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date: 17 April 2024

A Stakeholder Perspective: Origins and Core Conceptsfree

A Stakeholder Perspective: Origins and Core Conceptsfree

  • Pernille EskerodPernille EskerodManagement and Organizational Behavior, Webster University


Organizations (whether they are permanent or temporary) have stakeholders, that is, individuals and groups that can affect or be affected by the organization’s activities and achievements. Assuming that the fundamental driver of value creation is stakeholder relationships, managing those relationships well is a prerequisite for obtaining and sustaining success in all businesses, regardless of the success measures applied. Therefore, applying a stakeholder perspective is of significant importance for any manager or entrepreneur. However, the essentials as well as the implications of applying such a perspective are not clear. Researchers and practitioners have offered many contributions, however, the existing literature is inconclusive. To provide clarity, stakeholder concepts (e.g. stakeholder definition, systems perspective, separation thesis, stakeholder analysis, stakeholder engagement, perception of fairness, stakeholder utility function, stakeholder salience, stakeholder disaggregation, stakeholder multiplicity, managing for stakeholders, Value Creation Stakeholder Theory, value destruction, shadows of the context) are defined and 15 propositions for further inquiry are offered. The Scandinavian and American origins of stakeholder thinking are presented. The propositions are intended to invite discussion—and could form the basis for future research questions as well as provide guidance for managers. By drawing on (a) Professor Eric Rhenman, who in the 1960s first proposed an explicit theoretical framework on stakeholder thinking; (b) Professor R. Edward Freeman, who has been the most influential contributor to the field; and (c) additional, selected contributions, the aim is to providevalue for both new and seasoned researchers as well as for managers, consultants, and educators. In order to give the reader the opportunity to self-assess and interpret the “raw data,” the text is rich on citations.


  • Business Policy and Strategy
  • Organization Theory


Applying stakeholder thinking within business and management is “a way to see the company and its activities through stakeholder concepts and propositions. The idea … is that ‘holders’ who have ‘stakes’ interact with the firm and thus make its operation possible” (Näsi, 1995b, p. 19). The underlying premise is that all organizations have stakeholders, that is, “any group or individual who can affect or is affected by the achievement of the firm’s objectives” (Freeman, 1984, p. 25). Managing stakeholder relationships well is a prerequisite for obtaining and sustaining success in any business, regardless of the success measures applied.

“Stakeholder theory has been intimately connected to the idea of strategy from the earliest days, [and] its origins and early development were clearly aimed at making business policy and strategy more effective” (Freeman, Phillips, & Sisodia, 2020, p. 214). Observations of value creation in the business world have had a central role in the development of stakeholder theory. “Every business has always created and sometimes destroyed multiple kinds of value (e.g., financial, intellectual, social, emotional, spiritual, cultural, and ecological) for customers, suppliers, employees, communities, and financiers” (Freeman et al., 2020, p. 225). The important message is that the stakeholder relationship and its interconnections with other relationships should be the unit of analysis instead of “the most common unit of analysis [which] is the ‘economic transaction,’… [Economic transactions are] ultimately summed to measure business success. But relationships are not the summation of a group of transactions. Focusing on the value created for investors is far too narrow a focus for building a great company” (Freeman et al., 2020, p. 225). For Harrison and Wicks (2013), value is perceived broadly as the aggregated utility (economic and non-economic) the focal organization and the stakeholder receive by engaging with each other, and which would not have been received had they not engaged. Here, the term engagement is used rather loosely. It could be that a given focal organization is merely complying with the requirements outlined in a permission granted by a local authority.

Applying a stakeholder perspective to an organization, that is, making strategic decisions and actions based on an understanding of the relationships between the organization and its stakeholders as well as the stakeholders’ characteristics, for example, demands, wishes, contribution potential, legitimacy, power, network, and more, is of major importance for any manager or entrepreneur. This is agreed upon among researchers and practitioners. However, the essentials as well as the implications of applying such a perspective are not clear, as the existing literature is inconclusive. The aim of this article is to help new and seasoned researchers as well as practitioners (such as managers, consultants, and educators) within management by clarifying core concepts and offering propositions relevant for discussions and future research.

This article draws on many contributions within the very big field of stakeholder thinking. Contributions by two authors have, however, had the biggest influence on the article: (a) the Swedish professor Eric Rhenman, who in the 1960s offered a theoretical framework as well as a thorough description of an in-depth case study on stakeholder thinking; and (b) the American professor R. Edward Freeman, who has had a tremendous influence on researchers, educators, consultants, and managers alike through his numerous contributions within the field, including his groundbreaking book Strategic Management: A Stakeholder Approach (Freeman, 1984).

Examples to Set the Stage and Establish an Initial Understanding of the Phenomenon

The Textbook Case (based on Eskerod & Jepsen, 2013): A printing company entered into a contract with two authors of a well-known and well-esteemed self-published textbook on management. A new printing company had been sought by the authors for several reasons, none of which are relevant for the purpose of this case study. Agreements on specifications, the budget, and deadline were stated in the contract, and everything seemed fine from the perspective of the printing company as well as that of the authors.

Previous editions of the book featured a unique design feature, that is, that the printed book consisted of pages with different colors. The first half of the book was printed on white paper, whereas the second half was printed on yellow paper. This design, which was also intended for this edition, guided readers to hands-on management tools, located in appendices in the second half of the book, that is, on the yellow pages.

Unfortunately, the printing company’s paper supplier could not deliver yellow paper in time. Shortly before the agreed deadline for the book’s delivery, the printing company informed the authors that the book would be delayed due to the lack of yellow paper. As a result, the book was not available for the start of the semester—resulting in many frustrated bookstore sales personnel, professors, and students; less revenue from the book’s sale; and the risk that the book would not be included in book lists in subsequent years.

The authors were very unhappy about the situation. “Had they just contacted us,” they said, “then we would have told them to print the appendices on white paper. To have the textbook delivered in time for the semester start was our highest priority.”

Undertaking a brief case analysis, we see how the printing company failed to apply the stakeholder perspective when an unexpected event outside the company’s control (i.e., the missing yellow paper supply) occurred. The failure had multiple aspects:


When the printing company realized that it could not fulfill the contract, that is, deliver the books on time with the agreed upon specifications (i.e., the yellow paper), it did not inform the stakeholder.


When the printing company was faced with a trade-off decision between time (delivering on time) and specification (delivering the appendices on yellow paper), the company opted for the solution (delaying delivery) that best suited itself (if the alternatives were considered at all), instead of asking the stakeholder about her or his priorities in the trade-off situation.


When the company made the trade-off decision, it did not consider the core interests of the stakeholder’s stakeholders, that is, the bookstores, the professors, and the students. The conclusion is that by not applying the stakeholder perspective, the printing company failed to minimize the negative consequences of the unexpected event for most parties involved. Through actions within its control, the publishing company made the situation worse.

The Employee Participation Case (based on Rhenman, 1968): If a company decides to grant employees the right to participate in the management of the company (inspired by the concept “industrial democracy,” which was heavily debated in the 1960s), it may turn out to be more difficult than anticipated. Employees A and B may both agree that participation in management is desirable; however, they may consider quite different courses of action, that is, means, to bring it about. They may also disagree about ideological goals. Employee A may strive for increased productivity (i.e., his ideological goals) through profit-sharing and suggestion schemes (i.e., his preferred means), whereas Employee B may strive for increased security and satisfaction from work (i.e., her ideological goals) through works councils and the right to information (i.e., her preferred means).

Undertaking a brief case analysis, it first becomes clear that individuals and groups within a company, here the employees, should also be considered stakeholders. Second, we see that individuals within a specific stakeholder label, here again the employees, may have different perceptions and preferences, in this case related to the means and goals of a management initiative. This is true even though Employees A and B both appreciate the overall initiative of employee participation in management. This makes us realize that (a) a stakeholder perspective must somehow incorporate the fact that the stakeholders at hand can have different perceptions (wishes, aims, requirements, and expectations), so communication efforts will be needed to make these differences visible and thereby points for discussion; and (b) that a stakeholder label may group together individuals with differing views, as exemplified in this case by Employees A and B, meaning that we need concepts within the theoretical framework to discuss stakeholders at a more granular level.

