Series on Effective Stakeholder Engagement: Stakeholder Theory


By Lynda Bourne, DPM

Melbourne, Australia

Stakeholder theory’ is a specific approach to recognising and dealing with stakeholders, based on the concept of stakeholder developed by Ed Freeman in his books Strategic Management: a Stakeholder Approach (1984), and Stakeholder Theory: The State of the Art (2010).  These ideas are central to the ESEI™ approach to stakeholder engagement.

The way in which organisations approach stakeholder engagement, the tools and techniques used to engage stakeholders and, at a philosophical level, the purpose of the organisation are built on which view of stakeholders is accepted by the organisation’s governing body.

The traditionalist / Friedman view of stakeholders focused on the ‘owners’ of the organisation (in the commercial world shareholders) with the simple purpose of maximising profits. A range of public relations and physical disasters highlights the short term, self-defeating outcomes of this approach.

pmwj31-Feb2015-Bourne-PHOTO1 FREEMANR Edward (Ed) Freeman’s stakeholder theory poses the deeper philosophical question: ‘can business leaders make decisions about the conduct of the business without considering the impact of these decisions on (all) those who will be affected by the decisions?’ Is it possible to separate ‘business’ decisions from the ethical considerations of their impact?

Photo: Ed Freeman

The evidence suggests it is impossible to build a sustainable organisation of any type, including a profitable business, if that organisation fails to meet the needs of most (if not all) of its stakeholders, most of the time. Freeman is considered to be one of the early proponents of this wider view of organisational stakeholders, writing that they could be defined as “any group or individual who can affect or is affected by the achievement of the organisation’s objectives” 


To read entire article, with footnotes, (click here)

Editor’s note: This series of articles on effective project stakeholder engagement is by Lynda Bourne, PhD, Managing Director of Stakeholder Pty Ltd (Australia) and author of the books Stakeholder Relationship Management and Advising Upwards, both published by Gower (UK). Dr. Bourne is one of the world’s leading authorities on program/project stakeholder relations. See her author profile below.

About the Author

Dr Lynda BourneDr. Lynda Bourne flag-australia

Melbourne, Australia 

Dr. Lynda Bourne is Managing Director of Stakeholder Management Pty Ltd – an Australian based company with partners in South America and Europe. Through this global network she works with organisations to manage change through managing the relationships essential for successful delivery of organisational outcomes.   Lynda was the first graduate of the RMIT University, Doctor of Project Management course, where her research was focused on tools and techniques for more effective stakeholder engagement. She has been recognized in the field of project management through her work on development of project and program management standards. She was also included in PMI’s list of 50 most influential women in PM.

She is a Fellow of the Australian Institute of Management (AIM) and a Fellow of the Australian Computer Society (ACS). She is a recognized international speaker and seminar leader on the topic of stakeholder management, the Stakeholder Circle® visualization tool, and building credibility and reputation for more effective communication.   She has extensive experience as a Senior Project Manager and Project Director specializing in delivery of information technology and other business-related projects within the telecommunications sector, working as a Senior IT Project Management Consultant with various telecommunications companies in Australia and South East Asia (primarily in Malaysia) including senior roles with Optus and Telstra.

Dr Bourne’s publications include: Stakeholder Relationship Management, now in 2nd edition, published in 2009, the second, Advising Upwards in 2011. She has also contributed to books on stakeholder engagement, and has published papers in many academic and professional journals and is a columnist for PMI’s PM Network. Her next book Making Projects Work is due for publication in 2014.

Dr. Bourne can be contacted at [email protected].

To see more works by Lynda Bourne, visit her author showcase in the PM World Library at http://pmworldlibrary.net/authors/dr-lynda-bourne/