Stakeholder Theory Research Based On Supply Network Model

Since1960s, the firm theory research is mainly divided into shareholder supremacy theory and stakeholder theory. The former argues that shareholders have enterprise, however, the latter says it is the stakeholders that really have the enterprise and shareholder is just one of many stakeholders. Stakeholders co-governance theory is a challenge to the traditional shareholder supremacy theory. Its development has the profound theoretical and practical background and it is increasingly recognised by the academia world and the management world. But most people who support this theory focus their research on the specific issues of stakeholders co-governance theory, such as the determination of stakeholders and the ways of stakeholders participating in the corporate governance, etc. To some extent, they all accept a default assumption that nowadays all the companies requiring governance should adopt the multilateral stakeholders co-governance mode. They have completely abandoned the "shareholder primacy" unilateral governance model on the consciousness. However, this is unscientific. This paper argues that corporate governance model should match the social environment. Enterprise need to take different corporate governance models in different period and different companies also should take the corresponding management model according to the their own specific environment even in the same period. The traditional pattern of "shareholder primacy" unilateral governance mode pursues high efficiency, while the stakeholder co-governance mode pays more attention to the fairness. It regards the enterprise and the society as a whole and pursues the whole’s Pareto Optimality, emphasizing enterprise’s sustainable development in synchronous coordination with the society. Like the pioneering national governance methods of "one country, two systems" put forward by Deng Xiaoping, according to different sectors of the economy, we should weigh the efficiency and fairness and permit different enterprises take different governance mode according to their specific position in the economy network, eventually making every enterprise find the most suitable and sustainable governance mode. On the research methods, we creatively draw lessons from the social network analysis methods, using Acemoglu’s economic supply network model to define the stakeholder theory’s application scope. If the sector in the center of the economy supply network occurs idiosyncratic risk, due to the cascade effect the idiosyncratic risk will rapidly transmits to the sector’s upstream and downstream sectors through supply network. Thus, a sector’s idiosyncratic shocks will translate into economic aggregate fluctuations because of interconnections, which is proved in the2008financial crisis. So, sectors which are in the center of economic supply network need to take the more stringent stakeholders co-governance mode. The financial industry is in the center of the economic supply network, and banks are the most important part of the financial industry. Banks are different from general enterprise in the capital structure, management goal, the relationship with the government and the conflict within various stakeholders. In addition, the commercial bank’s external effect is very obvious, which affects all aspects of social economy. All of these factors determine that the commercial Banks no longer applies to the traditional "shareholder first" unilateral governance mode, on the contrary, it may be more applicable to the stakeholder co-governance mode. In the empirical part, we explore the relationship between the stakeholders governance mode and banks profitability by taking China’s banking sector for example. We make a panel data regression with17national commercial Banks’data from2007to2012, and the regression result proves that the stakeholders co-governance mode has a significant positive role in promoting the enterprise’profitability.