The basis for stakeholder theory is that companies are so large and their impact on society so pervasive that they should discharge accountability to many more sectors of society than solely their shareholders.
As defined in an earlier section, stakeholders are not only are affected by the organisation but they also affect the organisation.
Stakeholder theory may be the necessary outcome of agency theory given that there is a business case in considering the needs of stakeholders through improved customer perception, employee motivation, supplier stability, shareholder conscience investment. Agency theory is a narrow form of stakeholder theory.