The Origins of the Stakeholder Perspective

The Scandinavian Origin

The first book that explicitly named stakeholders and stakeholder thinking was written by a Swedish business professor, Eric Rhenman, who worked at the Economic Research Institute at the Stockholm School of Economics in Sweden. The book was published in Swedish in 1964 and in English in 1968: Företagsdemokrati och företagsorganisation (Rhenman, 1964) and Industrial Democracy and Industrial Management (Rhenman, 1968). Only a year later, Rhenman and Stymne (1965) published the book Företagsledning i en föränderlig värld (which translates to Corporate Management in a Changing World). It was published only in Swedish. In 1969, Rhenman published the book Centrallasarettet: Systemanalys av ett Svenskt Sjukhus about an in-depth single case study of a Swedish hospital (Rhenman, 1969). It was published in English with the title Managing the Community Hospital: Systems Analysis of a Swedish Hospital (Rhenman, 1973). In 1970, Rhenman and two colleagues, Strömberg and Westerlund, published the book Conflict and Co-operation in Business Organizations (Rhenman, Strömberg, & Westerlund, 1970). A Swedish version had already been published in 1963, and the inspiration for the book (and maybe also for the other books) came from a series of seminars for business leaders in which real-world management problems were discussed. The seminars took place at the Economic Research Institute at the Stockholm School of Economists, starting in 1959.

As can be seen from Table 1, it is worth noticing that of the mentioned books in English, only Industrial Democracy and Industrial Management (Rhenman, 1968) explicitly uses the word stakeholders. However, when reading the other books, it becomes quite clear that they are rooted in stakeholder thinking as well. As an example, Rhenman (1973) states that “the participants in an organization are the individuals and groups that depend on it for the realisation of their personal goals, and on whom the organisation depends for its existence” (p. 13)—and gives reference to Rhenman (1968). However, Rhenman (1968) states that “the stakeholders in an organization are the individuals or groups dependent on the company for the realization of their personal goals and on whom the company is dependent for its existence” (p. 25). Due to the similarities of the two definitions, we clearly see that Rhenman is writing about the same phenomenon in both books, even though the nomenclature changes from stakeholders in Rhenman (1968) to participants in Rhenman (1973). Additional evidence supports this argument; a visual representation of Rhenman’s stakeholder theory—in some publications called “Rhenman’s Rose” (Andersen, 2008)—appears alongside the definitions mentioned previously in both books. In Rhenman (1968), The Company is placed in the rose’s middlle, and the rose petals consist of Employees, Management, Local authorities, Owners, Customers, The State, and Suppliers (p. 25). In Rhenman (1973), Hospital is placed in the rose’s middle, and the rose petals consist of Personnel, Hospital management, County authorities, Patients, State and local government, and Suppliers (p. 13). The application of the same visual representation, that is, the rose, strongly suggests that both books are rooted in a stakeholder theory mindset.

The following citation from Rhenman et al. (1970), begun in 1962, illustrates how deeply rooted his approach to organizations and business was in stakeholder thinking:

The complex interplay between individuals and task in the “organized” business enterprise has long been a subject of great interest to practising managers and organization theorists… . management of a business enterprise may—or must—[on top of economic objectives, long-term profitability, adequate liquid assets and the economic survival of the enterprise] also have the following goals: to provide work in forms acceptable to the state and the employees and to offer methods and types of work which permit the employee to develop his capacity and ability. The enterprise must also try to play its part in public life. In other words, it is a social institution with a duty to fulfill the various expectations of the community… . [O]thers besides management have goals related to the coordination of resources. All the people working in the enterprise or with an interest vested in it, have goals for their own participation in the coordination of resources. It is obvious that all these many objectives will conflict with one another and, for the good of the enterprise as a whole it will be necessary to find compromise goals to satisfy the special objectives of management, interested parties and employees.

(Rhenman et al., 1970, pp. 1–3).

Table 1 provides an overview of Rhenman’s earliest books.

Table 1. Rhenman’s Books on Stakeholder Thinking (Chronological—Swedish Version)

The Word “Stakeholder”


Year/Book Title in Swedish

Year/Book Title in English

in English Version

Rhenman, Strömberg, & Westerlund

1963/[title not identified]

1970/Conflict and Co-operation in Business Organizations



1964/Företagsdemokrati och företagsorganisation

1968/Industrial Democracy and Industrial Management


Rhenman & Stymne

1965/Företagsledning i en föränderlig värld

-/[translates to Corporate Management in a Changing World]



1969/Centrallasarettet: Systemanalys av ett Svenskt Sjukhus

1973/Managing the Community Hospital: Systems Analysis of a Swedish Hospital


As mentioned previously, the first text (based on the Swedish version chronology) on stakeholder thinking was initiated by seminars with business managers that started in 1959. The book that explicitly mentions stakeholders, that is, Industrial Democracy and Industrial Management (Rhenman, 1964, 1968), was begun in 1963, when the Swedish Federation of Employers asked Rhenman and colleagues to develop a proposal for a conceptual and theoretical framework on industrial democracy. The aim was (among other things) to determine the effects of changing a company’s decision structure so that it welcomed employee participation in decision-making. Furthermore, the research aimed to identify the problems—or we can say challenges—of industrial democracy, as well as to figure out where relevant conflicts could be resolved, for example, within the company or on the labor market. The business environment in Scandinavia was at that time characterized by private enterprises, powerful unions, and extensive use of advisory councils, and this may have been a good fertilizer for stakeholder thinking, among managers as well as academics.

According to Rhenman (1968), the two goals of industrial democracy were (a) to increase productivity, and (b) to balance various interests within the company. The task of Rhenman and his colleagues was to trace the relation between these goals and various means.

The growing interest in industrial democracy in the early 1960s grew out of experiments initiated in various countries during t World War II and in the immediate post-war period. Wartime productivity councils were established in England (they were later replaced by various types of works councils); joint consultation committees were introduced in Sweden in 1946; the German so-called Mitbestimmung was introduced in the steel and coal industry in 1951 and in other industries (in a modified form) in 1952; workers councils were set up in Yugoslavia in 1951; and various attempts to introduce profit-sharing were undertaken in the United States, England, and other countries (Rhenman, 1968).

All of these initiatives matured in the economic, political, and social climate of the post-war period until a point when it seemed relevant to start discussing industrial democracy in more detail, particularly in England and Scandinavia, where negotiation rather than legislation was already the preferred method for solving industrial conflicts and related problems.

In the early 1960s, a search began for new ways to increase productivity as well as to raise the standard of living. There was an increasing awareness that workers (including the growing number of white-collar workers) should demonstrate willingness for cooperation in order for improvements in efficiency to materialize. In addition, technological and economic progress put new demands as well as new opportunities on company management and administration. Rhenman (1968) mentions three assumptions underlying the rationale of implementing industrial democracy:


if democratic measures are implemented, it will arouse the employee’s interest and cooperation;


if employees have a greater part in running the business, it will be easier to tap their resources of experience, knowledge and ideas; and


the positive effects of industrial democracy (mentioned in the two assumptions above) will in the long run provide the employees with greater opportunities for personal development and education. (p. 5)

All three assumptions relate implicitly to both (a) the concept of stakeholders and (b) a stakeholder perspective on running a business: employees have resources in terms of experience, knowledge, and ideas; their interest and cooperation can be enhanced; and if they have more involvement in running the business, the business will more easily tap these resources. Engaging with the employees creates value for the company (implicitly stated) as well as for the employees (in terms of greater opportunities for personal development and education).

Implementation of democratic measures within companies can be seen as one means to enhance value creation for both parties, and these are the means with which Rhenman (1964, 1968) is concerned. However, we feel safe to say that the underlying logic of Rhenman’s argumentation is also relevant for other means a company can employ to enhance their employees’ (as well as other stakeholders’) interest, cooperation, and “part-taking” in the business.

