Partners Learning Agenda on
Local Organization Capacity Development
The Capable
Guideline Series
#8: A Primer on Stakeholder Analysis
“Choose stakeholders based on stakeholders’ potential to jeopardize the firm...”
– Freeman (1984)
INTRODUCTION
An important aspect of a Mission’s contextual analysis for capacity development interventions is
understanding the potential winners and losers (aka “stakeholders”). Stakeholders are all those
interest groups, parties, actors, claimants, and institutions – both internal and external to the
organization – that exert a hold on it. That is, stakeholders are all those parties that either affect or
are affected by an organization’s actions, behavior, and policies.
In many ways, we exist because of stakeholders. A stakeholder may be a government, a community
or religious group or a company that supports or prevents one’s work. Stakeholders may possess
resources (financial, influence, expertise) needed for strategy formulation or implementation; or
they may control relevant implementation “instruments” (i.e. the public sector). Some stakeholder
relationships are supporting in that they provide movement toward the organization’s purposes.
Some relationships are resisting in that they serve as barriers or encourage movement away from
the organization’s purposes.
Stakeholder identification is crucial to the success of capacity development. People tend to get
locked into positions, feeling a need to defend them. A “stakeholder oriented” focus advances the
dialogue by taking it to a deeper level, allowing parties to find common needs and interests. It can
be a complex and time consuming process and requires a thoughtful and deliberate approach to
validate one’s assumptions about the stakeholders’ needs, interests and positions.
Let us say that in country X the USAID Mission has come to see that a major barrier to local
organization strength is a lack of standards against which they can measure themselves and be
measured by prospective investors or donors. There is a nascent NGO that has recently been
formed by a group of a dozen leading NGOs after a consultative process under a grant from a
private foundation. The new NGO believes self-regulation is the way forward for local
organizations and wants to establish itself as a voluntary certification agency. It recognizes the
principle that it ought not to be a deliverer of CD services, seeing that as a conflict of interest. At
the same time there are four or five local organizations and institutions that do supply CD services.
Recently USAID put up a new project with a U.S. contractor as a prime, part of whose objective
is to train local CSOs in organizational capacity. USAID has word there are competitive forces at
work that threaten all the actors in this new realm and needs to understand what is going on.
Stakeholder analysis can help.
This guideline provides an overview of stakeholder analysis: definitions, parameters that affect
rules and behaviors and relationships between stakeholders. It also provides a matrix to help plot
your assumptions about relevant stakeholders, their characteristics, interests, and influence.
Finally, this guideline distinguishes between stakeholders and audience in that stakeholders are a
de facto ‘audience’ but not all audiences are stakeholders.
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FORMAL VS. INFORMAL RULES AND BEHAVIORS
One challenge is to get at the differences between formal and informal rules and behaviors within
and between the various actors. This usually involves looking at a multitude of influences,
interests, needs, positions, decisions and pathways to them.
One needs to look at power relationships and which factors affect those, such as: reciprocity,
authority, legitimacy, loyalty, political party, membership in temporary or permanent coalitions
which, in turn, may be based on age, gender, place of origin, and so forth. All this, of course,
requires access to the paths to information; however, in almost all cases, an analysis of financial
resources (“following the money”) provides clues to these relationships.
SOME DEFINITIONS AND PARAMETERS THAT HELP IN LOOKING AT RULES,
BEHAVIORS AND INSTITUTIONS

Institutions can be both formal entities, such as a university, or informal entities, such as an
association, that refer to codified norms and codes ("rules of the game"). In the latter sense
“the Law is also an institution.” Institutions govern or influence behavior and can be embodied
in kinship, in religion, in traditions, and in organizations.

Organizations are formal structures, with defined roles, functions, responsibilities, and
decision-making processes. There are formal organizations, such as development agencies,
NGOs, government ministries. And there are informal ones, like clubs or sports teams or
associations.

These institutions and organizations exist at all levels of society: in the market; in the public
sector (government) and at the community level.

There are informal rules – not codified, written down or even spoken about, but which are
expressed in terms of practices and behavior.

There are formal institutional rules – often codified and written, but not what people always
follow. That is why we need to understand behavior as well as rules. What people actually do
leads to how things really work.

It is important to understand the relationships between people inside organizations and
institutions: who has power, who does not, who controls what. In many cases those who have
power are not necessarily those in the positions where one expects power to reside.
Furthermore, it is important to understand the relationship between people outside these
organizations and institutions, including their interactions with and influence upon those
organizations and institutions.

It is important to understand how these rules and behaviors affect, determine and reinforce
organizational effectiveness and learning; and how they are likely to affect any capacity
development intervention.
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STAKEHOLDER ANALYSIS
Stakeholder analysis involves assessing likely winners and losers, active vs. passive interests,
stakes that seem negotiable vs. those that are not and individual vs. collective stakes. The idea is
to relate all this to the capacity for and interest in change, positive evolution, learning, and greater
effectiveness.
The first step is to figure out who the stakeholders are. A useful approach is to begin with one or
more key informants and then fill in a stakeholder analysis matrix, such as the one below. The
matrix is a useful tool to summarize and compare stakeholder categories in terms of their relevance
to the organization, their characteristics, their interests and their influence.
Format of A Stakeholder Analysis Matrix (SAM)
Stakeholder
categories
Relevant
stakeholders
Characteristics
Interests
Influence
Social situation,
location,
size,
organizational
capability
Commitment to
status quo vs.
openness to
change
H=High
M=Medium
L=Low
Government
policymakers
Implementing agency
staffs
Intended beneficiaries
Adversely affected
persons
Organized interest
groups
(business associations,
trade unions)
Civil society (NGOs,
CBOs, religious
organizations) Donors
Other external /
international
stakeholders
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SOME DEFINITIONS AND PARAMETERS TO CONSIDER IN STAKEHOLDER
ANALYSIS

