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Stakeholder Judgments of Value

Published online by Cambridge University Press:  24 May 2016

Leena Lankoski ,
N. Craig Smith  and
Luk Van Wassenhove
Leena Lankoski
Affiliation:
University of Helsinki and INSEAD
N. Craig Smith
Affiliation:
INSEAD
Luk Van Wassenhove
Affiliation:
INSEAD
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Abstract:

Although central to stakeholder theory, stakeholder value is surprisingly neglected in the literature. We draw upon prospect theory to show how stakeholder judgments of value depend crucially on the reference state, how there are several alternative reference states that may be operative when stakeholders judge value, how the choice of reference state for stakeholders’ value judgments can occur intuitively or deliberately, and how the level of the operant reference state may change with time and may also be incorrectly perceived by stakeholders or managers. Our theorizing results in a fundamentally different way of perceiving the value of corporate actions to stakeholders and shifts understanding of the avenues available for companies and others to influence stakeholder judgments of value. This novel perspective has implications both for theory and management practice, and not least for normative business ethics, if business is about stakeholder value creation.

Keywords

Stakeholder ValueNormative Business EthicsStakeholder TheoryProspect TheoryReference StatesStakeholder Judgments
Type
Articles
Information
Business Ethics Quarterly , Volume 26 , Issue 2 , April 2016 , pp. 227 - 256
Copyright
Copyright © Society for Business Ethics 2016 

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