What does stakeholder theory advocate for?

Stakeholder theory advocates for considering the interests of all stakeholders in decision-making processes. This approach emphasizes that businesses should be accountable not only to shareholders but also to a broader set of entities, including employees, customers, suppliers, the community, and the environment. By integrating the perspectives and needs of these various groups, companies can create more sustainable and equitable practices that enhance overall value, leading to long-term success.

The theory suggests that addressing the concerns and aspirations of all stakeholders can cultivate a positive relationship with each group, thereby fostering loyalty, increasing engagement, and ultimately contributing to the organization's reputation and sustainability. This holistic perspective contrasts sharply with theories that prioritize shareholder profits exclusively, operate with disregard for non-shareholder interests, or promote limited transparency, as these approaches can lead to short-term gains at the expense of long-term viability and ethical considerations.