Stakeholder Essay Example | Topics and Well Written Essays - 1250 words

Stakeholder - Essay Example Without a clear consensus on how to define a stakeholder, the essential question that most definitions attempt to answer is, ‘What is a stake?’ The two definitions above certainly represent a contrast in broad versus narrow viewpoints of stakeholders. With Clarkson’s (1995) narrow perspective, a distinction can be made between stakeholders that voluntarily or involuntarily bear some form of risk. Voluntary stakeholders are those that bear risk based on an investment of either capital, human, or financial value in a firm. Involuntary stakeholders are at risk due to the activities of the firm. The common element between both types of stakeholders is risk, and without risk there is no stake (Mitchell et al., 1997). In the broader definition offered by Freeman (1984), the list of possible stakeholders is so expansive that it could include almost anyone or any entity. Diverse groups such as suppliers, community, industry, local government, neighbors, lobby groups, labor unions, and the natural environment have been included as stakeholders under this broad definition. The broadness of this definition (i.e. â€Å"can effect or is affected by†) allows the stake to be either unidirectional or bidirectional, and there is no requirement for reciprocal action as in a contract or with a relationship (Mitchell et al., 1997). From the critical perspective, Freeman’s definition (1984) is so broad that it would include everyone or every entity, except those with no power to affect the firm and have no relationship to the firm. The claim that a stakeholder is â€Å"any group or individual who can effect, or is affected by, the achievement of an organisation’s objectives† (Freeman, 1984: 46) is so broad that it is not falsifiable. In contrast, Clarkson’s definition (1995) uses risk to represent some form of legitimate claim