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The Stakeholder Theory in the Modern Global Business Environment

International Journal of Applied Institutional Governance (ISSN: 1747-6259) Volume 1 Issue 1 - Download PDF

Tony Ike Nwanji
PhD Researcher on Corporate Governance

Kerry E. Howell
Professor of Governance and Regulation

The International Research Unit for Institutional Governance
Ashcroft International Business School
Anglia Polytechnic University APU

Abstract

The stakeholder theory made popular during the 1980s suggested that corporations should look beyond the shareholder theory of profit maximisation, and take into consideration other stakeholder groups that the corporation is associated with, and who contribute to the company’s achievements.

This paper examines why the shareholder theory of the traditional Anglo-American model of corporate governance failed to overcome the problems of unethical business practices of corporate boards and their managements. Overall, this paper argues that the application of deontological and teleological ethical theories could help boards of directors manage their companies’ stakeholder issues to the benefit of the company and its stakeholders.

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