Stakeholder Theory

Stakeholder theory provides a theoretical grounding for public relations practitioners to expand their understanding of how individuals, groups, and external organizations impact their organization and how the organization affects its stakeholders. The theory suggests that public relations [Page 873]success depends upon how organizations manage relationships with stakeholders. Stakeholders, in essence, are the audiences for organizational messages, practices, and policies.

Stakeholder theory is an outgrowth of general systems and resource dependency theories suggesting that organizations must forge links with stakeholders to acquire valuable resources or stakes and reduce uncertainty. One of the central tenets of stakeholder theory is that organizations should attend to the needs of a broader set of stakeholders that reaches beyond stockholders. From a public relations perspective, stakeholder theory seeks to identify and manage the diverse needs, values, and interests of various stakeholders and the potential communication tensions between these groups as well as between the organization and them.

R. Edward Freeman in 1984 was one of the first proponents of stakeholder management. He argued for considering stakeholders as part of the larger strategic planning process. In this case, organizations that develop strong instrumental links including communication channels with stakeholders are likely to hold a competitive advantage over organizations that do not. A key idea in his work is that organizations and stakeholders can and should mutually influence one another in an ongoing process of accommodation based on holding and granting stakes—the resources of mutual dependency. Since organizations are dependent upon stakeholders for resources, these groups have the ability to withhold their resources if they disagree with the organization on important issues.

Much of the research on stakeholder theory discusses how narrowly or broadly organizations should define their stakeholders. Freeman defined stakeholders as any individual or group that impacts or is impacted by the actions of organizations. Researchers agree that stakeholders can be located both within and outside the organization. For instance, Robert L. Heath (1997) delineated activist publics, intraindustry players, interindustry players, potential activist publics, customers, employees, legislators, regulators, judiciary, investors, neighbors, and the media as a loss of potential stakeholders. More recently some researchers have argued for nonhuman stakeholders, including wildlife and the environment. Certainly, after environmental disasters such as the Exxon Valdez oil spill off the coast of Alaska in 1989, the 1986 nuclear accident at the Chernobyl power plant in the Ukraine, and BP's Deepwater Horizon oil spill in the Gulf of Mexico in 2010, one can reasonably argue that these groups are impacted by organizations. However, organizations depending upon their industry or circumstances are going to have different potential stakeholders. For this reason, identifying stakeholders is a key issue for public relations practitioners.