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Economics Research International
Volume 2012 (2012), Article ID 142910, 9 pages
http://dx.doi.org/10.1155/2012/142910
Research Article

Creating Values for Sustainability: Stakeholders Engagement, Incentive Alignment, and Value Currency

New York Institute of Technology-Vancouver, 1700-701 W. Georgia Street, Vancouver BC, Canada V7Y 1C6

Received 6 August 2011; Revised 18 October 2011; Accepted 20 October 2011

Academic Editor: Almas Heshmati

Copyright © 2012 Frank T. Lorne and Petra Dilling. This is an open access article distributed under the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.

Abstract

A shareholder theory of firm and a stakeholder theory of firm may differ in their respective evaluation method of firm performance. Both theories however recognize the importance of value creation as the economic role of firms as institutions. The New Institutional Economics (NIE) emphasizes incentives alignment, while also viewing stakeholder engagements as methods to expand the boundaries of firms. The difference in performance evaluation between the two approaches can be reduced if stakeholders, while formulating incentive alignment, also evaluate the mechanisms of establishing a common currency value. The concomitant development of stakeholder engagement, incentive alignment, and value currency creation is argued to be an evolutionary process with the efficiency implications of the two theories tending to converge.