Stakeholder: Definition
Def: An individual, or group, who
can influence and/or is influenced
by the achievement of an
organization’s purpose.
 Stakeholders often have differing
goals and power/influence over
time
Source: Freeman, 1984

Chapter 3
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Basic Stakeholder Analysis
1.
2.
3.
4.
5.
Who are our stakeholders?
What are their stakes?
What opportunities and challenges are presented
to our firm?
What responsibilities (economic, legal, ethical, and
philanthropic) does our firm have to all its
stakeholders?
What strategies or actions should our firm take to
best deal with stakeholder challenges and
opportunities?
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Opposition to Stakeholder Concept

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Problems of categorization (e.g., how to
identify and prioritize stakeholders)
Challenges in meeting expectations (e.g.,
tradeoffs among the stakeholders)
Dilution of top management focus (e.g., away
from financial performance)
Impracticality of shared governance (e.g.,
focus still on shareholders)
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Argument for Stakeholder Concept

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Simply good business
Ignoring stakeholder interests can have
substantial economic consequences (e.g.,
employees, customers, lenders, etc.)
Provides more systematic approach to
recognizing stakeholder expectations and
deciding how to respond
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Issues Management: Definition

A systemic process by which the
corporation can identify, evaluate, and
respond to those economic, social, and
environmental issues that may impact
significantly upon it.
Chapter 3
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Issues Management

Issues Life Cycle Stages:
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Degree of awareness of issue over time
(none or little; increasing; prominent; peak;
declining)
Text illustrates these as Five time periods
(T1 – T5)
Next slide develops this process in more
detail for the first 4 stages
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Issues Development Life Cycle
Process
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Stakeholder Management Capability

The ability of managers to:
(1) identify stakeholders and their influence;
(2) develop the organizational practices to
understand stakeholders; and
(3) undertake direct contact with
stakeholders.
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Diagnostic Typology: Savage et al
Types of Stakeholders
Stakeholder’s Potential for Threat to
High Organization
Low
High
Stakeholder’s
Potential for
Cooperation
With
Organization
Low
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Stakeholder Type 4
Mixed Blessing
Stakeholder Type 1
Supportive
Strategy:
Collaborate
Strategy:
Involve
Stakeholder Type 3
Nonsupportive
Stakeholder Type 2
Marginal
Strategy:
Defend
Strategy:
Monitor
Stakeholder Identification and Salience
Mitchell, Agle & Wood

Power


Legitimacy

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A stakeholder’s ability to get firm to do something that it
would not otherwise do based on force, threat, incentives,
etc.
Perceived validity or appropriateness of a stakeholder’s
claim. Low – Interest; Medium – Right; High - Ownership
Urgency

degree to which a stakeholder’s claim or relationship calls
for immediate attention
Source: Mitchell et al., 1997
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Who Are Business Stakeholders?
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Stakeholder Action Types
(Ref: Table 4.2 for more detail)

Latent stakeholders (1, 2, 3)


Expectant stakeholders (4, 5, 6)

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Require more attention from managers
Definitive stakeholders (at centre – 7)


Managers may not recognize their existence
Management must address the claims of these
stakeholders immediately
Non-stakeholders (8)
Source: Mitchell et al., 1997
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Influence Strategies that Stakeholders
use on Organizations

Withholding strategies

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Usage strategies


stakeholder discontinues providing a resource
stakeholder continues to supply resource but specifies how
it is to be used
Influence pathway

when withholding and usage strategies are used by an ally
of the stakeholder
Source: Frooman, 1999
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Stakeholder Management =>
Stakeholder Collaboration
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Foundation put in place
Organizational alignment
Strategy development
Trust building
Evaluation
Repeat the process
Source: Svendsen, 1999
Chapter 4
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Stakeholders and Social Capital
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Definition: Any aspect of a corporation’s
organizational arrangement that creates
value and facilitates the actions of
stakeholders within and external to the
corporation.
Dimensions: Structural (networks); Relational
(trust & reciprocity); Cognitive (mutual
understanding)
An alternative to ‘arm’s length’ transactions
Chapter 4
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