Resource and
ResourceMarket-Based
Stakeholders
Prof. Dr. Sybille Sachs
U i
Universität
ität Zü
Zürich
i h
Course Outline Business & Society
Introduction and Basics
17.9.
Business Ethics
Core Questions Business
Ethics I & II
24.09. & 1.10.
Credibility I-III
8.10./15.10./22.10.
Implementation
(Case Study)
29.10.
Stakeholder Management
Justification and
Identification of
Stakeholders
5.11.
Normative Stakeholder
Management,
Stakeholder Theory of
the Firm
12.11.
Stakeholder View
26.11.
Corporate
p
Social
Responsibility/
Performance
10.12.
Social and Political
St k h ld
Stakeholders
26.11.
Resource-based &
Market-based
Stakeholders
3.12.
2
B&S-Vorlesung, Universität Zürich - Prof. Dr. Sybille Sachs
Issue
Management,
Multistakeholder
Management
17.12.
A
Agenda
d
14.00-14.45
Resource-Based Stakeholders
15.00-15.45
Input Stakeholder Identities
(Tom Schneider)
16.15-17.45
Guest Lecture
Henri Gassler,
Gassler Endress
Market Stakeholders
3
B&S-Vorlesung, Universität Zürich - Prof. Dr.
Sybille Sachs
Agenda
|
Resource based stakeholders
(slides 5-16; Sachs & Rühli 2011, chapter 7)
|
Market based stakeholder
(slides 17-25; Sachs & Rühli 2011, chapter 8)
4
B&S-Vorlesung, Universität Zürich - Prof. Dr.
Sybille Sachs
Classical Approaches to Strategy
2 Approaches
Market-based
view
Resourcebased view
Market or environmental
orientation
Example: Porter
5
Strategy
(Policy)
Resources
Market
orientation
B&S-Vorlesung, Universität Zürich - Prof. Dr.
Sybille Sachs
Resource
orientation
Example:
Prahalad/Hamel
(Core) Market and Resource Approach
Market-based
view
Industry Structure
Positioning
Competitive Advantage
Skills
Competencies
Resources
Resource-based
view
6
B&S-Vorlesung, Universität Zürich - Prof. Dr.
Sybille Sachs
Basic Assumptions of the Resource
Resource-based
based
View (RbV) based on Theory of the Firm
Firm as a bundle of idiosyncratic resources
Managers as key actors: bounded rationality
regarding creation and exploitation of unique
resources and core competencies
Exploitation of resources in favor of one specific
resource owner (shareholder)
Resource markets as coordination mechanism;
competition (rivalry) as external condition
New development: the stakeholder theory of the
firm
•
•
•
•
•
Source: Sachs, Rühli (2011)
7
B&S-Vorlesung, Universität Zürich - Prof. Dr.
Sybille Sachs
Resource Definition
(Barney, 1991:101)
„Firm resources include all assets, capabilities,
organizational processes, firm attributes,
information, knowledge etc. controlled by a firm
that enable the firm to conceive of and implement
strategies that improve its efficiency and
effectiveness.“
8
B&S-Vorlesung, Universität Zürich - Prof. Dr.
Sybille Sachs
Intangible Resources
(Hall, 1992)
|
|
|
|
|
|
9
The intellectual property rights off patents,
trademarks, copyright and registered designs
Trade secrets
Contracts and licenses
Databases
Information in the public domain
Personal and organisational
g
networks
B&S-Vorlesung, Universität Zürich - Prof. Dr.
Sybille Sachs
Intangible Resources
(Hall, 1992)
|
|
|
10
The know-how of employees, professional
advisers, suppliers and distributors
Th reputation
The
t ti off products
d t and
d company
The culture of the organisation; e.g. the ability
of the organisation to react to challenge,
challenge to
cope with change etc.
B&S-Vorlesung, Universität Zürich - Prof. Dr.
Sybille Sachs
The concept of core competencies
in the Stakeholder View
Resources from
Stakeholders’
Contributions
Sustainable
S
t i bl
Success
Choice and
Combination
Stakeholdervalue
Sustainable
competitive
Advantage
g
Core
Competencies
Capacity for innovation
11
B&S-Vorlesung, Universität Zürich - Prof. Dr.
Sybille Sachs
C
Core
C
Competencies
t
i
|
|
|
Innovative resource p
pooling,
g, e.g.
g combination of
an instrument manufacturer’s knowledge with a
famous surgeon’s experiences
Innovative resource development e.g.
innovation processes for private banking in a
i t
international
ti
lb
bank
k
Capability to interact with stakeholders e.g.
processes of mutual learning
Source: Sachs, Rühli (2011)
12
B&S-Vorlesung, Universität Zürich - Prof. Dr.
Sybille Sachs
RbV - License to innovate
as a perspective of the Stakeholder Paradigm
The traditional RbV
The License to innovate perspective
Residual profit distributed to shareholders (capital owners)
Distribution of value to contributing stakeholders
Exploitation of core competencies
Superior value creation with stakeholder with respect to innovative solutions
Unique and inimitable core
competences
Three types of core competencies: Resource pooling, resource developing and interacting capabilities
Narrow set of economic resources from factor markets
Broad range of limited and non‐limited resources provided by stakeholders
Stakeholders as owners and contributors of resources
Sachs, Rühli (2011)
13
B&S-Vorlesung, Universität Zürich - Prof. Dr.
