Stakeholder theory is a theory of organizational management and business ethics. It holds that an organization is accountable not only to its owners but to the groups it affects, such as employees, suppliers and local communities [1]. In sport, these groups include fans, athletes, leagues, sponsors, broadcasters and host cities.
Key points
- The theory asks who a company’s stakeholders are and how managers treat them, not only what shareholders want [1].
- Donaldson and Preston (1995) describe three mutually supportive aspects: descriptive, instrumental and normative [1][2].
- Mitchell, Agle and Wood (1997) rank stakeholders by power, legitimacy and urgency [1][3].
- The framework has been tested on sporting event organizing committees [4].
- In 2019, 181 CEOs in the Business Roundtable committed to benefit all stakeholders, not only shareholders [5].
Origin
The word “stakeholder” in its current business use is traced to an internal memorandum at the Stanford Research Institute in 1963 [1]. R. Edward Freeman later credited the concept to internal discussion at that institute [1]. His book Strategic Management: A Stakeholder Approach (1984) identifies and models the groups that are stakeholders of a corporation and recommends methods by which management can give due regard to their interests [1][6]. Donaldson and Preston (1995) then separated the theory into descriptive, instrumental and normative aspects [1][2].
How it works in sports media
The theory treats a club, league or broadcaster as a hub of relationships rather than a single seller and buyer. Mitchell, Agle and Wood (1997) derive a typology from three attributes: power, legitimacy and urgency. Parent and Deephouse (2007) applied this framework to two large-scale sporting event organizing committees. They interviewed managers at three hierarchical levels, and found a positive relationship between the number of attributes a stakeholder has and how important managers judged it to be [4].
Examples
- Sporting events. The organizing committees studied by Parent and Deephouse (2007) were examined for how their managers identified and prioritized stakeholders using the power, legitimacy and urgency framework [4].
- Corporate purpose. The Business Roundtable’s 2019 Statement on the Purpose of a Corporation was signed by 181 CEOs who committed to lead their companies for the benefit of all stakeholders: customers, employees, suppliers, communities and shareholders [5].
Common questions
Who coined the term “stakeholder”?
Its current business use is traced to a 1963 internal memorandum at the Stanford Research Institute [1]. Freeman made it a full management theory with his 1984 book [1][6].
What are the three aspects of the theory?
Donaldson and Preston (1995) call them descriptive, instrumental and normative [1][2].
How do managers decide which stakeholders matter most?
Mitchell, Agle and Wood (1997) propose that a stakeholder’s salience depends on its power, legitimacy and urgency [1][3].
Related terms
- Sports Ecosystem — the network of interdependent stakeholders that produces the sports product.
- Sports Entities — the main groups that make up that network.
- Value Co-Creation — how stakeholders jointly create value.
- Ecosystem vs Industry — why sport is better read as a network than a single industry.
- Sports CSR — responsibility to communities and other stakeholders.
- Sports Governing Body — a stakeholder with regulatory power.
Read more on Play of Values
- Sports Ecosystem v0.1: Key Sports Entities
- Management Theories and the Entities of the Sports Ecosystem
- Media Revolutions and the Sports Ecosystem
Sources
- Wikipedia. (n.d.). Stakeholder theory. In Wikipedia. Link
- Donaldson, T., & Preston, L. E. (1995). The stakeholder theory of the corporation: Concepts, evidence, and implications. Academy of Management Review, 20(1), 65–91. https://doi.org/10.2307/258887
- Mitchell, R. K., Agle, B. R., & Wood, D. J. (1997). Toward a theory of stakeholder identification and salience: Defining the principle of who and what really counts. Academy of Management Review, 22(4), 853–886. https://doi.org/10.2307/259247
- Parent, M. M., & Deephouse, D. L. (2007). A case study of stakeholder identification and prioritization by managers. Journal of Business Ethics, 75(1), 1–23. https://doi.org/10.1007/s10551-007-9533-y
- Business Roundtable. (2019, August 19). Business Roundtable redefines the purpose of a corporation to promote 'an economy that serves all Americans'. Link
- Freeman, R. E. (1984). Strategic management: A stakeholder approach. Pitman. https://doi.org/10.1017/CBO9781139192675