Introduction - Stakeholders - Three focus areas of Stakeholder Theory
3 important questions on Introduction - Stakeholders - Three focus areas of Stakeholder Theory
What are the three focus areas of stakeholder theory and who is the source where this information is from?
Source: Donaldson & Preston, 1995
- Instrumental - identify effective practices
- Descriptive - outline critical relationships
- Normative - prescribe the role/purpose of the firm.
What is meant by effective in terms of the instrumental stakeholder theory? And in light of this, what is the focus really on?
It is effective in terms of achieving profitability. The focus is on identifying those stakeholder practices that will allow companies to achieve profitability.
Why should you cater to stakeholders according to the instrumental stakeholder theory, in addition to achieving profitability?
Because (or insofar as) it IS good business.
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