As mentioned, Rhenman (1968) defines stakeholders as “individuals or groups dependent on the company for the realization of their personal goals and on whom the company is dependent for its existence” (p. 25). Rhenman (1968) differentiates between “chief stakeholders” and other stakeholders. The former category consists of the customers, the shareholders, and the employees, whereas the latter consists of the state, the local authorities, the suppliers, as well as other individuals or groups that, in Rhenman’s own words, “at times [can] be the source of pressing or awkward demands” (Rhenman, 1968, p. ii). In other parts of the book (Rhenman, 1968), he adds to the list by also mentioning creditors, managers, the local community, and the society as a whole. Even if we just stick narrowly to the “chief stakeholders,” that is, the customers, the shareholders, and the employees, their interests will almost certainly clash, according to Rhenman (1968).

Rhenman (1968) states that the interaction between the stakeholders and the company is characterized by the fact that the stakeholders and the company have claims on each other. The claims can be economic, for example, employees expecting wages, creditors and owners expecting interest and dividends, and suppliers expecting payment; or non-economic, for example, influence through joint decision-making. The goals and the needs of the stakeholders govern such claims.

Rhenman (1968) emphasizes that, due to the fact that most stakeholders are voluntary members of the organization, they can decide to take actions to withdraw from the relationship, for example, employees leaving the company to take other positions, investors transferring their investments to other companies, customers and suppliers transferring their business elsewhere, and the community removing its support.

The decisions and actions of the stakeholders will be based on the expectations they form (based on their conceptions of the company’s goals and plans and of the likelihood of their claims being fulfilled), the urgency of their claims, as well as their knowledge of alternative ways to fulfill those claims. “Stakeholders who wish to exert influence on the business leader have many sanctions at their disposal other than a refusal to give the company their support. For example, employees can strike; politicians can threaten restrictive measures; or several groups can ally themselves to assert their claims. Furthermore, all categories—customers, employees and society—have come to rely increasingly on the social pressure of public opinion” (Rhenman, 1968, p. 27).

Rhenman (1968) states that even though management of a company can be regarded as a stakeholder, this group has the responsibility to act as a mediator that resolves conflicts between the stakeholders and, when necessary, decides which claims to satisfy. According to Rhenman (1968), “management is usually the group most inclined to identify itself with the organization and to fight for its survival, expansion and future security” (p. 26). The author points out that management often has very little freedom of action when it comes to formulation of goals, norms, and plans, as it “cannot realize its own goals without taking into consideration the claims of the many other stakeholders” (Rhenman, 1968, p. 26).

When discussing the dependence management has on the company’s stakeholders, Rhenman (1968) points to illustrative studies prior to his own work by Selznick (1949), Höglund (1953), and Brown (1960). Further, he states that he himself was particularly influenced by Chester Barnard, Herbert Simon, and Philip Sleznick (Rhenman, 1968).

In sum, we can conclude that Rhenman (1968) sees employees and managers as two particularly important stakeholders. Characteristically, a manager both represents the company and pursues personal interests.

Rhenman and his colleagues undertook an in-depth case study of a Swedish hospital, starting in February 1965 (Rhenman, 1969, 1973). Rhenman (1973) considered the case study as pioneer work and saw his contribution as “to suggest languages … which can be used to describe important sub-systems of an organization in great detail” (Rhenman, 1973, p. xviii).

The researchers perceived the hospital as an open, controlled production system, and they selected stakeholder relationships for study on the basis of which ones they thought were the most important relationships in relation to the hospital’s production. They analyzed the stakeholders’ contributions to the operation of the hospital and the inducements the stakeholders received in return, as well as incentives offered in the form of possibilities for extra inducements for increased contributions. On the basis of the hospital’s annual report and other available documents, a preliminary overview of the contribution–inducement balance was produced. For the analysis, the researchers tried to classify the identified stakeholders into groups consisting of those who made more or less similar contributions and received similar inducements. This made the researchers differentiate, for example, the stakeholder “personnel” into department chiefs, junior doctors, nurses and midwifes, office staff, maintenance staff, and more. Furthermore, they analyzed the stakeholders’ relative power and internal relations as well as the institutions the hospital used to resolve conflicts with the stakeholders (Rhenman, 1973).

Rhenman (1973) gives a very interesting contribution to stakeholder research when he states that “measurement of results is aimed primarily at evaluating whether the hospital has been able to maintain good relations with its various participants [i.e., stakeholders] … [and] relations with a [stakeholder] are a measure of the [stakeholder’s] willingness to continue to associate with the hospital” (p. 16). He points to various ways in which poor relationships, anchored in dissatisfaction, may manifest: patients can complain, even via the press; personnel can be disloyal or have a high frequency of absenteeism; suppliers can be unwilling to make quick deliveries or offers; or the participants, that is, the stakeholders, can begin to desert the hospital, that is, withdraw.

Rhenman (1973) states that

relations between an organization and its participants [i.e., stakeholders] usually depend on the way in which the inducements received by the [stakeholders] are related to their demands and expectations. Since most organizations have a scarcity of such inducement, some symptoms of poor relations are a normal phenomenon. An organization seldom has the ability to satisfy all its participants. This means that only the most serious symptoms of poor relations are perceived by the management as alarming. (p. 16)

It is worth noting that Freeman et al. (2010) point to Simon (1947) as the one behind the inducement–contribution model, as he identifies customers, employees, suppliers, and entrepreneurs as relevant organizational participants. Simon points back to Barnard (1938) when it comes to the executive’s role, which implies that Chester Barnard, an American business executive, public administrator, and author of the landmark book The Functions of the Executive (Barnard, 1938), is a primary figure in both the American and Scandinavian origins of stakeholder theory. This is also the opinion of Freeman et al. (2010), as they state, “Barnard … articulates the problems of value creation and trade, the ethics of capitalism, and managerial mindsets. In our view it is really Barnard who set the stage for the development of modern stakeholder theory” (p. 50).

Rhenman (1973) is focusing on the organization’s ability to gather and process contributions (which he calls internal effectiveness) as well as on the expenditures to secure these contributions (which he calls external effectiveness). He points to two factors influencing the scarcity of inducements the management has at its disposal. First of all, the supply of inducements depends on the way in which the organization is run. The more inducements produced per given contribution, the more inducements there will be altogether. Second, “the more … contributions … an organization can obtain from its [stakeholders] for a given quantity of inducements, without deterioration of relations, the less scarce the inducements will be” (p. 17).

Rhenman (1973) points to consultation and negotiation as institutions used by the organization to establish working relations with these stakeholders in order to resolve potential conflicts. In addition, “the hospital can use the market as the most important institution for resolving conflicts in relation to its suppliers and personnel” (p. 50). Rhenman (1973) emphasizes the importance of defining the range and boundaries of the organization to be studied. In the hospital case study, the researchers have chosen to define the range of the hospital on the basis of its formal management structure. In sum, Rhenman (1973) provides a thorough template for conducting an in-depth case study as well as how to apply and study stakeholder thinking in business and management.

According to Näsi (1995a), the stakeholder approach, proposed by Rhenman (1964) and Rhenman and Stymne (1965), became the dominant paradigm in Europe, especially in Scandinavia and Finland, in management teaching at universities. It was also frequently used as a framework in academic research and for practical company planning. The authors’ (Rhenman, 1964; Rhenman & Stymne, 1965) main contribution, according to Näsi (1995b), was to offer a theory of the firm. This dominant position was maintained until the beginning of the 1980s, after which the theory remained one theory among others (Näsi, 1995a). Professor Rhenman passed away in 1993 (SIAR, n.d.); however, his legacy has been kept alive by the Scandinavian Institutes for Administrative Research (SIAR) as well as by researchers, managers, educators, and consultants around the globe.

The American Origin

The interest in stakeholder thinking in the United States was sparked by the publication in 1984 of the book Strategic Management: A Stakeholder Approach by R. Edward Freeman, who was a professor at the University of Minnesota. The book (Freeman, 1984) “was written as a textbook for business policy and strategy courses … [with] the explicitly normative idea of helping decision makers make better decisions” (Freeman et al., 2020, p. 215). The core suggestion in the book is to apply a stakeholder framework within strategic management as an alternative to the existing way of thinking about strategic management.

