A defining features of stakeholder theory is its argument that business and morality cannot be separated. Moreover, stakeholder theory has long argued that stakeholder-oriented firms will be able to create more value than shareholder-oriented firms by upholding moral standards when managing their stakeholders. However, there is little, if any, empirical evidence about the role morality plays in how stakeholders react to firms’ stakeholder management. We therefore set out to study moral emotions as potential mechanisms explaining the impact of firms’ stakeholder management on stakeholders’ value-creation behaviors. Across two vignette-based experiments and a survey, we show that stakeholder-oriented firms are more likely to elicit value-creation behaviors in their stakeholders because they trigger more positive moral emotions, and that shareholder-oriented firms are less likely to elicit value-creation behaviors because they trigger more negative moral emotions. In addition to contributing to the theoretical development and empirical testing of stakeholder theory by hypothesizing and finding a role for stakeholders’ moral emotions in explaining value creation, we also contribute to making stakeholder theory more amenable to empirical analysis by validating scales to measure firms’ stakeholder and shareholder orientation.
