The Inequality Embedded In Stakeholder Capitalism : An Eclectic View of The Adoption of Stakeholder Management Practices

Ethical and instrumental arguments for paying attention to stakeholders’ demands have flourished inside and outside academia, especially since the Great Recession. So far, however, we are still missing the actual level of adoption of stakeholder management practices and, more importantly, the balance with which firms are meeting stakeholders’ demands. To be sure, even if stakeholder integration is portrayed as an integrative practice where all stakeholders receive attention from the firm, we theorize that some stakeholder groups will be favored over others. By hinging on a non-parametric method to model endogenously firms’ preferences for integrating each stakeholder group, we first assess the transition to the so-called stakeholder capitalism and its shape. The results show that stakeholder integration has increased, but inequality in the treatment of stakeholders is pervasive. By building on these findings and employing a cross-lagged design, we then explore the impact of this inequality on firms’ economic and non-economic performance. Overall, this study questions the narrative put forward by mainstream opinion-formers that hails the arrival of “stakeholder capitalism” – at least as we conceive it. Furthermore, managerial and theoretical implications are derived from these results, particularly, the need to consider an additional dimension in stakeholder management: inequality