The book was very well received and can be seen as the starting point for a massive interest in the stakeholder concept around the globe, and it has kept its status as “the” reference book ever since. The interest has been so significant that some authors (Friedman & Miles, 2006) even refer to the early uses of the stakeholder concept “pre-Freeman, 1984.”

A book by Freeman, Harrison, Wicks, Parmar, and De Colle (2010) offers a personal story of how Freeman got into the field. In his early years, Freeman, who had studied philosophy and mathematics, worked as a junior researcher at the Wharton School at the University of Pennsylvania. He first worked on projects conducted by the Busch Center, a group chaired by Russell L. Ackoff, who is acknowledged for his pioneering work in operations research and systems theory. A few months later, he was transferred to a newly established group, the Wharton Applied Research Center, which was chaired by Janes R. Emshoff, one of Ackoff’s former students, and organized like a consultancy, with projects and development areas. Ackoff had already worked with stakeholder thinking himself, drawing on systems theory, in his book Redesigning the Future (Ackoff, 1974) (more description is offered later in this section). Freeman took part in a seminar on stakeholder thinking and was very inspired by listening to the seniors’ discussions. Emshoff, who had extensive experience as a management consultant, encouraged Freeman to work on his various ideas, and together they published some of the first texts on stakeholder management (i.e., Emshoff & Freeman, 1978, 1979). The Wharton School had already begun a “stakeholder project” in its Applied Research Center in 1977; it applied an action research model to generate stakeholder theory from real cases (Freeman & Reed, 1983). The researchers’ conceptual point of departure was the Stanford Research Institute (SRI)’s definition from 1963 of stakeholders as “those groups without whose support the organization would cease to exist” (SRI, cited in Freeman, 1984, p. 31).

Even though many acknowledge Freeman as the founder of stakeholder management theory (and he certainly has had a tremendous influence), he gives credit to a number of other researchers for stakeholder thinking. He initially traced the stakeholder concept back to 1963, when researchers in an internal memorandum at the SRI defined stakeholders, as cited in Freeman (1984). Further, Barnard (1938), Abrams (1954), Dill (1958), March and Simon (1958), Cyert and March (1963), Ansoff (1965), Thompson (1967), and Ackoff (1974) are among those who have given the main impulses to stakeholder thinking (Freeman, 1984). Freeman et al. (2010) point also to Mary Parker Follet as an important early contributor. Her contributions are clearly described by Schilling (2000).

In his book Corporate Strategy: An Analytic Approach to Business Policy for Growth and Expansion, Ansoff (1965) states that “the objectives of the firm should be derived balancing the conflicting claims of the various ‘stakeholders’ in the firm … The firm has a responsibility to all of these and must configure its objectives so as to give each a measure of satisfaction” (referred to in Friedman & Miles, 2006, p. 5). We see that this is in line with the thoughts offered by Rhenman.

In his book, Freeman (1984) points to the fields of corporate planning, systems theory, corporate social responsibility, and organization theory (even though not all contributors used the word “stakeholder,” e.g., Pfeffer & Salancik, 1978, as will be discussed). The benefit of letting stakeholder groups participate actively in decision-making had already been articulated in strategic management literature in the mid-1970s, as Dill (1975) states:

For a long time, we have assumed that the views and initiative of stakeholders could be dealt with as externalities to the strategic planning and management process; as data to help management shape decisions, or as legal and social constraints to limit them. We have been reluctant, though, to admit the idea that some of these outside stakeholders might seek and earn active participation with management to make decisions. The move today is from stakeholder influence towards stakeholder participation.

(Cited in Freeman, 1984, p. 38)

Two American researchers who have had a major influence on the field of project management, William R. King and David I. Cleland, worked in the field of corporate planning during the 1970s. Both had worked for the U.S. Air Force before they joined academia. When King earned a PhD in 1964 in Operations Research, his doctoral supervisor was the previously mentioned contributor to stakeholder thinking, Russell L. Ackoff. In their book Strategic Planning and Policy, King and Cleland (1978) state that “a firm has responsibilities and moral obligations to a number of claimants, including stockholders, managers, employees, suppliers, distributors, and supporting service organizations such as advertising agencies, various interest groups, public agencies, and the public at large” (referred to in Eskerod, Huemann, & Savage, 2015b). The authors mention that managerial thinkers such as Churchman (1968) and McConnell (1971) believe, like themselves, that the organizational clientele of a company should function as the basic foundation for setting business objectives and strategies. An important contribution of the King and Cleland (1978) book is that they propose a method for analyzing “‘clientele groups,’ ‘claimants,’ or ‘stakeholders’ of the organization” (p. 149) based on their work in project management. They state that “if the diverse objectives of various claimants are to be considered by the business firm, or any organization, in determining their own objectives, some methodology is essential. Otherwise, consideration of clientele may be reduced to value musings about what they want to get out of us… . We shall present such as a methodology” (King & Cleland, 1978, p. 149).

In the same year as King and Cleland published their book (1978), the American researchers Jeffrey Pfeffer and Gerald R. Salancik published The External Control of Organizations: A Resource Dependence Perspective. Pfeffer and Salancik (1978) were concerned by the extent to which organizations were dependent upon external constraints—and aimed to contribute to the field by pointing out ways of designing and managing organizations to decrease their dependency on external constraints. In addition, another aim was to explain how external resources affect executives’ behavior, based on the fact that any organization needs to procure resources (Pfeffer & Salancik, 1978).

Comparing the two 1978 books, it becomes clear that Pfeffer and Salancik (1978) focus on stakeholders possessing resources, which is in line with the SRI’s stakeholder definition as “those groups without whose support the organization would cease to exist” (Freeman, 1984, p. 31), whereas King and Cleland (1978) focus on the company’s moral obligations to fulfill various stakeholder groups’ claims.

Russel L. Ackoff (who studied corporate planning, among other things; see, e.g., Ackoff, 1970) made an important contribution to stakeholder thinking by suggesting that stakeholders should be seen as elements of a system (Ackoff, 1974). He proposed a method for doing stakeholder analyses of organizational systems. Furthermore, he stated that system-wide problem-solving requires that stakeholders participate. He therefore also offered a method for including stakeholder groups in analysis and problem-solving, which he illustrated with case studies on designing large-scale projects (Ackoff, 1974). Freeman et al. (2020) point to “early applications by Ackoff (1974, 1981) aimed at assisting a Mexican brewer in understanding the importance of government in their business model” (p. 214–215). While keeping previous contributions to stakeholder thinking in mind, it was Freeman’s book (1984) that constituted the breakthrough of the stakeholder approach.

Another American professor, Archie Carroll (1989), connected the stakeholder approach to business and society—and thereby the ground was fertile for discussing value issues, ethics, and social responsibility for companies. These are all recurring topics in stakeholder thinking.

In line with Rhenman (1964/1968) and Rhenman and Stymne (1965), Freeman (1984) aimed to discuss a theory of the firm. In his book, Freeman (1984) proposed a Stakeholder View of the Firm. This view was meant to replace the two dominant views: the Production View of the Firm and the Managerial View of the Firm. A manager applying the Production View of the Firm focuses on efforts to procure resources from suppliers, efforts to turn the resources into projects, and efforts to sell the products to customers. The narrow focus on satisfying suppliers and customers was sufficient before the 19th century, as most companies were small, owner-entrepreneur founded entities with the owner and her or his family members as the only workers. With the arrival of the Industrial Revolution, the business environment became characterized by new production processes, adoption of new technology, rapid urbanization, and significant investments in production facilities and infrastructure. Companies grew bigger, and the founder(s) and their family members were no longer sufficient to staff a workforce or even the managerial positions of these larger enterprises. With hired managers as well as non-family workers, the managerial task expanded to include concerns of the owners and the employees. Therefore, the Production View of the Firm was replaced with the Managerial View of the Firm (Freeman, 1984).

