What Is Stakeholder Theory?

What Is Stakeholder Theory?

Stakeholder theory is a business ethics, morals and values approach to managing stakeholders involved with a project or organization that seeks to optimize relations with stakeholders and improve efficiencies. It is used in many important fields such as project management, corporate social responsibility, strategic management and business ethics. Ian Mitroff's book Stakeholders of the Organizational Mind was the first to define stakeholder theory, and R. Edward Freeman's book Strategic Management: A Stakeholder Approach is often referred to as Freeman's stakeholder theory. ProjectManager is cloud-based work and project management software that helps manage stakeholder expectations and keep them updated.

Edward Freeman's stakeholder theory differs from Milton Friedman's shareholder theory in that it states that all stakeholders are important for a corporation. This includes employees, customers, suppliers, financiers, communities, governmental bodies, political groups, trade associations, trade unions and even competitors. The list of who the stakeholders are is not universally agreed upon, and even the definition of a stakeholder remains contested by some. For an example, we'll identify the interests and expectations of stakeholders for the construction of a manufacturing facility.