Stakeholder theory was first described by Dr. F. Edward Freeman, a teacher at the University of Virginia, in his point of landmark book, “Strategic Management: A Stakeholder Approach.” It proposes that investors are just one of numerous partners in an organization. The partner biological system, this hypothesis says, includes anybody put and associated with, or influenced by, the organization: workers, environmentalists close to the organization’s plants, sellers, legislative offices, and then some. Freeman’s hypothesis recommends that an organization’s genuine achievement lies in fulfilling every one of its partners, not simply the individuals who may benefit from its stock.
Stakeholder theory replaces the term profit with the term esteem. Profit is an estimation in cash while esteem may be estimated in all kind of ways. Organizations can’t exist in a vacuum, it requires that there should be investors to provide cash to the business, customers to purchase their products, work force/ employees to serve the customers, vendors to offer them the materials that they will offer, and a network inside which they can flourish.