Stakeholder Orientation, Managerial Discretion and Nexus Rents
STAKEHOLDER THEORY, MANAGERIAL DISCRETION AND NEXUS RENTS, R. Phillips, ed., Edward Elgar Publishers, Northampton, 2010
Posted: 19 Nov 2010
Date Written: November 17, 2010
Building on prior research (Phillips et al. 2010), we make explicit the implied assumptions – both managerialist and determinist – in stakeholder research. We argue that three elements – managerial discretion, stakeholder orientation and nexus rent – interact in important and under-examined ways. A firm’s orientation toward its stakeholders determines how it will use the discretion accorded to it by external and internal circumstances. The interaction between these two factors affects a firm’s ability to create value in the short term and influences the level of discretion available to the firm in the long term. We argue that the interplay of discretion and orientation create a vicious (or virtuous) cycle, in which the firm either creates or destroys goodwill with stakeholders, thereby making it more or less likely that stakeholders will grant discretion in the future.
Keywords: stakeholder theory, managerial discretion, nexus rent
JEL Classification: L20, L21, M20, M14
Suggested Citation: Suggested Citation