Applying Stakeholder Theory to e-Government - Benefits and Limits

The notion of the "stakeholders" of the firm has drawn ever-increasing attention since Freeman published his seminal book on Strategic Management: A Stakeholder Approach in 1984. In the understanding of most scholars in the field, stakeholder theory is not a special theory on a firm's constituencies but sets out to replace today's prevailing neoclassical economic concept of the firm. As such, it is seen as the superior theory of the firm. Though stakeholder theory explicitly is a theory on the firm, that is, on a private sector entity, some scholars try to apply it to public sector organizations, and, in particular, to e-government settings. This paper summarizes stakeholder theory, discusses its premises and justifications, compares its tracks, sheds light on recent attempts to join the two tracks, and discusses the benefits and limits of its practical applicability to the public sector using the case of a recent e-government initiative in New York State.