A “Stake” is an interest that has potential consequence; it has “weight;” it is not just a passive
interest. For example, I can be interested in who will win a football game, but it doesn’t matter
that much to me because I have no “stake.” Or, I can be interested in who wins, and it matters
greatly to me because I bet $1,000 dollars on one of the teams; I now have a much more serious
“stake” in the outcome.

A stakeholder is not merely interested in the organization’s progress; rather the stakeholder
will be affected by it, or in a position to affect it, positively or negatively.

The very word “stakeholder” implies that at least one critical property of a stakeholder will be
influenced by the property of at least one other stakeholder. There is a network of
interdependent relationships among all stakeholders.

Once identified, we need to appreciate the nature of their stakes. Are they positively or
negatively inclined? Are they for change or for the status quo?

We want to know how much influence they have. For example, does the stakeholder have
ability to influence or manipulate the media?

We need to know what might happen to different stakeholders if the organization becomes
more successful, sustainable, and effective. Will they come out as winners or as losers, and
how much so?
LEVEL OF STAKEHOLDER INTEREST
Social facts offer clues to likely stakeholders and are usually related to material well-being or
status. Sources of material well-being for different groups and individuals provide clues to the
level of a stakeholder’s interest. For example, if the source of one's livelihood comes from privilege
rather than just plain work, maintaining the privilege becomes a stake. Similarly, if one's livelihood
is based on high earning then the stake in maintaining that level of earning is equally high.
People with high stakes based on their material well-being are often:
 Owners of capital assets
 Owners of land
 Bosses, managers, heads of entities
 Controllers of resources
 Rent seekers
People with high stakes based on power and status, are often:
 Political leaders
 Community leaders
 Church leaders
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

Teachers
Anyone in the social world to whom prestige or status or power adheres
STAKEHOLDER VS. AUDIENCE
In addition to identifying stakeholders, a good stakeholder analysis helps identify viable audiences.
There are a number of potential ‘internal’ and ‘external’ audiences. Distinguishing between
stakeholders and audiences will, for example, help decide who needs what kind of information and
the methods for communicating with them. Finally, stakeholders are a de facto ‘audience’ but not
all audiences are stakeholders.
The charts below are helpful to identify and distinguish between potential stakeholders, audiences
and level of interest:
STAKEHOLDERS
Who are the stakeholders in this program or project?
SECTOR
PRIMARY
SECONDARY
Public sector:




FUTURE TARGETS
Central government
Regional government
Local government
Government agencies
Business:





International companies
National companies
Local companies
Enterprise agencies
Business associations
Civil Society:







International NGOs
National NGOs
Local NGOs
CSOs
Interest groups
Religious organizations
Other community groups
Other:





Academic institutions
Donors
Other resource providers
International agencies
Labor organizations
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CONCLUSION
AUDIENCES
Who are the audiences for this research?
(Note: the stakeholders are considered a de facto ‘audience’ but not all audiences are
stakeholders)
AUDIENCE
PRIMARY
SECONDARY
NOTES
(e.g. Why?)
In addition to stakeholders
(above)
Public sector:



Policy makers
Politicians
Public sector administration
Business:



Business ‘champions’
Other businesses
Other business organizations
Civil Society:



Community leaders
Change agents
Interest groups
Academic institutions



Intellectual leaders
Universities / colleges
Training institutions
Potential Donors / Resource
Providers



International foundations
Government departments
Local resource providers
Media:






Newspapers
Specialist magazines
Radio
TV
Internet
Other
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A number of years ago a dam project scheduled to be built by the Tennessee Valley Authority in
the U.S. was delayed for years because they failed to identify and address a silent stakeholder: The
snail darter.
The snail darter is a small fish that would become extinct if the dam was built. Because the fish
could not speak for themselves, another stakeholder, the environmentalists, decided to speak for
the snail darter. Failure to consider stakeholders can be disastrous.
Who are the potential snail darters in a proposed program?
Stakeholder engagement is valued for legitimacy. Accountability requires power sharing and
externalities must be considered in the accounting process. At the very least, have a dialogue with
all stakeholders.
Each stakeholder is a distinct and distinguishable entity that has resources, purposes, and a will of
its own. However, there is a network of interdependent relationships among all stakeholders. Some
stakeholder relationships are supporting in that they provide movement toward the organization’s
purposes, other relationships are resisting in that they serve as barriers or encourage movement
away from the organization’s purposes. Wise decision makers consider the relationships among
stakeholders, rather than just looking at stakeholders in isolation.
Finally, because there are no absolute rules for generating a complete list of all relevant
stakeholders, one needs some guidelines. This guideline provides some definitions and principles
to identifying relevant stakeholders and their probability of being involved.
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