In mature and post-industrial societies, democratic developments allowed for more individuals and groups to voice their opinion(s), for example, governmental authorities, unions, consumer advocates, competitors, environmentalists, special interest groups, and the media (Freeman, 1984). Therefore, a Managerial View of the Firm, according to Freeman (1984), was no longer sufficient for business success. Instead, Freeman (1984) suggested managers and directors apply a Stakeholder View of the Firm when formulating corporate objectives and consider “any group or individual who can affect or is affected by the achievement of the firm’s objectives” (p. 25). This view entails an integration of the understanding of the needs and concerns of stakeholders in the corporate objectives as a prerequisite for ensuring the stakeholders’ support for the company’s current operations and future survival. At the same time, Freeman (1984) argues that stakeholders that are affected by the firm’s strategies have a legitimate right to have their interests considered. We see that these thoughts are very much similar to Rhenman’s (presented in the section “The Scandinavian Origin”), so both the Scandinavian and the American origins of stakeholder thinking have the same line of reasoning.

Stakeholder Thinking Post-Freeman (1984)

Edward Freeman has been a major contributor to the field, and he has published (alone and with colleagues) many works in which he clarifies and adds to the stakeholder framework offered in his seminal 1984 book. These later works also point to, in his opinion, misunderstandings as well as discussions that have gone off track in the stakeholder theory discourse (e.g., Freeman et al., 2020). Four good reference books to understand the current stand of stakeholder thinking are Stakeholder Theory: Concepts and Strategies (Freeman, Harrison, & Zyglidopoulos, 2018), Stakeholders: Theory and Practice (Friedman & Miles, 2006), Stakeholder Theory: The State of the Art (Freeman et al., 2010), and The Cambridge Handbook of Stakeholder Theory (Harrison, Barney, Freeman, & Phillips, 2019), as they give an overview of the field; present the core concepts in a very clear way (Freeman et al., 2018); discuss foundations for stakeholder thinking, for example, liberal pragmatism (pluralism) as an underlying philosophy (Friedman & Miles, 2006, referring to Freeman, 1994); point to application areas, for example, strategic management, finance, accounting, and marketing (Freeman et al., 2010); and relate stakeholder theory to (among other topics) society (Harrison et al., 2019).

The stakeholder field is characterized by the fact that not much consensus exists. Just looking at the definition of stakeholders, Miles (2012) identifies hundreds of different definitions, ranging from narrow to wide (Freeman & Reed, 1983). An example of a narrow definition of stakeholders is “any identifiable group or individual on which the organization is dependent for its continual survival” (Freeman & Reed, 1983, p. 91), whereas the widest definition (far beyond anybody else), according to Friedman and Miles (2006), is offered by Starik (1994), who suggests stakeholders are “any naturally occurring entity which affects or is affected by organizational performance” (p. 90), including animals, plants, rocks, water, ecosystems, the Sun–Earth system, and the cosmos. While this definition is unusually broad, it has become more and more common to propose stakeholder status for the natural environment (see, e.g., Driscoll & Starik, 2004).

Chronologically, stakeholder thinking “entered scholarly discussion with full force only in the 1990s” (Näsi, 1995b, p. 21). This is documented by the content of most journals in the field of management and ethics from the time, especially the Academy of Management Review (AMR), as well as by proceedings from management and ethics conferences around the world. Moreover, a number of special conferences, seminars, and other academic events started to appear. Among these were:

Reflections on Stakeholder Theory, mini-conferences in Toronto, Canada, 1993;

Understanding Stakeholder Thinking, symposium in Jyväskylä, Finland, 1994;

Stakeholder mini-conference in Tampere, Finland, 2008;

Stakeholders, Resources & Value Creation, EISAM 1st Interdisciplinary Conference in Barcelona, Spain, 2011.

Reviewing the various books, articles, and conference papers published by many authors since 1984, it appears that the stakeholder framework is perceived in the same way around the globe, implying that it is not meaningful to differentiate between a Scandinavian/European approach and an American approach. Instead, a differentiation can be made between scholars within strategic management and scholars within ethics. Roughly speaking, the former are focused on the purposeful, strategic interactions with stakeholders in order to enhance the achievement of an organization’s goals, whereas the latter are focused on fair treatment and the legitimacy of all stakeholders, regardless of their power or other characteristics.

An important conceptual contribution to strategic management thinking is offered by Savage, Nix, Whithead, and Blair (1991), who give suggestions for strategies to assess and manage organizational stakeholders. The authors (building on Freeman, 1984, and implicitly also on Rhenman, 1968) emphasize that stakeholders have the potential to help or harm an organization by providing or withholding contributions. The potential is determined by the stakeholder’s capacity and opportunity to contribute to or threaten the organization (Savage et al., 1991). The authors therefore suggest that management continuously assesses each stakeholder’s capacity, opportunity, and willingness to help or harm the organization. Based on the assessment, management should choose strategies to deal with the various stakeholders and, if necessary, prioritize among them. It is important to notice that the assessment and prioritization should not be done once and for all, but should be issue-based (Savage et al., 1991, building on Freeman, 1984).

Hill and Jones (1992) suggest the application of agency theory within stakeholder thinking. They employ the idea of the firm as a nexus of implicit and explicit contracts between stakeholders and managers—and with the managers as the central node, “where managers have the responsibility to reconcile divergent interests by making strategic decisions and allocate strategic resources in a manner that is most consistent with the claims of the other stakeholder groups” (Mitchell, Agle, & Wood, 1997, pp. 870–871, referring to Hill & Jones, 1992). In this way, the authors explicitly draw a stakeholder constellation with the firm in the middle, in line with Rhenman’s Rose (see the section “The Scandinavian Origin”).

In 1995, Freeman identified a hidden assumption in most business theories and named it the Separation Thesis. “The discourse of business and the discourse of ethics can be separated so that sentences like, ‘x is a business decision’ have no moral content, and ‘x is a moral decision’ have no business content” (Freeman, 1995, p. 37). Freeman (1995) suggests that we (as researchers, managers, educators, and consultants, we add) should give up this separation thesis and acknowledge that “almost every decision that a manager makes has consequences that are at once economic and moral, and that it is not always possible to separate out which is which” (p. 38). Instead of applying the separation thesis, we should find “conceptual mechanisms which do not distinguish clearly between the business and ethical parts of a decision. What we need are concepts and ideas that mix up our understanding of business and our understanding of ethics” (Freeman, 1995, p. 39).

One way to do this is to understand

value-creation activity as a contractual process about those parties affected … then we can construct a normative core that reflects the liberal notions of autonomy, solidarity, and fairness … The normative core … will capture the idea of fairness if it ensures a basic equality among stakeholders in terms of their moral rights as these are realized in the firm, and if it recognizes that inequalities among stakeholders are justified if they raise the level of the least well-off stakeholder. The liberal idea of autonomy is captured by the realization that each stakeholder must be free to enter agreements that create value for themselves, and solidarity is realized by the recognition of the mutuality of stakeholder interests.

(Freeman, 1995, p. 42)

Subsequently, a ground rule proposed by Freeman is the “Principle of Externalities,” saying that “if a contract between A and B imposes a cost on C, then C has the option to become a party to the contract, and the terms are renegotiated” (Freeman, 1995, p. 43).

In 1995, Donaldson and Preston published an article that has since been highly cited. The authors (Donaldson & Preston, 1995) point out that basic concepts within the field, that is, stakeholder, stakeholder model, stakeholder management, and stakeholder theory, are explained and used in the literature in very different ways, and that neither this diversity nor its implications are often discussed. The article points to some of the distinctions, problems, and implications related to the stakeholder concept; it also clarifies and justifies the concept’s essential content and significance. The authors conclude that (a) stakeholder theory is managerial, (b) an instrumental assumption (stakeholder management contributes to successful financial performance of the organization) is not a sufficient basis for understanding the theory, and (c) its normative basis is the ultimate justification for the theory. Referring to the normative basis, Donaldson and Preston (1995) define stakeholders as “persons or groups with legitimate interests in procedural and/or substantive aspects of corporate activity. [They] are identified by their interests in the corporation, whether the corporation has any corresponding functional interest in them [or not]” (p. 67, boldfaced in the original text). Donaldson and Preston (1995) suggest that a modern and pluralistic understanding of the so-called theory of property rights, as opposed to a firm-as-a-set-of contracts (Evan & Freeman, 1988), is meaningful for understanding the normative basis for stakeholder theory. A property consists of a bundle of rights, and those of the landowner are not unrestricted. He or she has to stick to and consider human rights and other possible restrictions against harmful use. The landowner needs to protect the interests of others including the broader society. Theories of distributive justice are relevant.

