Thomas Donaldson

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Recommended: Managerial stakeholder theory

A stake holder, in general is defined as an individual or organization likely affected by the performance of an organization. In “The stakeholder theory of the corporation: Concepts, evidence, and implications” by Thomas Donaldson , he quotes Stanford research institution and calls stake holders “those groups without whose support the organization would cease to exist.”

Therefore a stakeholder can be thought of as some who both influences and is influenced by an organization.

According to Greasley (1999, p9) there are 3 types of stake holders: internal, connected and external.

Internal stakeholders are described as “the managers and employees of a company.” Connected stakeholders are those that are beyond the immediate boundaries of the firm. External stakeholders are those who are outside the firm.

`Having assessed their own power bases, change agents should identify powerful individuals and groups with an interest in the changes such as staff groups, unions, departmental managers, and top level executives. These key stakeholders can thwart or support change. `

(Cummings and Worley 2008, p182)

From this it can be derived that different stakeholders hold varying amounts of influence, as well as varying amounts of interest, within the organization. For example in the case of a mining company an individual miner would have a large interest the company, especially in terms of working conditions ,salary benefits , etc. However he would have very little influence, and hence would not be able to improve his working condition on his own, having to turn to a union instead.

However, there has been some debate on the legitimacy of the supposed concept of the stakeholder.

`The stakeholder concept has not gone unchallenged....

... middle of paper ...

...rley, C.G.(2008) Organization development and change,

Stanford: Cenage Learning

Donaldson, T., Preston, L.E.(1995) The Stakeholder Theory of the Corporation:

Concepts, Evidence, and Implications .The Academy of Management

Review,20(1), pp 65-91 .Available from: http://www.jstor.org/stable/258887,

[Accessed 21 November 2010]

Friedman, A.L., Miles, S. (2006)stakeholders :theory and practice, Oxford: Oxford

university press

Greasley,A (1999). Operations management in business, Cheltenham: Nelson

Thornes

Norton, A., Hughes, J.(2009) CIMA Official Learning System Enterprise

Management ,Oxford: Butterworth-Heinemann

Vale(2010).available from: http://www.vale.com/en-us/sustentabilidade/fundacao-

vale/pages/default.aspx [Accessed 26 2010]

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