Applied Business Research: Stakeholder Theory Essay


Discuss about the Applied Business Research for Stakeholder Theory.


Part One

Stakeholder Theory:

A stakeholder is an individual or a group of individuals, who possess specific interests in an organisation and these individuals could influence or be influenced by the business (Zanjirchi and Moradi 2012). There are different types of stakeholders associated with the business organisations, which comprise of both internal and external stakeholders (Strand and Freeman 2015). The internal stakeholders are the employees, managers and owners of the business, while the external stakeholders of the business are mainly the suppliers, the shareholders, the government bodies, creditors, financers and communities. There is a great impact of all these stakeholders in the business (Bridoux and Stoelhorst 2014).

From the conventional viewpoint of an organisation, increasing the value of the shareholders is of prime importance. Therefore, the organisations develop obligatory fiduciary duties to place their requirements in the first place. In opposition to this, the stakeholder theory points out that the needs of the other stakeholders are significant for an organisation to manage the business activities and operations effectively. In fact, the competitors are often treated as the stakeholders of an organisation and their status is determined based on their capacities to influence the company and its associated stakeholders.

The sustainability related conditions at the suppliers affect the buyers’ economic performance. The effect of the SRC in the economic performance has been studied using a regression equation. The SRC has been taken as independent variable and the economic benefits are taken as dependent variables. The prices of the products, buyer vulnerability, spillover benefits and others also influence the buyers’ economic policies along with the SRC at the suppliers (Busse 2015). Suppliers SRC by four mediating effects influence the buyers’ performance. The effect of SRC through purchasing cost is negative while the effect of SRC through risk costs of the supply chain, benefits from collaboration and benefits from stemming excess of the self-promotion of a supplier.

The Stakeholder theory has been implemented on the part of the managers to address higher-level ethical issues in the business. The implementation of the ethical standards by the managers has helped in improving the business conditions. The ethical considerations are less efficient in making a value judgment and are more about creating a conversation between the stakeholders and the organization (Edward Freeman et al. 2012).

The annual profit of the organization for the previous year has been estimated to be ?1203 for each employee. The average income of the sector is ?1228 for each employee. The value has a standard deviation of ?104 for each employee. Therefore, it has to be tested whether the average income is equal to ?1228 or not. The null hypothesis of the test is H0: The mean value of profit per employees is equal to ?1228 and the alternative hypothesis is H1: The mean value of the profit per employees is greater than ? 1228. A t-test could be conducted assuming the income to be normally distributed. The null hypothesis of the test is H0:? = ? 1228 and the alternative hypothesis is H1: ??? 1228.

The p-value of the test is 0.405, which is greater than the given level of significance ? = 0.05. This implies null hypothesis of the test is accepted. The average value of the profit per employees equals to ?1228.

The probability that the mean value of the profit of each employee is equal to ? 1203 is given by:

  • P[ X ? 1203] = P[ Z ? (1203 – 1203)/104]

(Since the mean value of profit per employee is equal to ? 1203 and the standard deviation value are 104)

  • P [Z? 0] = 0.5.

(Since Z follows a standard normal distribution (Tong 2012).

Therefore, the required probability is 0.05.

The p-value of the test so computed is entirely based on the estimated mean value from the sample. The change in mean value of the sample will change the mean value of the population as well. If the p-value computed from the sample is equal to 0.0302 and the significance level is equal to 0.01, then also the null hypothesis will be rejected as p-value is less than the given level of significance level.

When the null hypothesis is rejected when the null hypothesis that is H0 is actually true, then this is the Type I error. The probability of rejecting the null hypothesis when it is true is known as probability of committing Type I error.

The annual profit from each employee has been calculated to be ? 1228. The test results suggest that the null hypothesis of the test has been accepted. This means that the average annual profit per employee could be assumed ?1203 based on the results of the test. Although there is a slight difference in the estimated value from the sample and the actual value from the population, the probability that the sample value is different from population value is very small. Therefore, it could be assumed that the profit per employee is ? 1203.

Part Two:

The article illustrates the ways of making decisions in the supply chain (Wu and Pagell 2011). The economic as well as the environmental issues affect the supply chain. The environmental issues are the proper management of the environmental resources in order to maintain the environmental sustainability. There is dependence between the environmental challenges and the economic issues. The environmental issues such as changes in the environment often affect the economic problems such as the price changes. Most of the firm oversees these issues and go on exploiting the environment. The loss of the companies due to this exploitation of the firms is not visible in the short term, but it affects in the long-term production and business activities. The people or organizations that affect the business or are affected by firm are referred to as the stakeholders. The environmental concerns involve some third party stakeholders like the NGOs, who were not involved in the business earlier. The involvement of these organizations and the concern about environmental pollution may increase the cost initially, but will decrease the cost in the long-run. The objective of the research is to understand how the companies can make decision in the supply chain by considering the environmental issues.

