Wednesday, October 31, 2012

Towards different narratives for the value creation of the firm

A conference was held October 19-21 on stakeholder theory at the renowned Darden School of Business. Forty participants were invited, all academics who had recently made important contributions to stakeholder theory or stakeholder management. A fascinating uplifting atmosphere prevailed. This was already demonstrated by the conference location. On the one hand, there were the historical buildings of the University of Virginia, built according to the plans of Jefferson, founder of the University and later third President of the USA, a true architectural jewel. On the other hand, not far off is the extremely modern and generously designed building of the Darden School of Business; a symbol of the will and strength to find and develop new forms of research and teaching in management.

Contained in these illustrative surroundings, in both senses of the word, the discussion took place among the leading scholars of stakeholder theory. The participants agreed that the failure in recent years of the management generation, and the blatant market failure of the financial industry in particular, necessitates that the theory of value creation in firms and their respective management needs to be reconsidered. The dominating opinion is that the “intellectual comfort zone” of the current theory needs to be abandoned, and new theoretical approaches have to be developed on the basis of assumptions that are more humanly relevant and that lead to positive narratives of the value creation of the firm.

In particular, the question was debated as to which of the basic assumptions of the previous theory of the firm and of conventional management understanding have to be changed in order to do justice to the current situation of the operative reality of businesses, and to develop positive narratives for a firm’s value creation. In different sessions, the participants’ requirements of theories were two-fold. Either one extends the current assumptions of the mainstream theories, as stipulated for instance by the stakeholder theory of the firm, which can induce gradual changes in the theories, as a basis for positive narratives for the management. Or one embraces a more radical change of assumptions, which leads to disruptive changes in strategy theories and practices regarding the theory of value creation. The final conclusion was that the time is ripe for a change.
Let’s seize it!

 Sybille Sachs



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