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

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Introduction

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.

Middle

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.

Conclusion

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.

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