The Strategic Imperative: Do We Need Normative Considerations in Strategic Theories of Stakeholder Engagement?

Abstract

Recent work in strategy has examined how distinctive stakeholder engagement promotes value creation and appropriation, leading to a proposed “new stakeholder theory” (NST). In developing this new literature stream, NST scholars have adopted an instrumental (performance-oriented) and predictive approach, thus abstracting from normative (morally informed) considerations justifying stakeholder-oriented strategies. In this paper, it is argued that NST should explicitly state its underlying normative assumptions, even if it keeps its predictive focus, for four main reasons: theorists might want to rule out unacceptable or illegitimate managerial behavior (which might still be consistent with a value creation logic), define the criteria to set the boundaries of stakeholder claims (who is included and especially who is excluded from the value creation process), specify the working definition of “value” (which might differ from the usual emphasis on economic value), and discuss the downstream managerial implications of the proposed theory. The paper concludes by suggesting how to incorporate such normative assumptions in strategic stakeholder-centered theorizing.

Keywords: New stakeholder theory, Instrumental stakeholder theory, normative stakeholder theory, stakeholder strategy, stakeholder governance

JEL Classification: M14, M10