A Stakeholder Theory of The Modern Corporation
Stakeholders are the groups who have a stake or claim in the firm. Specially included suppliers, customers, employees, stockholders, and the local community, as well as management in its role as an agent for these groups. Each of these stakeholder groups has a right not to be treated as a means to some end, and therefore must participate in determining the future direction of the firm in which they have a stake. The Attack on Managerial Capitalism The legal argument The result of such changes in the legal system can be viewed as giving some rights to those groups that have a claim on the firm. It raises the question, at the core of the theory of the firm: in whose interest and for whose benefit should the firm be managed? The answer proposed by managerial capitalism is clearly “stockholders”, but the law has been progressively circumscribing the answer. The economic argument The avoidance of competitive behavior on the part of firms, each seeking to monopolize a sma...