What are the main criticisms of stakeholder theory?

What are the main criticisms of stakeholder theory?

Stakeholder theory suggests that companies should consider the interests of all stakeholders, not just shareholders. Critics argue that it can lead to conflicting interests, lack of accountability, and difficulty in measuring success.

Can you elaborate on the conflicting interests aspect?

Sure! Conflicting interests arise when different stakeholders have opposing goals. For example, employees may want higher wages, while shareholders may prefer cost-cutting to increase profits. Balancing these interests can be challenging.

What about the accountability issue?

Critics argue that stakeholder theory dilutes accountability because it can be unclear who is responsible for decisions. If a company prioritizes multiple stakeholders, it may be difficult to hold anyone accountable for negative outcomes.

Are there any alternatives to stakeholder theory?

Yes, alternatives include shareholder primacy, which focuses solely on maximizing shareholder value, and corporate social responsibility (CSR), which emphasizes ethical obligations to society.