Resource Dependence, Managerial Discretion and Stakeholder Performance

44 Pages Posted: 12 Jun 2006

See all articles by Shawn L. Berman

Shawn L. Berman

Santa Clara University

Robert A. Phillips

York University - Schulich School of Business

Andrew C. Wicks

University of Virginia - Darden School of Business

Date Written: June 2006

Abstract

Despite its remarkable rise in popularity, stakeholder theory continues to be criticized for a dearth of empirical studies as well as ambiguity in the underlying theory. Several scholars have argued that resource dependence theory provides a useful lens through which to view firm-stakeholder relationships (Frooman 1999; Mitchell, Agle, & Wood 1997; Rowley 1997). There may, however, be reason to question the extent of this proposed theoretical bolster due to differences in assumptions and prescriptions between the two theories. To test this proposed linkage, we introduce "stakeholder performance" as a measure of how well stakeholders are treated by the firm. We develop resource dependence-based hypotheses concerning stakeholder performance based on Boyd's (1990, 1995) operationalization of the three dimensions of environmental uncertainty identified by Dess & Beard (1984): munificence, dynamism, and complexity. As anticipated, these initial tests returned equivocal results. We follow up these results by considering the effects of different levels of managerial discretion (Hambrick & Finkelstein 1987) on stakeholder performance. We find that, under conditions of greater managerial discretion, stakeholder performance increases. Differences between resource dependence and stakeholder theory are elaborated and implications for future research are discussed.

Keywords: managerial discretion, resource dependence, stakeholders, stakeholder performance

JEL Classification: M19, L10, L20

Suggested Citation

Berman, Shawn L. and Phillips, Robert A. and Wicks, Andrew C., Resource Dependence, Managerial Discretion and Stakeholder Performance (June 2006). Available at SSRN: https://ssrn.com/abstract=907721 or http://dx.doi.org/10.2139/ssrn.907721

Shawn L. Berman

Santa Clara University ( email )

Santa Clara, CA 95053
United States

Robert A. Phillips (Contact Author)

York University - Schulich School of Business ( email )

4700 Keele Street
Toronto, Ontario M3J 1P3
Canada

Andrew C. Wicks

University of Virginia - Darden School of Business ( email )

P.O. Box 6550
Charlottesville, VA 22906-6550
United States

HOME PAGE: http://www.darden.virginia.edu/faculty/wicks.htm

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