Behavioral Stakeholder Theory

Abstract

Examines stakeholder theory through the prism of behavioral research, which aims to bring realistic assumptions about human behaviors, emotions and cognition to understanding how to manage stakeholders. Although a broad stakeholder orientation – engaging with numerous stakeholders in the social-political environment – is associated with positive outcomes for firms in the form of increased collaboration and reduced conflict with actors in their sociopolitical environments, companies are constrained with limited resources. Looking inside the firm, particularly at how interdependencies and trade-offs across stakeholders are viewed and managed, helps to explain why some firms attend to the interests of more stakeholders than others. Also, efforts to appeal to some stakeholders often fail to create value for firms. Behavioral research in stakeholder theory can address two overarching themes: how executives interpret their environment and devise appropriate responses (thus, accounting for heterogeneity across firms) and how stakeholders make sense of corporate data and difficult-to-observe corporate practices (thus, accounting for heterogeneity across outcomes).