Working Papers Home

2015 Working Papers
2014 Working Papers
2013 Working Papers
2012 Working Papers
2011 Working Papers
2010 Working Papers
2009 Working Papers
2008 Working Papers
2007 Working Papers
2006 Working Papers
2005 Working Papers
2004 Working Papers
2003 Working Papers
2002 Working Papers
2001 Working Papers
2000 Working Papers

Search All Papers

JEL Classification

Past Working Papers (Prior to 2000)

Office of Research
Home Page

Information on
Submitting a Paper

"Towards a Property Rights Foundation for a Stakeholder Theory of the Firm"

Joseph Mahoney, Cheryl Carleton Asher, and James Mahoney


First Author :

Joseph Mahoney
Business Administration
UIUC College of Business
1206 S. Sixth Street
339 Wohlers Hall, M/C 706
Champaign, IL 61820


Second Author :

Cheryl Carleton Asher
Villanova University
1007 Bartley Hall
800 Lancaster Avenue
Villanova, PA 19085


Third Author :

James Mahoney
Federal Reserve Bank of New York
33 Maiden Lane
New York, NY 10045


Abstract :
This paper suggests that due to the changing nature of the firm in today’s business world, viewing shareholders as the sole residual claimants is an increasingly tenuous description of the actual relationships among a firm’s various stakeholders. Thus, a shareholder wealth perspective is increasingly unsatisfactory for the purpose of accurately answering the two fundamental questions concerning the theory of the firm: that of economic value creation, and the distribution of that economic value. The thesis of the current paper is that examining the firm from a property rights perspective of incomplete contracting and implicit contracting provides a solid economic foundation for the revitalization of a stakeholder theory of the firm in strategic management and in expanding the resource-based theory of the firm. In order to make progress in strategic management, a clearer conceptual and empirical understanding of implicit contracting is required. The perspective outlined in this paper provides for a more accurate direction towards both measuring economic value creation, and analyzing the distribution of that value. It is also submitted that such a perspective has important implications for corporate governance, particularly when managers must balance conflicts among stakeholders to achieve the goal of maximizing economic value.
Footnotes & Acknowledgements :
This research paper was part of the 2004 Academy of Management Business Policy & Strategy (BPS) Division Symposium in New Orleans, LA titled: “The Role of Individual Stars, and Stakeholders in Creating and Appropriating Rents,” which was co-organized by Teppo Felin (Emory University) and Jamal Shamsie (Michigan State University). We thank Ruth Aguilera, Russ Coff, Andrea DeMaskey, Jonathan Doh, Anna Grandori, Henry Hansmann, David Ikenberry, Charlie Kahn, Matt Kraatz, Steve Michael, Nicolai Foss, Jack Pearce, and Dave Ziebart for their comments and suggestions. The usual disclaimer applies. The views expressed in this paper are those of the authors and do not necessarily represent those of the Federal Reserve Bank of New York or the Federal Reserve System.
Manuscript Received : 2004
Manuscript Published : 2004
This abstract has been viewed 3349 times.
Click here to view the full text of this paper.