Book review

Abstract

Few paradigms in organization studies have attracted as much ambivalence as stakeholder theory. The theory conjures images of two groups with widely divergent philosophical orientations. On the one hand, some supporters view the theory as one that questions the merits of a singular focus on shareholders and capitalism run amuck. On the other hand, detractors believe that the theory comes from a socialist worldview and is ill-advised and problematic since it is difficult to identify valid stakeholder claims or to trust managers to distribute shareholder wealth. Although the arguments put forward by both groups have merit, they miss a core element of stakeholder theory. Stakeholder theorists see the separation of moral good and business success as artificial and unhelpful. Instead, they have argued that the effective management of stakeholders is a strategic activity that is necessary for business success as it adds value to shareholders and ensures the long-term survival and sustainability of the firm. Ignoring stakeholders is dangerous, not just because it is morally inappropriate, but also because it does not make economic sense.