Stakeholders Theory

 Claims that the purpose of a business is to create value and to serve the interest of all
stakeholders not just shareholders
 Unwritten contract na Pag pumasok ka sa business you agree na lahat ng gagawin mo ay
makakabuti sa society
 Tinitignan muna kung ano ang makakabuti sa lahat then consequently mag earn ka ng
profit. (ED freeman)
 Approaches
o Descriptive
 Explains how managers, firms and stakeholders interact.
 The purpose of the descriptive approach is mainly to improve the
 Interaction and relationship of stakeholder
o Instrumental
 Looks at stakeholders as means to improve corporate performance
 Assumes that for managers to maximize the objective function of the firm,
they must consider the interest of stakeholder
 Instrument lang ang management
 Interest of stakeholders
o Normative
 Titignan effect nung actions
 Stakeholders' interests despite the effects of these actions on the firm
 Titignan stakeholder and effect sa company
 Objective: The benefit of the stakeholders (Ed Freeman)