We develop and test theory related to the central proposition of instrumental stakeholder theory (IST): that stakeholder-oriented firms will outperform profit-oriented firms. While IST has always been clear that this proposition hinges on favorable behavioral reactions towards stakeholder-oriented firms, it has never developed a causal model detailing its central proposition. We address this gap in three steps. First, we build on extant literature to propose unambiguous definitions and operationalizations of IST’s independent variable (IV) and dependent variable (DV). For the IV we develop vignettes describing a ‘stakeholder-oriented firm’ and a ‘profit-oriented firm,’ and for the DV a vignette describing a situation requiring cooperation in a collective action situation. Second, we hypothesize that stakeholders of stakeholder-oriented firms are more likely to cooperate than stakeholders of profit-oriented firms because the former are more likely to trust the firm and to enter a relational as opposed to a transactional psychological contract with it. Finally, we test these hypotheses in a preregistered experimental vignette study and find support for a model in which the effect of the firm’s stakeholder-orientation on stakeholder cooperation is sequentially mediated by trust and a relational contract. We discuss how our work contributes to research in behavioral stakeholder theory.
