The Coase theorem and stakeholder theory
This research document introduces a positive, transaction-level theory of stakeholder identification and management rooted in the Coase theorem. Traditional stakeholder theory often focuses on broad categories—such as employees, customers, and investors—and asks which groups deserve attention based on affectedness or legitimacy. In contrast, this paper proposes a rule based on the operational conditions of value creation. It draws on the logic that when bargaining and enforcement are costless, parties will reach agreements that maximise joint value, regardless of initial rights. The strategic question for firms is not only how value is divided, but whether they can design arrangements that preserve the value-creating transactions upon which that division depends.

The Coasian stakeholder
A Coasian stakeholder is defined as an actor possessing “shutdown power”. This is the de facto capacity, within a relevant time horizon, to prevent, materially delay, or substantially reduce the expected joint value of a focal value-creating transaction. Stakeholder status is thus associated with a specific actor–transaction relationship rather than fixed categories. An actor might stand outside the focal exchange but still hold shutdown power through formal property rights, regulatory authority, or the capacity to mobilise opposition. The strategic significance of a stakeholder set depends on the economic centrality of the exposed transactions and the breadth of an actor’s reach across them.

The Coasian stakeholder theorem
The authors formalise this logic into a benchmark theorem: if every actor with shutdown power can be identified, and agreements can be reached and enforced at no cost, the parties will choose the option that creates the greatest joint value. While initial rights affect how value is distributed, they do not affect which option is chosen or the amount of joint value created. However, in reality, positive transaction costs—related to identification, bargaining, and enforcement—can consume gains or suppress value-creating transactions entirely.

From the Coasian benchmark to stakeholder strategy
The report develops six propositions to explain how transaction costs and coalition formation shape stakeholder strategy. Proposition 1 suggests that firm-level differences in the capacity to identify actors with shutdown power and design low-cost transfers generate persistent performance differences. Proposition 2 argues that as a firm creates more visible value, outside actors have greater incentives to invest in acquiring shutdown power; thus, the stakeholder set of a successful firm expands endogenously over time. Proposition 3 notes that, all things equal, the greater an actor’s credible shutdown power, the larger the share of joint value they capture.

Coalitions: how the affected become stakeholders
Diffuse groups, such as communities or workers, often acquire shutdown power through coalition formation. Proposition 4 states that affected actors become Coasian stakeholders when the expected gains from influence exceed the costs of sustaining collective action. Firms can strategically alter these coalition costs to manage their stakeholder environment. Proposition 5 posits that firms are more likely to make commitments that increase an actor’s shutdown power—such as granting sign-off rights—when the retained value exceeds that of the best available alternative. This logic of the “hostage exchange” ensures cooperation by accepting future exposure to holdup.

Countervailing power and the benefits of consolidated opposition
Proposition 6 offers the counter-intuitive implication that firms may benefit from helping their opposition consolidate. When multiple independent actors hold shutdown power, they may independently price their consent, leading to an “anticommons” problem where stacked claims suppress the transaction entirely. A single consolidated stakeholder internalises these externalities and prices its consent against the whole surplus, which it now has an interest in preserving. Consequently, firms may rationally subsidise the organisation of their own opposition to preserve transactional feasibility.

Identifying Coasian stakeholders
Identification requires assessing the source and substitutability of shutdown power. Suppliers only qualify if they control an indispensable input that the firm cannot readily replace within the relevant horizon. Similarly, employees become Coasian stakeholders only when they possess critical tacit knowledge or when collective organisation (such as a union) converts substitutable labor into coordinated control over production. Society and future generations typically exert power through intermediaries like regulators or courts that can obstruct specific transactions.

Managing Coasian stakeholders
Effective management involves designing value transfers that support stakeholder alignment without necessarily relying on direct financial incentives. Transfers may include investments in local infrastructure, hiring commitments, or granting formal voice in governance. The goal is to embed stakeholders in a network of mutual dependence, reinforcing alignment with those holding substantial shutdown power while filtering out actors who lack such influence.

Discussion
The Coasian lens has significant implications for other fields. In entrepreneurship, it provides a framework for strategy under Knightian uncertainty, where entrepreneurs must anticipate who could acquire shutdown power over future transactions. For platform theory, it suggests that success depends on selectively enrolling participants whose defection would compromise the transactional core. In strategic human capital, it identifies when specialised skills or internal coalitions become “stakeholding capital”, requiring management practices like “golden handcuffs” or project-based autonomy to ensure alignment.

Conclusion
The Coase theorem shifts stakeholder theory from broad preference balancing to the transaction-level problem of shutdown power. This approach reframes stakeholder management as a strategic design problem. The central managerial task is to manage the specific actors and mechanisms that control whether value-creating transactions can occur, ensuring that friction is reduced and collective value creation is enhanced.