Stakeholder Theory

Stakeholder Theory

Impact and Prospects

Edited by Robert A. Phillips

Honoring the twenty-fifth anniversary of R. Edward Freeman’s Strategic Management: A Stakeholder Approach, one of the most influential books in the history of business strategy and ethics, this work assembles a collection of contributions from some of the most renowned and widely-cited scholars working in the area of stakeholder scholarship today.

Chapter 5: Globalization, Mental Models and Decentering Stakeholder Approaches

Patricia H. Werhane

Subjects: business and management, strategic management


Patricia H. Werhane In the last 25 years, stakeholder theory has grown from Ed Freeman’s embryonic idea spelled out in his 1984 book, Strategic Management, to a set of full-blown theses that have influenced both ethical theory and corporate practice. The term ‘stakeholder’ has become commonplace in the academic literature, in corporate boardrooms, in annual reports, and in the language of non-government organizations (NGOs). Freeman’s original idea and its offspring have become central to the theory and practice of business, and we are profusely grateful for Freeman’s seminal contribution. Yet, and this will be my argument in this chapter: in a diverse globalized ‘flat’ world with expanding economic opportunities and risks, we need to revisit and revise our mindsets about stakeholder analysis and corporate governance. Taking the lead from the final chapters of Strategic Management, I want to suggest that how one constructs a stakeholder graphic creates certain kinds of mental models, frames our perceptions and narrows our foci, thus affecting corporate governance issues, management behavior, and ethical decision making. Reframing those graphics enables companies and their managers to think more globally and systemically about corporate responsibility and corporate governance. THE ‘FLAT WORLD’ In a recent book, The World is Flat, Tom Friedman developed a set of persuasive arguments that ‘[g]lobalization has now shifted into warp drive’ (Wright, 2005). That is, free enterprise has not only infiltrated most of the corners of the earth, but jobs, ideas, goods and services, like the internet, are now global. This is not...

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