The Relationship between strategic management research and stakeholder theory, reconsidered
Research Seminars
Academic Areas Strategy
Jay B. Barney , Presidential Professor of Strategic Management, Lassonde Chair of Social Entrepreneurship, Chair, Department of Entrepreneurship and Strategy, David Eccles School of Business, The University of UtahPresidential Professor of Strategic Management, Lassonde Chair of Social Entrepreneurship, Chair, Department of Entrepreneurship and Strategy, David Eccles School of Business, The University of Utah
May 18, 2015
| 10:00 AM - 11:30 AM | Monday
AC 2 MLT, Level - 2, Hyderabad, India
Open to Public
Despite calls to integrate a stakeholder perspective into strategic management research, the shareholder supremacy model continues to dominate both strategic management research and practice. A key assumption of the shareholder supremacy model is that shareholders are the only firm stakeholder with a residual claim on a firm’s cash flows. Building on the “nexus of contracts” view of firms (Jensen and Meckling, 1978) and strategic factor market theory (Barney, 1986), this paper shows that if a firm’s only residual claimants are its shareholders, then a firm cannot be expected to generate economic profits it could distribute to shareholders. If, on the other hand, a firm does generate such economic profits, then it must be the case that it has residual claimants besides its shareholders. What this means is that strategic management’s efforts to explain the existence of economic profits logically implies that the interests of multiple stakeholders must be included in these explanations. The paper discusses several implications of this conclusion.
