Sample Business Studies Coursework Paper on Learning Log: Stakeholder Theory

Learning Log: Stakeholder Theory

Introduction

In my quest to understand the stakeholder theory, I applied the literature review approach on this aspect. I identified journals on management from the ABS list. I then searched and located three journals from the list on EBSCO, a credible online research database. These journals titles are provided in the reference list.  In the search for relevant literature on the topic, I used keywords which I combined using Boolean operators (AND/OR) (Fink 2013). On the basis of this strategy, I was able to search relevant materials. This paper documents a learning log on my knowledge and understanding on agency relationship between managers and shareholders, which is one of the fundamental issues in stakeholder theory.

Learning on stakeholder theory

The module has been of great significance in enhancing my managerial skills and knowledge. One of the skills I learned is how to use the literature review approach in the learning process. Thus, I have gained remarkable knowledge on how to undertake a literature review from different online sources. The module has been of great value in enhancing my understanding and knowledge with regard to the importance of management practices in enhancing organizational sustainability.  One of the concepts that I have learned relates to the value of stakeholder theory in assisting organizations to achieve sustainability.

From a review of the three journal articles identified, it is evident that effective implementation of the stakeholder theory is a complex aspect (Freeman et al. 2010). The complexity emanates from the fact that a manager is required to integrate a holistic and comprehensive approach in order to enhance the theory’s effectiveness in enhancing organizational sustainability (Phillips 2003).

To enhance the contribution of stakeholder theory in enhancing organizational sustainability, managers must establish a balance between the interests of different internal and external stakeholders (Goodwin 2011). Managers must ensure that the shareholder’s wealth is maximized. Additionally, the society’s welfare must be taken into consideration (Bosse & Phillips 2016). One of the fundamental issues that managers should take into consideration when employing the stakeholder theory is to ensure that the agency-principal relationship established between the shareholders as the company’s owners and managers is effectively implemented (Mitchell et al. 2016). 

The rationale of ensuring that the agency-principal relationship is effectively established is underlined by the fact that managers may make and implement managerial decisions that might negatively affect the organisation’s sustainability. For example, managers may make decisions aimed at maximizing profit at the expense of the shareholders’ quest to maximize profit (Phillips 2007). Additionally, some of the decisions might affect the society’s welfare (Weiss 2014).  The existence of agency problem has become a major management issue in the contemporary business environment as evidenced by the increase in cases of organizational failure (Joos 2016). Amongst the notable cases of organizational failure that are a result of agency problem include Enron Corporation failure (Hernandez 2012). The company failed due to the existence of a conflict of interests among its organizational managers. The managers entered into transactions with different organizations including financial entities with the objective of profiteering.  The module has provided insight on how managers can avoid agency problem by adhering to their stewardship role (Hernandez 2012).  

Conclusion

In summary, the literature search on stakeholder theory has underlined the importance of establishing an effective agency-principal relationship. From the knowledge gained on the multifaceted nature of the agency-principal relationship, I will be able to implement stakeholder theory in my managerial role.  This move will not only contribute to improvement in an organization’s capacity to maximize profitability and shareholder’s wealth but will also improve the organization’s capacity to undertake corporate social responsibility.  

References

Bosse, D & Phillips, R 2016, ‘Agency theory and bounded self-interest’, Academy of Management Review, vol. 41,no. 2, pp. 276-297.

Goodwin, E 2010, Microeconomics in context, M.E Sharpe, New York.

Fink, A 2013, Conducting research literature reviews; from the internet to paper, SAGE Publications, Thousands Oak.

Freeman, E, Harrison, S, Wicks, A, Parmar, B & Colle, S 2010, Stakeholder theory; the state of the art, Cambridge University Press, Cambridge.

Hernandez, M 2012, ‘Towards an understanding of psychology of stewardship’, Academy of Management Review, vol. 37, no. 2, pp. 172-193.

Joos, K 2016, Convincing political stakeholders; successful lobbying through process, Wiley, London. 

Mitchell, R, Weaver, G, Agle, B & Bailey, A 2016, ‘Stakeholder agency and social welfare; pluralism and decision making in the multi-objective’, Academy of Management Review, vol. 41, no. 2, pp. 252-275.

Phillips, R 2003, Stakeholder theory and organisational ethics, Berrett-Koehler, San Francisco.

Phillips, R 2007, Stakeholder theory; impacts and prospects, Edward Elgar Publishers, Cheltenham.

Weiss, J 2014, Business ethics; a stakeholder and issues management approach, Berrett-Koehler, Inc., San Francisco.