Behavioral Stakeholder Theory

Keevil, Adrian A.C., Darden Graduate School of Business, University of Virginia
Wicks, Andrew, Darden Graduate School of Business, University of Virginia
Freeman, R. Edward, Darden Graduate School of Business, University of Virginia
Jones, Thomas M.

Many scholars have investigated the link between stakeholder management and firm performance. With few exceptions, prior works tend to rely on assumptions about stakeholder behaviors that are based on simplified assumptions about human behavior. These simplified assumptions produce theories that are implausible in practice. For example, we tend to assume that stakeholders reward firms that treat them well. While stakeholders arguably should reward firms that treat them well, there are a myriad of situational and psychological factors that could intervene to keep this from happening in practice. The overarching purpose of this dissertation is to propose an approach to stakeholder theory that accounts for real stakeholder behaviors, which I refer to as behavioral stakeholder theory. It is, effectively, the synthesis of stakeholder theory and behavioral economics.

In addition to articulating the behavioral stakeholder theory approach, the dissertation also explores important empirical questions in stakeholder theory related to factors that shape stakeholder behaviors. In three empirical chapters, I present results from eight separate studies and twenty four statistical analyses. I find that in order to expect stakeholder reciprocity, firms must significantly exceed stakeholders’ expectations of fairness. I also find that we currently overestimate the value of economic incentives in promoting stakeholder behaviors that contribute to firm performance. I measure the relationships between ethical, structural, relational and economic resources and stakeholder commitment. Under a variety of firm, industry and individual-level conditions, ethical factors consistently outperform economic factors.

I conclude with a discussion of implications for theory. I argue that behavioral stakeholder theory can identify and draw attention to new connections between business and society. Ultimately, I argue, it can deepen our understanding of how business works, what constitutes better and worse approaches to managing stakeholders, and better explain stakeholder management and firm performance.

PHD (Doctor of Philosophy)
stakeholder behavior, behavioral economics, behavioral stakeholder theory, firm performance
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