Evidence of an Inverted U-Shaped Relationship between Stakeholder Management Performance Variation and Firm Performance

Laplume A. O., Harrison J. S., Zhang Z., Yu X., Walker K.

Business Ethics Quarterly, vol.32, no.2, pp.272-298, 2022 (SSCI) identifier identifier

  • Publication Type: Article / Article
  • Volume: 32 Issue: 2
  • Publication Date: 2022
  • Doi Number: 10.1017/beq.2021.19
  • Journal Name: Business Ethics Quarterly
  • Journal Indexes: Social Sciences Citation Index (SSCI), Scopus, IBZ Online, International Bibliography of Social Sciences, Periodicals Index Online, ABI/INFORM, ATLA Religion Database, Business Source Elite, Business Source Premier, EconLit, PAIS International, Philosopher's Index, Public Affairs Index, DIALNET
  • Page Numbers: pp.272-298
  • Keywords: instrumental stakeholder theory, stakeholder management performance variation, stakeholder theory, firm performance
  • TED University Affiliated: No


© Empirical research is largely supportive of the assertion of instrumental stakeholder theory that a positive relationship exists between managing for stakeholders and firm performance. However, despite considerable debate on the subject, the amount of variation across firm investments in stakeholders (stakeholder management performance) has not been adequately investigated. We address this gap using a sample of more than eighteen thousand firm-level observations over ten years. We find evidence to support an inverted U-shaped relationship between variation in stakeholder management performance and Tobin's q, suggesting that firms that have some imbalance in their stakeholder management, but not too much, perform best. We discuss the implications of our study for instrumental stakeholder theory and managerial practice.