Stakeholder Theory: A Radical Institutionalist View

Stakeholder theory is sometimes criticized by radical scholars for being pro-business and pro-capitalistic. However, stakeholder theorists recognize their disagreements with neoclassical economics and reject the notion of shareholder primacy. I argue that the rejection of shareholder primacy introduces a radical dimension to stakeholder theory, which can be further developed by drawing on the radical institutionalist literature. This literature acknowledges that private ownership can impede the social provisioning process by acting as a ceremonial drag. By adopting a radical institutionalist view of stakeholder theory, I suggest that rejecting shareholder primacy implies eliminating ceremonial elements that hinder the social provisioning process. Consequently, I see stakeholder management as a possible means of replacing these elements with discretionary community control that promotes inclusion, empowerment, and engagement of diverse stakeholders.