Stakeholder salience in Latin America: Who really counts?

Abstract

This chapter explores the issue of stakeholder salience in the context of Latin America. The notion of “stakeholder” has become embedded in both management scholarship and management practice. Its origins trace back to the publication of R. Freeman’s Strategic Management: a Stakeholder Approach. According to agency theory, the shareholder is the most salient stakeholder from a normative standpoint. The theory claims that, in practice, such salience is not always evident, due to the failure of shareholders to align managers’ behavior with their own interests. Managers will acknowledge the salience of shareholders and intend to pursue their benefit if they are entrusted to do so. Stakeholder theory realistically describes how managers manage, and it explicitly acknowledges the importance of the firm’s different constituencies, beyond shareholders. Thus, prioritizing the diverse stakeholder groups and actions to satisfy their legitimate interests requires a top management team with a special sensitivity.