37
Stakeholder Theory
The traditional view of organizations is that they primarily care about improving the wealth of their shareholders, those who own shares in the company. In this view, the actions and decisions of the firm are primarily economic and are at the expense of other types of interests, such as society’s best interests. Stakeholder theory goes against this traditional view of the corporation (Freeman, 2002).
The main idea in stakeholder theory is that organizations should focus on meeting a broader set of interests than just amassing shareholder wealth. Instead of focusing only on the firm’s financial performance, organizations should also focus on their social performance. They should try to understand, respect, and meet the needs ...
