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Defining stakeholders

In this video, professor Mollie Painter discusses Stakeholder theory.

Stakeholder-identification is a key building block in any ethical deliberation, since it ensures that all legitimate interests are being acknowledged and protected.

How is the term ‘stakeholder’ defined?

“Simply put, a stakeholder is any group or individual who can affect, or is affected by, the achievement of a corporation’s purpose. Stakeholders include employees, customers, suppliers, stockholders, banks, environmentalists, government and other groups who can help or hurt the corporation.”

Source: Freeman, R. E. (1984). Strategic Management: A Stakeholder Approach. Boston, Pitman. p. vi

Some important assumptions underpin stakeholder theory in a business ethics context:

  • Stakeholder theory rejects the “separation fallacy”, I.e. it argues against isolating economic issues from social issues
  • As with all good theories of management, stakeholder theory is both practical and prescriptive. It therefore tells us not only what is the case, but is also concerned with what ought to be the case. In this way, it provides ethical direction.
  • Different representations of stakeholder engagement are possible > indicates slightly different assumptions

In the video you will be made aware of the various ways in which stakeholder relations in corporations can be depicted.

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