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. Stakeholders are important to public relations [Page 809]professionals because these groups are essentially the “public” in public relations. Stakeholders, in essence, are the audiences for organizational messages. Stakeholder theory is an outgrowth of general systems and resource dependence perspectives 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.

R. Edward Freeman (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. 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, intra-industry players, inter-industry 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 non-human stakeholders, including wildlife and the environment. Certainly, after environmental disasters such as the Exxon Valdez and Chernobyl, 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.