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Stakeholder Theory

Every company exists in a web of relationships with groups and organizations that affect and are affected by the company’s efforts to achieve its objectives. Taken together, these are the company’s stakeholders, implying that they hold a stake in its conduct. Typically, stakeholders of a for-profit company include its customers, employees, stockholders, suppliers, the local community, and many others.

Stakeholder theory is the systematic study of these relationships, their origins, and their implications for how companies behave. Used in this context, the word theory is controversial. Social scientists who study stakeholder relations ask empirical questions, such as why companies and stakeholders behave as they do and whether these behaviors affect the company’s financial performance. They use the word theory to refer to a specific set of ...

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