Toward a new theory of the firm: a critique of stakeholder “theory”

Argues that stakeholder theory may be an appropriate model to describe firm behavior and replace the dominant paradigm, the economic model of the firm. However, current conceptualizations of stakeholder theory do not meet the requirements of scientific theory. Thus, looks at the historic roots of stakeholder “theory”, critiques its current form, and suggests steps that may be taken for stakeholder theory to satisfy the conceptual requirements of theory. Specifically suggests that contractual interests may underlie stakeholder relationships just as they do the agency relationship between managers and stockholders as prescribed by traditional economic theory.