The basis for stakeholder theory is that companies are so large and their impact on society so pervasive that they should discharge accountability to many more sectors of society than solely their shareholders.
Considering and applying the stakeholder theory business will have direct positive impact through improved customer perception, employee motivation, supplier stability, shareholder conscience investment.
The basis for stakeholder theory is that companies are so large and their impact on society so pervasive that they should discharge accountability to many more sectors of society than solely their shareholders.
As defined in an earlier section, stakeholders are not only are affected by the organisation but they also affect the organisation.
Stakeholder theory may be the necessary outcome of agency theory given that there is a business case in considering the needs of stakeholders through improved customer perception, employee motivation, supplier stability, shareholder conscience investment. Agency theory is a narrow form of stakeholder theory.
Think about a business whose employees who are not giving their 100% because company only take care of shareholders and not listen to employee.
And this will affect the company through low quality and less creativity.
Think about business that ignores law and order, they do not think of the society and the effect on society. It’s obvious that this company will going to see the decline in business.
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