Abstract
This paper considers firms’ need to attract enough primary stakeholders who are powerful −in the sense of having high bargaining power over the value created by the firm thanks to competition in product or factor markets− in order to revisit the question “Will firms that treat all stakeholders well create more economic value than firms that prioritize some stakeholders over others?”. The paper builds on the resource-based view and justice literature to argue that the answer to this key question is: it depends on what drives powerful stakeholders’ choice of which firm to associate with. A strategy that aims to balance all stakeholders’ interests can be successful if the pool of stakeholders the firm draws from contains enough powerful stakeholders who value how fairly others are treated and if these stakeholders assess the firm’s stakeholder strategy as fair. The justice literature also helps us explain why powerful stakeholders may care about how fairly other stakeholders are treated and shed light on stakeholders’ fairness assessments.
Published Version
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