Toward a Stakeholder Theory of the Firm: The Case of the Saturn Partnership

This paper seeks to engage the organization theory community in contemporarydebates over the role of the cxxporation in American society by building a stakeholdertheory of the t%n. We develop a set of normative premises and positivist propositionsderived from these debates, from a combination of organization and industrial relationstheories, and by using data from the Saturn Corporation. Three questions are posed fora stakeholder theory: (1) Under what conditions is a stakeholder firm likely to emerge,(2) what are the critical determinants of performance in a stakeholder firm, and (3)what will determine the sustainability and diffusion of this organizational form in theAmerican environment? The history, design features, and dynamics of the labormanagementpartnership at Saturn are used to illustrate and interpret a specific case ofemployees as stakeholders. Saturn?s governance structure, work organization, andinternal processes fit the characteristics of a stakeholder firm. Employees establishthemselves as critical stakeholders by using their knowledge to improve organizationalperformance. The local union likewise contributes to firm performance by organizingworkers into a dense social network that contributes to problem solving, conflictresolution, and quality improvement. However, the legal and political environment inwhich the firm operates produces considerable uncertainty over the sustainability anddiffusion of Saturn?s features in particular, and the stakeholder organizational form ingeneral. Additional hypotheses and research questions are proposed to continue theorybuilding around the more general model of the stakeholder firm. Organization theoristsare encouraged to take up the analysis of stakeholder models and thereby contribute tothe contemporary and future debates over the role the corporation in American society.