Stakeholder theorists contend that firms can boost their value creation by enfranchising key stakeholders, implicitly assuming that stakeholders have agency, i.e., they can recognize and reciprocate the value being shared with them. In this paper, we interrogate that assumption, arguing that stakeholders are often heedless, powerless, or absent, and laying out the conditions under which firms’ attempts to enfranchise stakeholders may go unrewarded—conditions we collectively define as missing agent problems. Profit-maximizing firms will avoid enfranchising stakeholders who lack agency, and firms that do enfranchise such stakeholders are likely to see their profits decline. Our study thus highlights an important but largely unexamined boundary condition of stakeholder theory, while offering a fresh perspective on the social impact of stakeholder management.