In 1997, Mitchell et al. published an article that became one of the most cited in the field of stakeholder thinking. Based on a discussion of broad versus narrow stakeholder definitions (originally proposed by Freeman & Reed, 1983), the authors (Mitchell et al., 1997, pointing to Freeman, 1994) point to the need for helping managers figure out how to identify and respond effectively to stakeholders instead of being paralyzed by the bewildering complexity of a broad definition. Their contribution is a stakeholder typology to guide managers on how to identify and decide on “who and what really counts” (Mitchell et al., 1997, p. 853, referring to the expression’s origin in Freeman, 1994) when it comes to managerial attention. The core idea is to systematically evaluate actual and potential stakeholder–manager relationships in the absence or presence of three attributes, that is, the stakeholder’s power, the stakeholder’s legitimacy, and the urgency of the stakeholder’s claim. An individual or a group that scores on all three attributes is a stakeholder with the highest so-called salience and should therefore be given most managerial attention. An individual or group lacking all three attributes is a non-stakeholder. Mitchell et al. (1997) point out two challenges: (a) that the evaluation is based on the manager’s/managers’ perception of the stakeholders and their attributes, and (b) that stakeholders’ salience is dynamic and will typically change from issue to issue and over time. An implication of the two challenges is that management should be aware that making a stakeholder map can only give static clarity of the perceived stakeholder constellation at a particular point in time. The analysis needs to be repeated, for different issues and at different times, and the scores need to be well argued and supported by data.

In 1997, Rowley suggested changing the stakeholder constellation from one consisting of dyadic ties between individual stakeholders and a focal organization (as illustrated, e.g., in Freeman (1984), who considers relationships involving the focal organization; in Rhenman’s Rose; and in Hill and Jones’s (1992) nexus of contracts image) to one consisting of a network of actors potentially influencing each other. He offers the concept of “stakeholder multiplicity” (Rowley, 1997). The idea of mutual influences across the stakeholders was already present in earlier works, including in Rhenman (1968); however, Rowley (1997) made an important contribution by explicitly stating that the dual contacts do not exist in a vacuum and that the stakeholders may influence each other significantly, suggesting that social network analysis would be a valuable means to understand the stakeholders and the stakeholder constellation. Many authors followed the network idea, including Rowley and Moldoveanu (2003), who made an interest- and identity-based model of stakeholder group mobilization, and Savage et al. (2010), who discussed implications of stakeholder collaboration for stakeholder theory and practice.

In 1999, the Clarkson Center for Business Ethics proposed seven principles to summarize the essentials of stakeholder management (Donaldson, 2002):


Managers should acknowledge and actively monitor the concerns of all legitimate stakeholders, and should take their interests appropriately into account in decision-making and operations.


Managers should listen to and openly communicate with stakeholders about their respective concerns and contributions, and about the risks that they assume because of the involvement with the corporation.


Managers should adopt processes and modes of behavior that are sensitive to the concerns and capabilities of each stakeholder constituency.


Managers should recognize the interdependence of efforts and rewards among stakeholders, and should attempt to achieve a fair distribution of the benefits and burdens of corporate activity among them, taking into account their respective risks and vulnerabilities.


Managers should work cooperatively with other entities, both public and private, to ensure that risks and harms arising from corporate activities are minimized and, when they cannot be avoided, appropriately compensated.


Managers should avoid altogether activities that might jeopardize inalienable human rights (e.g. the right to life) or give rise to risks that, if clearly understood, would be patently unacceptable to relevant stakeholders.


Managers should acknowledge the potential conflicts between (a) their own role as corporate stakeholders; and (b) their legal and moral responsibilities for the interests of stakeholders, and should address such conflicts through open communication, appropriate reporting, and incentive system, and where necessary, third party review. (Appendix: Principles of Stakeholder Management, 2002, p. 260) The principles can be seen as an answer to Freeman’s (1995) request to avoid separating business and ethical issues. They also reflect the analogy offered by Donaldson and Preston (1995) of property rights and their owners’ obligations.

Freeman, Harrison, and Wicks (2007) published the book Managing for Stakeholders: Survival, Reputation, and Success, in which they differentiate between a “managing stakeholders approach” and a “managing for stakeholders approach.” In a managing stakeholders approach, the individuals undertaking stakeholder management focus on procuring stakeholder contributions needed by the focal organization, whereas stakeholders who do not possess resources needed by the organization, and who may be affected, are nevertheless not considered. All actions are carried out with a self-serving mindset of the focal organization, and ethical treatment in all stakeholder relationships is not part of the agenda. On the contrary, the managing for stakeholders approach allocates rewards including information among a wide range of stakeholders, who are also invited to take part in decision-making. Ethical considerations are also taken into account. “Firms that manage for stakeholders allocate more value than that which is necessary simply to maintain their willful participation in the workings of the firm” (Harrison, Bosse, & Phillips, 2010, p. 153). In other words, they overinvest in some of the stakeholders (Freeman et al., 2007).

In 2009 and 2010, Bosse, Harrison, and Phillips published two articles that give strong conceptual contributions to the field. In Bosse, Phillips, and Harrison (2009), the authors discuss reciprocity and perception of fairness as two important concepts to understand the behavior of both the stakeholder and the focal organization. Because the stakeholder and the focal organization are in a reciprocal relationship, future exchanges (e.g., contributions for rewards) are influenced by past ones. The authors argue that if a party receives more than they have expected, then they may offer or contribute more in the next exchange. This creates a positive, upward spiral or “gift exchange.” Conversely, reciprocity can, according to the authors, also lead to a negative, downward spiral. If a party gets less than expected, this may lead to disappointment and a type of “punishment” in return, in turn disappointing the first party. This initiates the downward spiral that deteriorates the relationship, as each party receives less and less. According to Bosse et al. (2009), the exchange can also relate to information exchange. This leads to their other important concept, the perception of fairness. This concept concerns three dimensions: (a) distributional fairness, (b) procedural fairness, and (c) interactional fairness. The authors’ message is that stakeholders are willing to settle for rewards that are “good enough” instead of pursuing their maximal self-interests if they feel that (a) the sum of rewards offered by the focal organization is distributed among the stakeholders fairly, (b) procedures (e.g., on decision-making or knowledge sharing) take place fairly, and (c) the interactions are undertaken fairly, for example, respectfully. All three dimensions must be deemed fair in order for the stakeholder to perceive fairness in the relationship. Both the reciprocity concept and the perception of fairness concept contribute to a nuanced analysis of the relationship between the focal organization and any of its stakeholders.

