• Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

Why stakeholders are important in an international business and the effects of Stakeholder Theory on an international business.

Extracts from this document...


Why stakeholders are important in an international business and the effects of Stakeholder Theory on an international business Introduction In 1984, Freedman proposed the theory about stakeholders in his book "stakeholder approach to strategic management". The stakeholder's management theory refers to all managerial activities the manager of company carries out in order to balance the interest's requirements of all stakeholders. The theory of stakeholders is different from the shareholders' theory. Stakeholders think that any company can not develop without the participation of stakeholders. The objective of company is to pursue the whole interest of stakeholder rather than some people's interest. As the development of society and technology, the theory of stakeholders is more abundant in recent years. More and more companies take account into stakeholders when the companies make critical decisions. The theory of stakeholders challenges the authority of shareholders. The theory of stakeholders is a new point of view in the distribution of resources and ownership of enterprises (Annika, Carlsson, K., Karl, Henrik, D., Moll, C. H & Dario, P., 2008). The comparison of stakeholders and shareholders does not still stop until today. The word "stakeholders" date back to 1929. The definition of stakeholders is various. The definition that is accepted by majority belongs to Freeman. He thought that stakeholders are all individuals and groups which can affect the objectives of enterprise or are affected in the process of pursuing enterprise's objectives. Generally speaking, stakeholders include shareholders, creditors, employees, customers, suppliers and business partners. In addition, the content of shareholders is still expanding. Now governments, local residents, local communities, media, and environmentalists are included in stakeholders. The theory of stakeholders will play a more important role in global business in the future. International business involves in more stakeholders compared with domestic business. The purpose of this essay is to explore why stakeholders are important in an international business and the effects of Stakeholder Theory on an international business. ...read more.


In addition, different organizations have themselves definitions according to their needs. The situation is every enterprise has a definition, for example, many companies do not think that competitors are stakeholders. Secondly, the objectives of enterprises are changed under Stakeholders Theory; the maximum of commercial profit is not the only goal of company. Corporate social responsibility must be undertaken by enterprise with Stakeholders Theory. On the one hand, people would misunderstand that the nature of enterprise is social rather than commercial. Once one company purely pursues commercial profit, the condemnations from public will be unimaginable. On the other hand, some companies do not how to balance the relationship of corporate social responsibility and commercial profit. The consequence of Stakeholders Theory is that enterprise will undertake excessive responsibilities and public will have more and bigger expectations. Thirdly, one problem is that enterprise should how to practice Stakeholders Theory. The feasibility of Stakeholders Theory has gone through more and more challenges in recent years. On the one hand, the development of Stakeholders Theory makes the range of stakeholders is broadened. On the one hand, fiercer and fiercer competition makes enterprise do not have money and time to care stakeholders. Even though the value of Stakeholders Theory is enormous in theoretical explanation, it is so hard to apply it in practice. For example, customers are stakeholders, but what companies should do in order to participate into the actions of companies. In addition, many so-called stakeholders are not willing to involve on the activities of company just in order to a little interest. Therefore, the definition of stakeholders is not enough in theory. Scholars should take account into the needs of people who are included in stakeholders. The effects of Stakeholders Theory on international business This part focuses on the effects of stakeholders on international business. The theory of stakeholders has changed some management and operation of business, especially for international business. ...read more.


