Transactions and relationships in stakeholder theory: A Luhmannian view

• Proposes a Luhmannian systems-theoretical view of stakeholder theory. • Reframes transactions as elemental operations of the economic function system. • Shows transactions and relationships as distinct yet interdependent dimensions. • Explains how relationships legitimize transactions but may also cause dysfunction. • Strengthens stakeholder theory’s alignment with capitalist economic principles. Stakeholder theory has often elevated relationships above transactions, portraying relationships as morally richer and strategically superior. This asymmetry can obscure Freeman’s original insight that both are indispensable to value creation. Drawing on Luhmann’s theory of social systems, we reconceptualize transactions as the elemental operations that reproduce the economic system, while stakeholder relationships generate the legitimacy and trust that stabilize these operations. We argue that transactions and relationships are functionally distinct yet mutually reinforcing: transactions sustain the autonomy of the economy, while relationships provide the social acceptance necessary for its continued viability. Methodologically, the paper adopts a conceptual research design and develops a systems-theoretical framework through theoretical synthesis of scholarship in stakeholder and systems theory. The framework advances stakeholder theory by restoring conceptual symmetry between relationships and transactions and by sensitizing managers to the need for ongoing calibration that aligns the two.