Harrison et al. (2010) discuss the “controversy [on] the degree to which firms should allocate firm value to satisfy the needs and demands of a broad group of stakeholders beyond what is necessary to simply maintain their willful participation in the workings in the firm [i.e., applying a managing for stakeholders approach]” (p. 150, referring to Harrison & Freeman, 1999; Jensen, 2002) and the question posed by Sisodia, Wolfe, and Sheth (2003), “how is it that these companies can be so generous to everyone who costs them money (customers, employees, suppliers, communities) and still deliver … superior returns to investors?” (p. 17). Harrison et al. (2010) point to a research gap when they state that “there is not much in the research literature that systematically describes, at the level of a firm’s relationship with a stakeholder, how a particular type of stakeholder treatment leads to competitive advantage” (p. 150). The authors point to trust building as an important but insufficient means to create competitive advantage. Instead, they explain how understanding of the stakeholder-perceived distributional, procedural, and interactional justice (together with the related concepts of salience, reciprocity, and generalized exchange) can “facilitate the acquisition of knowledge about stakeholder utility functions” (p. 151). This implies that a precondition for creating value for the stakeholders is to have nuanced knowledge about what it is that means something of value for them, that is, their utility functions, such as in the examples with the Textbook case and the Employee Participation case presented in the section “Examples to Set the Stage and Establish an Initial Understanding of the Phenomenon.” The message is that knowing the factors that drive utility for each stakeholder as well as the weighting assigned to these factors can give the focal organization a competitive advantage because the knowledge can be used to fine-tune tactics, resource allocations, and strategies as well as give rise to value-creation opportunities. The authors explicitly mention that their contribution is to strategic management and not corporate social responsibility. Moreover, they limit themselves to focusing on the stakeholder types that are most closely related to the focal organization’s operations or objectives, that is, employees, managers, customers, suppliers, and owners. In addition, it is important to notice that they do not claim that investment in stakeholder relationships will always lead to superior performance, and that it should be acknowledged that overinvestment as well as unwise investment certainly can happen, implying that stakeholder management is a difficult and uncertain process. Harrison et al. (2010) state that

a firm that manages for stakeholders seeks to identify and understand how the welfare of its stakeholders is affected by the actions it takes. It also seeks to act in a way that demonstrates to stakeholders that it understands and respects how their welfare is affected. Welfare refers to the well-being of an individual or group and is often conceptualized by a utility function… . the relevant “utility function” of a stakeholder specifies that stakeholder’s preferences for different combinations of tangible and intangible outcomes resulting from actions taken by the firm. (p. 156)

Cost, time, and quality are all mentioned as examples of tangible outcomes, whereas examples of intangible outcomes include self-image, fairness, process, and relationships. According to the authors, some of the expected and measurable outcomes from a managing for stakeholders approach include growth, efficiency, and higher levels of innovation.

Freeman et al. (2010) state that stakeholder theory “is fundamentally a theory about how business works at its best, and how it could work … It is about value creation and trade and how to manage a business effectively. ‘Effective’ can be seen as ‘create as much value as possible’” (p. 9), realizing that the fundamental driver of value is stakeholder relationships. “Stakeholder theory focuses on the jointness of stakeholder interests rather than solely on the trade-offs that sometimes have to be made … [It] solves the value creation question by asking how we could redefine, redescribe, or reinterpret stakeholder interests so that we can figure out a way to satisfy both, or to create more value for both” (Freeman et al., 2010, p. 15).

Freeman et al. (2010) state that many stakeholder theorists have focused on the inherent conflict between stakeholder interests instead of focusing on joint stakeholder interests. Ackermann and Eden (2011) introduce the concept of stakeholder disaggregation, highlighting the notion that subcategories or a segmentation of stakeholder types may be relevant in order to do stakeholder analysis and engagement well, for example, deciding whether to focus on a single customer, segments of customers, or all customers as the unit of analysis.

Sisodia (2011) discusses a philosophy of doing business, that is, “Conscious Capitalism,” in which (and based on a higher purpose of the company than profit maximization) the relationship to the stakeholders, especially the SPICE stakeholders—society, partners, investors, customers, and employees—is at the center of attention. The underlying idea is that by explicitly managing for the simultaneous benefit of the SPICE stakeholders, the company will experience “far more engaged and fulfilled employees, loyal and trusting customers, innovative and profitable suppliers, thriving and environmentally healthy communities, and more” on top of financial wealth (p. 99). Enduring, endearing, self-organizing, self-motivating, and self-managing organizations are created due to extraordinary levels of employee (and stakeholder in general, we may add) engagement based on alignment of personal passions and corporate purpose. Building on Gupta (2011), this can be seen as a result of the focal organization applying a relational perspective to their stakeholder relationships in opposition to a transactional perspective. Applying a relational perspective in its pure form to the stakeholder relationships will mean to “treasure a harmonious maintenance of existing social relations above all else” (Gupta, 2011, p. 20) and consistently search for win–win situations instead of trade-offs. This is in line with the managing for stakeholders approach (Freeman et al., 2007); however, it broadens the perspective, as it not only focuses on the focal organization’s point of view as the approach does, that is, how to manage, but also sees it from the stakeholders’ point of view, that is, that they will be looking for ways to continue the organization–stakeholder relationship by all possible means. This is the exact opposite of applying a transactional perspective, as this “operates on the premise that each transaction is complete in itself and that interacting parties [i.e., the stakeholders] make no assumptions about the continuity of the relationship beyond the focal transaction” (Gupta, 2011, p. 20). Realizing that both perspectives in their pure form have major weaknesses (the relational perspective may foster a pathological situation and suboptimal lock-ins, whereas the transactional perspective may imply very high transaction costs, complex contracts, and no investment in future-oriented assets), Gupta (2011) points to the benefit of integrating the two perspectives. His own suggestion would be to focus on choices by the focal actor related to the three following dimensions: relationships, contexts, and time.

Freeman et al. (2020) proposes that stakeholder theory should concern value creation (economic value as well as other values). To emphasize this, they point out that they are dealing with a strand of the stakeholder theory that they have called “Value Creation Stakeholder Theory.” Where Freeman et al. (2010) use the formulation “a theory about how value gets created” (p. 14), Freeman et al. (2020) explicitly point to the managerial perspective by stating that “stakeholder theory is about ‘knowing how’ to engage stakeholders and create value for them” (p. 5). (Notice that “knowing how” instead of “knowing that” is also emphasized in Freeman et al., 2010). The authors (Freeman et al., 2020) emphasize the importance of seeing the business as an interconnected and interdependent system, where all stakeholders contribute in order to flourish collectively, and where each stakeholder must also benefit from the system in order to continue to flourish. All the components in the system as well as their interactions and interdependencies should be considered, particularly for its long-run viability. In other words, adopting a systems perspective (Kast & Rosenzweig, 1972; Rousseau, 1979) and acknowledging that a broad, holistic perspective on business instead of a narrow, reductionist one is needed (Freeman et al., 2020).

According to Freeman and colleagues (2020), 21st-century executives already understand that “having shared values and shared purpose, a long-term orientation, consciously building trust and fostering agility in the system lead to greater value creation. It is not stakeholders versus shareholders, or economic versus social value. In today’s business world, ‘and’ is the most important word” (Freeman et al., 2020, p. 226). The authors illustrate their message by pointing to the difference between a value network (where the participants have a shared purpose that guides them to move forwards together) and a value chain (where the value creation roughly is seen from the shareholders’ perspective and focuses on the linear creation of financial value). The authors point to the “alignment of values, norms and ethics as mechanisms for efficient and effective flourishing within and among organization” (Freeman et al., 2020, p. 219), while acknowledging that economic relationships will be characterized by both cooperative and competitive elements. Further on, they point to the importance of acknowledging the need for (more) behavioral theory as well as “a more humanistic concept of business as a vehicle for human cooperation to realize outcomes not otherwise attainable” (Freeman et al., 2020, p. 219) to take the field of stakeholder theory further.

Barney (2018) takes the discussion in a slightly different direction when he couples the resource‐based theory with a stakeholder perspective. Though he acknowledges that an organization may need resources from a number of internal and external stakeholders in order to generate profit, he points to the fact that a company that is able to assemble co-specialized resource bundles that other companies are unable to assemble will be able to generate more profit than those other companies. Stakeholder(s) who possess resources necessary for this unique resource bundling should be the focus of and given first priority by the focal organization. This is relevant when bargaining both about contributions and about distribution of created value. Therefore, Barney (2018) addresses the perennial question at the heart of stakeholder theory, that is, “who and what really counts” (Freeman, 1994, referred to by Mitchell et al., 1997, p. 853), which is discussed by almost every researcher writing about stakeholder perspective.

In 2019, researchers pointed to the potentials of considering and developing a behavioral stakeholder theory (Crilly, 2019) and a behavioral view on stakeholders (Bundy, 2019). Even though references to human nature and micro and behavioral foundations have been mentioned since Rhenman (e.g., Rhenman, 1968) and Freeman’s (e.g., Freeman, 1984) very early works, it seems that a lot could be done in order to understand stakeholders better, including their perceptions and ways of interpreting their interactions with the focal organization and other stakeholders. Future research could be both conceptual and empirical. Moreover, Nartey (2019) suggests bringing more contextual richness to new stakeholder research.