The environmental issues have always been a part of the business. The business need to operate its activities in such a way to maintain the environmental sustainability. The incorporation of environmental concern in supply chain is referred to as the green supply chain. There always exist a positive association between the quality management and the environmental issues. The environmental concerns offer both benefits as well as challenges to the organizations. The organizations have to bear some extra costs to manage environment related issues. In order to reduce carbon emission, the companies have introduced carbon less products that would lead to a clean and green environment. The use of these products by the companies may incur a little more cost, but these will benefit the company in the future. However, this is also true that not all the stakeholders of the business firm can be satisfied at the same time. The environmental concerns always involve a huge amount of costs. The existing studies have revealed that the managers of the companies have claimed to manage this environment related issues in the supply chain. However, the way of satisfying all the stakeholders in the supply chain is not yet understood.

The research methodology involves the methods of accumulating pertinent information for the particular study, which could be both primary and secondary in nature. The secondary data has been collected from the case studies. This constitutes the qualitative research part of the study. However, this is not sufficient to arrive at meaningful inferences of the research. The research also involves some quantitative research, which comprises of collection of primary data. The primary data can be collected with the help of research questionnaire, interview, direct observation and other methods. The direct interview method has been applied in this case to suit the purpose of the research. The interview been conducted among the managers of the company and the range of each interview varies from 60 to 80 minutes. However, some interviews have lasted more than 120 minutes as well. The data collected from the interviews has been evaluated cortically to arrive at the research outcome. The researcher has followed deductive approach, since the existing theories and models have been used to carry out the research work.

The data has been collected by interviewing the managers of eight such environmental firms. The managers of these eight firms are unable to point out how they are managing with the cost and the economic benefits in the short-term results. The managers have stated that it is like a new challenge to them to earn more profit in the supply chain even after considering the environmental issues. The workers of the company should be given proper training about the environmental hazards that could arise if the environment related issues are not addressed during the production process. The supply chain management suffers a bit in the short run due to the awareness of the workers of the firms. However, the environmental issues are managed properly in the supply chain. In these cases, the productivity is also not hampered due to the awareness of the workers. The sampling method used for data collection is stratified sampling. The different forms of the companies like the food and beverage companies, wood and forestry companies, IT and hardware companies are taken as the strata.

The organizations also adopt various environmental initiatives to distinguish themselves in the supply chain. This makes the companies distinct from other companies and people become more interested to buy their products. Thus by taking environmental concerns in the supply chain, the company could also attract more customers to buy their products. The use of Cleaning Products for the environmental issues involves other stakeholders like the NGOs and others into the supply chain. This in turn helps in the growth of some organizations.

The environmental concern and supply chain runs side by side, as it is pointed out in the given article. The business model of the company needs to be understood in order to understand the ways by which the company is making profit from sustainability. The article suggests that the organizational and technical challenges of the company need to be studied for understanding the ways by which the company is managing environmental issues. The article states that the results obtained from the case studies does not focuses on a single point of view and different companies have different strategies for environmental issues. Therefore, it is advisable to review the business performance and environmental performance because of sustainability practices to make decision about managing environmental issues in the supply chain. A few more research needs to be done in this matter regarding the role of the managers in the sustainable issues in supply chain.


Bridoux, F. and Stoelhorst, J.W., 2014. Microfoundations for stakeholder theory: Managing stakeholders with heterogeneous motives. Strategic Management Journal, 35(1), pp.107-125.

Busse, C., 2015. Doing Well by Doing Good? The Self?interest of Buying Firms and Sustainable Supply Chain Management. Journal of Supply Chain Management.

Chen, H.T. and Turner, N.C., 2012. Formal Theory Versus Stakeholder Theory New Insights From a Tobacco-Focused Prevention Program Evaluation. American Journal of Evaluation, 33(3), pp.395-413.

Edward Freeman, R., Rusconi, G., Signori, S. and Strudler, A., 2012. Stakeholder theory (ies): Ethical ideas and managerial action. Journal of business ethics, pp.1-2.

Strand, R. and Freeman, R.E., 2015. Scandinavian cooperative advantage: The theory and practice of stakeholder engagement in Scandinavia. Journal of business ethics, 127(1), pp.65-85.

Tong, Y.L., 2012. The multivariate normal distribution. Springer Science & Business Media.

Wu, Z. and Pagell, M., 2011. Balancing priorities: Decision-making in sustainable supply chain management. Journal of Operations Management, 29(6), pp.577-590.

Zanjirchi, S.M. and Moradi, M., 2012. Construction project success analysis from stakeholders' theory perspective. African Journal of Business Management, 6(15), p.5218.

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