The application of Stakeholders Theory should be placed into a right and suitable place, or the consequence will be not good. In addition, the range of stakeholders could be large and small. It can not be denied that some companies are confused about how to apply it. Maybe the shortages of Stakeholders theory will limit the application of it, or the shortages could be overcome in the practices. Many problems need to be explored in practice not just in theory. No matter how the future of Stakeholders theory is, its value has been seen. Therefore, people also should not be negative to the development of it. Stakeholders Theory should be together with other theories in order to overcome its shortages. Reference Annika, Carlsson, K., Karl, Henrik, D., Moll, C. H & Dario, P., 2008, Participative backcasting: a tool for involving stakeholders in local sustainability planning. Science Direct, 40 (1), pp. 34-46. Ezekiel, C & Paul, O.,2010. Introducing Stakeholder Management. Construction Stakeholder Management, 29 (10), pp.1-12. Ektewan, M & Stephen, O.,2010. Strategies and Tactics for Managing Construction Stakeholders. Construction Stakeholder Management, 14 (8), pp.121-137. Freeman, R, E & David, L., 1984. Stockholders and stakeholders: A new perspective on corporate governance. California management review, 25 (3), pp. 88-106. Freeman, R, E., Andrew, C. W & Bidhan, P., 2004. Stakeholder theory and the corporate objectives revisited. Organization science, 15 (3), pp. 364-369. Jeff, F., 2010. The issue network: reshaping the stakeholder model. Canadian Journal of Administrative Sciences, 27 (2), pp. 161-173. Laurie, K. L., 2007. An Organizational Stakeholder Model of Change Implementation Communication. Communication Theory, 17 (2), pp. 176-204. Michael, L. B., 2006. Stakeholder influence capacity and variability of financial returns to corporate social responsibility. Academy of management review, 23 (7), pp. 56-64. Reinhard, S., 2006. Mapping stakeholder theory anew: from the 'stakeholder theory of the firm' to three perspectives on business-society relations. Business Strategy and the Environment, 15 (1), pp. 55-69. Sankar, S., Bhattacharya, B. C & Daniel, K., 2006. The role of corporate social responsibility in strengthening multiple stakeholder relationships: a field experiment. Journal of the academy of marketing science, 34 (2), pp. 158-166. ...read more.

The above preview is unformatted text

This student written piece of work is one of many that can be found in our University Degree Management Studies section.

Found what you're looking for?

  • Start learning 29% faster today
  • 150,000+ documents available
  • Just £6.99 a month

Not the one? Search for your essay title...
  • Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

See related essaysSee related essays

Related University Degree Management Studies essays

  1. McDonalds Stakeholder map

    Local communities are stakeholders as well, who rely on McDonalds to provide fast, efficient, good food on a consistent basis. Meanwhile, McDonald's has an impact on the local area such as creates jobs for people living locally and the local area will suffer if a business fails and is a

  2. Micro, Small and Medium Enterprises (MSMEs) have been recognised as one of the ...

    Define Micro, Small and Medium enterprises 2. PSBs to fix their own target - Min 20% growth every year so that outstanding is doubled every five years. 3. Doubling of Credit flow from 67,600 cr in 2004-05 to 135,200 cr by 2009-10 4.

  1. To what extent do you feel that The Body Shop has been successful in ...

    The following Table 1 outlines the key phases of how different stakeholder groups have been consulted since the social audit process began in 1994. It also indicates plans for future consultation. Body Shop is getting more and more successful in meeting stakeholder expectation.

  2. Leadership Theories - this review seeks to determine which theoretical perspectives, theories and schools ...

    An analysis of the use of learning approach theories in leadership development is a worthy research endeavor, nonetheless, to conduct the in-depth scrutiny of the literature necessary for this systematic review on the two clusters of theories, with the given time frame, would be impossible.

  1. Managing Change in Organisations. Examples from Beximco Pharma Ltd of Bangladesh. Develop systems ...

    of the need to cope with potential future problems, for example, intended government legislation, a new product development by a major competitor or further technological advances. Planned change represents an intentional attempt to improve, in some important way, the operational effectiveness of the organisation'.

  2. Innovation For Business Success. It is possible to be innovative in both large ...

    Rather than take the industry conditions as given and set a strategy accordingly, CNN decided not to follow suit and opted out of the race to compete for big-name news anchors. Kim and Mauborgne found that "even though value innovators do not set out to build advantages over the competition, they often end up achieving the greatest competitive advantages".

  1. Nestle stakeholders analysis

    The CEO chairs the Executive Board and delegates to its members individually the powers necessary for carrying out their responsibilities, within the limits fixed in the Executive Board’s Regulations. ________________ 2.1.2. Employees The Nestlé team comprises around 328,000 employees, 29% are based in Europe, 33.6% in the Americas and 37.4% in Asia, Oceania and Africa.

  2. Management principles and theories and their application to the construction industry.

    Each operational area must have its own level of performance. The department?s tasks must be specific, measurable and task oriented. 3. The department manager must then communicate this information to the line manager e.g. a contracts manager must pass this information on to the contracts manager.

  • Over 160,000 pieces
    of student written work
  • Annotated by
    experienced teachers
  • Ideas and feedback to
    improve your own work