ACCA Applied Knowledge · Business and Technology · Stakeholders in business organisations
Which of the following is a commonly cited criticism of stakeholder theory?
A common criticism is that stakeholder theory is hard to apply, because stakeholder interests often conflict and there is no single measure for weighing them. This leaves managers with unclear priorities and weaker accountability than a clear shareholder wealth aim.
- AIt ignores the fact that employees are affected by business decisions
- BIt gives managers no way of recognising that a company has customers
- CIt is hard to apply because stakeholder interests conflict and there is no single measure for balancing themCorrect
- DIt requires a company to pay out all profits as dividends
Explanation
Stakeholder theory offers no single objective to guide trade-offs, so managers face conflicting demands and may lack clear accountability. The other options misstate the theory.
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