Why stakeholder and stockholder theories are not necessarily contradictory: A knightian insight

S. Ramakrishna Velamuri and Sankaran Venkataraman
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Sankaran Venkataraman: Darden Graduate School of Business Administration

No D/591, IESE Research Papers from IESE Business School

Abstract: The normative foundations of the investor centered model of corporate governance, represented in mainstream economics by the nexus-of-contracts view of the firm, have come under attack, mainly by proponents of normative stakeholder theory. We argue that the nexus-of-contracts view is static and limited due to its assumption of price-output certainty. We attempt a synthesis of the nexus-of-contracts and the Knightian views, which provides novel insights into the normative adequacy of the investor-centered firm. Implications for scholarship and management practice follow from our discussion.

Keywords: Theory of the firm; corporate governance; entrepreneurship; business ethics; stakeholder theory (search for similar items in EconPapers)
Pages: 19 pages
Date: 2005-05-30
New Economics Papers: this item is included in nep-bec and nep-cfn
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Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:ebg:iesewp:d-0591

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