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Related Faculty
Luk Van Wassenhove
Emeritus Professor of Technology and Operations Management
N. Craig Smith
Affiliate Professor of Ethics and Social Responsibility
Awards
Runner-up in the Business Ethics Quarterly Best Article award
May 2017
Keywords
Stakeholder Value; Normative Business Ethics; Stakeholder Theory; Prospect Theory; Reference States; Stakeholder Judgments; Corporate Governance; Investors, Stakeholders and Accountability;
Journal Article
Although central to stakeholder theory, stakeholder value is surprisingly neglected in the literature. The authors draw upon prospect theory to show how stakeholder judgments of value depend crucially on the reference state, how there are several alternative reference states that may be operative when stakeholders judge value, how the choice of reference state for stakeholders’ value judgments can occur intuitively or deliberately, and how the level of the operant reference
state may change with time and may also be incorrectly perceived by stakeholders or managers.