1. DJ, 2003 Theories of the Firm Stakeholder Theory

2. DJ, 2003 Introduction z Answer to shareholder (owner) dominance of governance y Inspired by social/egalitarian view z Views firm as having value created not only by shareholders y Employees invest in the firm by developing firm- specific skills

3. DJ, 2003 The theory z Left to the market, individuals do not develop optimal firm-specific skills z Holders of skills should be rewarded in proportion to the importance of those skills to the firm z Institutions of governance should be changed to ensure this

4. DJ, 2003 Advantages z Encourages more cohesion within firms – argument that more cohesion means more profitable z Creates incentives for learning z If applied generally, will lead to greater social cohesion nation-wide

5. DJ, 2003 Critique z Based on neoclassical idea of incentives through returns to individual y Arguably, learning is an organisational rather than individual process z The role of unions – rather than firm-specific learning by individuals – has resulted in promotion

6. DJ, 2003 Writers on Stakeholding z Ciaran Driver and Grahame Thompson (2002) Corporate Governance and Democracy: The Stakeholder Debate Journal of Management and Governance; 6(2): 111-30. Corporate Governance and Democracy: The Stakeholder Debate z Will Hutton et al (1997) Stakeholding and its Critics, Institute of Economic Affairs z RE Freeman and R Phillips (1999) Stakeholder Theory: A Libertarian DefenseStakeholder Theory: A Libertarian Defense z Mary O’Sullivan, pp.52-58