Considering the recent focus on value creation for, by, and with stakeholders, Harrison and Wicks (2019) have identified another important topic: they point to the fact that a focal organization’s actions can be value-destroying for the stakeholder as well as being harmful to the stakeholder either emotionally, economically, or physically. Subsequently, the stakeholder can respond reciprocally to perceived harmful decisions and actions. The authors suggest that

in addition to asking how much value a strategy is likely to produce, decision makers should ask how much value it will destroy (e.g., who the strategy is likely to hurt, and how will it hurt them). Doing so will allow firms to assess the potential costs of a strategy more completely. For example, they can factor in any costs associated with potential legal suits, walkouts, boycotts, or lost business, in addition to considering the less easily quantifiable costs associated with a damaged reputation, reduced motivation and loyalty, and negative reciprocity.

(Harrison & Wicks, 2019, p. 13)

Stakeholder Thinking in Projects and Other Temporary Organizations

The two seminal books presented in this article, Rhenman (1968) and Freeman (1984), contribute explicitly to a theory of the firm; however, stakeholder thinking has been part of the project management literature since Cleland (1986) published an article titled “Project Stakeholder Management.” As previously mentioned, Cleland had proposed a method for analyzing stakeholders (based on his work in project management) in the 1970s in a book within strategic management (King & Cleland, 1978). Since the mid-1990s, projects have been conceptualized as temporary organizations (Lundin & Söderholm, 1995). This makes it very easy to apply stakeholder thinking to projects (see, e.g., Aaltonen, 2011; Eskerod, Hueman, & Savage, 2015b; Karlsen, 2002; Lehtinen & Aaltonen, 2020). The implications of applying stakeholder thinking to a temporary organization instead of a permanent organization have been discussed in many publications, for example, Eskerod and Jepsen (2013) and Huemann, Eskerod, and Ringhofer (2016). The fact that a project cannot be lifted from the ground without contributions from stakeholders makes many researchers in project stakeholder management explicitly aim to contribute to Freeman et al.’s (2010, 2020) call to “know how” to engage stakeholders and create value for them. Eskerod and Jepsen (2013) use concepts from (consumer) behavior theory to explain and predict stakeholders’ behavior, whereas Huemann et al. (2016) use systemic constellation methods rooted in family therapy and psychology for stakeholder analysis. More publications, for example, Eskerod and Huemann (2014) and Eskerod, Hueman, and Savage (2015b), discuss the implications of applying a managing for stakeholders approach. Other recent publications discuss stakeholder value constructs in megaprojects (Eskerod & Ang, 2017) and the influence of “shadows of the context” on project stakeholders (Eskerod & Larsen, 2018).

Propositions for a Stakeholder Perspective

Based on the text of this article as well as deductions, propositions for a stakeholder perspective are offered in Table 2. Each proposition can be an object for discussion as well as contribute to research questions for future research efforts.

Table 2. Propositions for a Stakeholder Perspective

Proposition 1: A stakeholder can be defined as any individual or group that affects, potentially can affect, or is being affected by a focal entity’s (whether permanent, e.g., an organization or department, or temporary, e.g., a project) activities and/or achievements.

Proposition 2: The broadness/narrowness of the stakeholder definition is not given. A broad definition of stakeholders can include, for example, the local community, society, future generations, animals, and ecosystems, whereas a narrow definition can include, for example, owners, core customers, core employees, and lead suppliers.

Proposition 3: To apply a stakeholder perspective implies to see a focal entity and its stakeholders as a system, in which the set of stakeholders areis not given, but should be defined based on the issue and purpose at hand.

Proposition 4: A stakeholder perspective presumes that the fundamental driver of value is stakeholder relationships, and that ethical decisions should not be separated from business decisions.

Proposition 5: Due to its activities and provided stakeholder contributions, the focal entity and the stakeholders create values that can be distributed among all parties. These include not only financial value, but all kinds of value, defined by the utility functions of the focal organization and the stakeholders. Additionally, the focal organization’s activities may create externalities, that is, unintentional costs (value destruction) or unintended benefits for itself and for stakeholders.

Proposition 6: Stakeholders may possess resources needed by the focal entity, and stakeholders may desire value provided by the entity and the cooperation. The relationship between the focal entity and its stakeholders is reciprocal and characterized by a series of exchanges, often contributions and rewards, which can go both ways.

Proposition 7: The focal entity and the stakeholders’ motivations for entering and continuing their relationships are guided by the parties’ utility function, expectation fulfillment, and perception of fairness. The perception of the relationship’s potential for value creation must be aligned for the relationship to be sustained and flourish.

Proposition 8: Most stakeholders are voluntary members of the system and can therefore decide to take actions to withdraw or to refuse to contribute sufficiently.

Proposition 9: A stakeholder perspective is managerial, that is, it deals with the “how” question when it comes to focal entity representatives analyzing and engaging stakeholders in intentional ways to create aimed-for values for all parties. Stakeholder analysis and engagement does not need to be done by formal managers. It can be carried out by any representative of the entity.

Proposition 10: For stakeholder analysis and engagement, the individual(s) in charge must decide on the level of stakeholder disaggregation, for example, treating all customers the same, doing segmentation of customers, or focusing on a single customer.

Proposition 11: The relationship between the focal entity and each stakeholder can be governed by a formal contract; however, incomplete contracts and psychological contracts are typically a major part of the relationship.

Proposition 12: In the exchange process between the focal entity and the stakeholders, claim fulfilment as well as expectation fulfillment or over-delivery are important for the relationship to be sustained and flourish.

Proposition 13: Stakeholders both compete and collaborate. A stakeholder perspective emphasizes the stakeholders’ common interests of moving forward together rather than their conflicting interests.

Proposition 14: A stakeholder perspective can be applied by a managing stakeholders approach or a managing for stakeholders approach. A managing stakeholders approach implies seeing stakeholders as means, whereas a managing for stakeholders approach applies a broader stakeholder definition—and considers stakeholders regardless of their instrumental value.

Proposition 15: A successful stakeholder manager is able to focus both on the dual relationships between the entity and each stakeholder and on the stakeholders in network with each other, when he or she is doing stakeholder analysis and engagement.

Suggestions for Future Research

The existing literature on stakeholders, the stakeholder perspective, and stakeholder theory is immense—and may make both young as well as seasoned researchers ask whether there really is more to be done in this field. The answer is yes; however, it could be that future research should be conceived of a little differently, or at least be supplemented by different research approaches. At the moment, the field is conceptually very strong. Even though considerable disagreements exist and are easily identifiable, particularly whether a stakeholder perspective should be seen with ethical lenses, strategic lenses, or both simultaneously (the latter being the case if the researcher or manager acknowledges that there should not be a separation thesis (Freeman, 1995), the conceptual path seems well identified. A challenge is, however, that the theoretical framework is rather abstract. Acknowledging it as a “know how” rather than a “know that” discipline (Freeman et al., 2010, 2018b)—as well as a managerial discipline—it seems that now would be the time to “put meat on the bones.” Rhenman (1973) accomplished this early on by analyzing a Swedish community hospital from a systems approach, and this application continues today, for example, Aaltonen, Kujala, Havela, and Savage (2015). This type of less abstract, applied research aligns with Nartey (2019), who suggests adding more contextual richness in stakeholder research. This could be done by aiming for richer data sets, in-depth case studies, and a narrative research approach. Many topics seem relevant, for example, how to integrate (or we can also say balance) a relational perspective and a transactional perspective in the stakeholder–focal organization relationship, based on the relationships, contexts, and time dimensions suggested by Gupta (2011). It could also be done by giving focus to the micro foundations of a stakeholder perspective as suggested by Bundy (2019) and Crilly (2019), for example, on how to figure out a stakeholder’s utility function, and how to find ways to create value in a system. More research on the combination of behavioral theory and value destruction (Harrison & Wicks, 2019) would also be relevant.


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