Beyond One‐Size‐Fits‐All: Understanding the Impacts Of Heterogeneous Stakeholders On Firm Performance

ABSTRACT Drawing on stakeholder and transaction cost theory, we empirically investigate how managerial efforts to engage five different key stakeholder groups affect firm financial performance. Building upon the existing literature on stakeholder heterogeneity, we propose a framework that highlights inter‐stakeholder differences to empirically test whether the commonly used overarching stakeholder groupings are sufficient. This approach allows us to hypothesize about the financial value creation and value destruction potential of integrating each stakeholder individually. Our propositions are tested using a panel dataset consisting of 4926 multinational companies from 2005 to 2020. The results show that the integration of minority shareholders and communities negatively affects financial performance. Conversely, integrating customers and suppliers has a positive impact on financial performance in the long run, while integrating employees has a positive impact in the short run. These findings underscore the particularities of each stakeholder group, pointing to the need to consider heterogeneity in future stakeholder research.