What concept does stakeholder theory involve?

Stakeholder theory emphasizes the importance of recognizing and considering the interests of all parties involved in a business, rather than focusing exclusively on one group, such as shareholders. This concept is rooted in the understanding that businesses operate within a complex web of relationships with various stakeholders, including employees, customers, suppliers, the community, and the environment.

By understanding the diverse interests and needs of these stakeholders, businesses can create more sustainable and ethical practices that benefit not only the company but also contribute positively to society as a whole. This approach advocates for a broader perspective on business success, where long-term viability and stakeholder satisfaction are prioritized alongside traditional financial measures. This holistic view promotes responsible decision-making, fostering trust and collaboration, which can enhance a company's reputation and operational performance over time.