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Beyond Stakeholder Utility Function: Stakeholder Capability in the Value Creation Process

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Abstract

In spite of the thousands of articles on stakeholder theory, research on value creation has had a shorter history and narrower breadth. Only a few studies have researched value creation from stakeholder perspective looking at how stakeholders appropiate value or the processes or activities by which stakeholders create value. Consequently to date, certain questions still remain unanswered regarding how a firm should treat stakeholders in order to create value. Several questions arise specifically from the stakeholder's side: What does "value" mean for a particular group of stakeholders and how do firms create these different types of value? How do we measure the value created by stakeholders? The purpose of this paper is to answer these questions from Amartya Sen's Capability Approach, identifying and measuring stakeholders' capabilities in the value creation process. Stakeholder Capability is the adequate concept for understanding stakeholder welfare rather than the utility function concept. The empirical evidence comes from an in-depth case study of the company The Grobo Group and its stakeholders. According to the results, the following stakeholder capabilities are relevant to value creation: being employable, being autonomus, being innovative, being entreprenurial, being responsive, being socially integrated, being emphatic, being "green" and being healthy.

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Notes

  1. This paper focuses on stakeholder theory as it was conceptualsed as a strategic management theory (Freeman 1984). Stakeholder theory is mainly concerned on value creation and trade, and not on Corporate Social Responsibility (CSR) (Freeman et al., 2010; Harrison et al., 2010).

  2. My focus will be on value creation and not on value appropriation. Lepak et al. (2007) and Coff (1999) amongst others have distinguished two sides: value creation and value appropriation. In this paper, my focus will be only on the value creation side and not on value appropriation.

  3. I do not consider any type of distinction (if stakeholder theory may be normative, instrumental or descriptive) in my approach to value creation because this distinction supports the separation thesis (Jones et al. 2002; Scherer and Patzer 2011). Freeman et al. (2010) has proposed an integration thesis for the value creation process and a pragmatic approach.

  4. Please checked at http//:www.losgrobo.com.ar

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  1. EADA Business School, Arago, 204, Barcelona, 08011, Spain

    Elisabet Garriga

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  1. Elisabet Garriga
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Garriga, E. Beyond Stakeholder Utility Function: Stakeholder Capability in the Value Creation Process. J Bus Ethics 120, 489–507 (2014). https://doi.org/10.1007/s10551-013-2001-y

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