As with legitimacy theory, stakeholder theory sees the organization as part of
the wider social system but this approach focuses on the various stakeholder
groups within society. Deegan et al. (2000) divide stakeholder theory into two
branches; the positive/managerial branch and the ethical/normative branch.
The positive branch posits that organizations will respond to stakeholders on
an asymmetric basis favoring the powerful or those who can have significant
impact upon the organization (O’Dwyer, 2003). The ethical branch argues that
“all stakeholders have the right to be treated fairly by an organization, and that
issues of stakeholder power are not directly relevant” (Deegan et al., 2000). In
particular Gray et al. (1996) support this view and argue for disclosure of
environmental information to all stakeholder groups.