Normative Approach of Stakeholder Theory

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Definition: Normative Approach of Stakeholder Theory

This theory states that Managers ought to pay attention to key stakeholder relationships. Stakeholders should be given importance while taking decisions. Relationship between manager and stakeholder is based on morals and normative commitments.

A certain benchmark is set while treating the shareholders.

Example: - Company defines itself based on its stakeholders like “what the company stands for” and “what is the business of the company”.

It sees the interest of the stakeholders of the company rather than just focussing on profits. This theory gives more importance to morals and doing business based on ethics.

This theory states that Managers ought to pay attention to key stakeholder relationships. Stakeholders should be given importance while taking decisions. Relationship between manager and stakeholder is based on morals and normative commitments. A certain benchmark is set while treating the shareholders.

Example: - Company defines itself based on its stakeholders like “what the company stands for” and “what is the business of the company”.

It sees the interest of the stakeholders of the company rather than just focussing on profits. This theory gives more importance to morals and doing business based on ethics.

Normative Approach of Stakeholder Theory

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