C/B/209. A popular definition of the stakeholder theory of corporate governance is: „The process of supervision and control intended to ensure that the companys management acts in accordance with the interests of the stakeholdersŽ (Parkinson, 1994). Is this an effective model of corporate governance in the current business climate?

The present paper discusses the issues of effectiveness of stakeholder theory in the current business environment. The discussion shows the role stakeholder theory place in strategic management: the realignment of the interests of key stakeholders. It shows that the stakeholder theory places a strong emphasis on the importance of power in firm-stakeholder relations and envisages the ways this power can be exercised by different stakeholder groups. The discussion outlines the drivers of stakeholder management and the way the theory can be practically applied.