Sybille Sachs
Requirements
q
in the p
perspective
p
of the license to innovate
|
The development of innovative products and services
services, as well as solutions
for all kinds of issues, has to be seen as the result of mutual value
creation between firms and stakeholders in network structures. The
economic system should facilitate bottom
bottom-up
up processes
processes, and not only the
voices of a few privileged stakeholders, but the expectations and
potentials of the whole cast of engaged stakeholders.
|
The diversity of human beings and their respective interest and purposes
must be respected and supported within the development of innovative
solutions between firms and the stakeholders.
|
The firm and the stakeholders are understood as owner of different kind of
resources, which they bring into networks of value creation. The
ownership
p of those contributing
g has to be respected.
p
Additionally,
y the
value created is to be distributed between the firm and its stakeholders
based on the participants' contributions of resources.
S
Source:
Sachs,
S
Rühli (2011)
(
)
14
B&S-Vorlesung, Universität Zürich - Prof. Dr.
Sybille Sachs
Basic Assumptions of the Industry Structure
View (ISV) based on Theory of the Firm
•
•
•
•
•
Firm as an actor in the competitive environment
Managers as key actors: seeking and exploiting
f
favorable
bl positions
iti
and
d creating,
ti
maintaining
i t i i and
d
exploiting imperfect competitive conditions
Focus on rivalry and superior position against rivals
and stakeholders: threat mentality
Product markets as coordination mechanism
Product-markets
New developments: CSR, as a broad understanding
of the interrelationship between a corporation and
society
Source:
Sou
ce Sac
Sachs
s & Rühli
ü ((2011)
0 )
15
B&S-Vorlesung, Universität Zürich - Prof. Dr.
Sybille Sachs
I d t Analysis
Industry
A l i (P
(Porter)
t )
|
Basic ideas
z
z
|
|
16
Efficient markets hypothesis
Contributions from the field of industry economics
Porter developed an analysis concept which
claims that a firm‘s strategic success is
primarily
i
il determined
d
i d by
b the
h structure off its
i
industry.
Th f
Therefore,
th analysis
the
l i off competition
titi and
d
competitors are the major elements of a
strategic environment analysis.
analysis
B&S-Vorlesung, Universität Zürich - Prof. Dr.
Sybille Sachs
I d t Analysis
Industry
A l i (P
(Porter)
t )
Intensity of competition and profit
Profit
Profit of bonds
+ risk charge
Intensity of competition
17
B&S-Vorlesung, Universität Zürich - Prof. Dr.
Sybille Sachs
P t ' Competitive
Porter's
C
titi Analysis
A l i
5 determinants of the intensity of competition
Potential new competitors
Threat of new entrants
Bargaining power of
suppliers
Competition within industry
Suppliers
Bargaining power
of buyers
Buyers
Rivalries among existing
competitors
tit
Threat of substitute products
and services
Substitutes
18
B&S-Vorlesung, Universität Zürich - Prof. Dr.
Sybille Sachs
Porter's
Porter
s Determinants of Competition
Threat of New Entrants
Entry Barriers
Economies of scale
Proprietary product differences
Brand identity
Switching costs
Capital requirements
Bargaining Power of Suppliers
Determinants of Supplier Power
Differentiation of inputs
Switching costs of suppliers
and firms in the industryy
Presence of substitute inputs
Supplier concentration
Importance of volume to supplier
Cost relative to total purchases in the industry
Impact of inputs on cost or differentiation
Threat of forward integration relative to threat
of backward integration by firms in the industry
Access to distribution
Absolute cost advantages
Proprietary learning curve
Access to necessary inputs
Proprietary low-cost product design
Government policy
Rivalry Among Competitors
Bargaining Power of Buyers
Rivalry Determinants
Industry growth
Fixed (or storage) Cost / value added
I t
Intermittent
itt t overcapacity
it
Product differences
Brand identity
Switching costs
Concentration and balance
Informational complexity
p
y
Diversity of competitors
Corporate stakes
Exit barriers
Determinants of Buyer Power
Bargaining leverage
Buyer concentration versus firm
concentration
Buyer volume
Buyer switching costs relative to
firm switching costs
Buyer information
Ability to backward integrate
Substitute products
Pull-through
Threat of Substitutes
Determinants of Substitutes
Relative price performance of
substitutes
Switching costs
B
Buyer
propensity
it to
t substitute
b tit t
19
B&S-Vorlesung, Universität Zürich - Prof. Dr.
Sybille Sachs
Strategy
St
ategy a
and
d Soc
Society
ety
(Porter, Kramer, 2006, p. 83)
20
B&S-Vorlesung, Universität Zürich - Prof. Dr. Sybille Sachs
Th St
The
Stakeholder
k h ld N
Network
t
k
Firms are embedded
Fi
b dd d in
i a stakeholder
t k h ld
network. The stakeholders in this network
nott only
l have
h
relationships
l ti
hi with
ith the
th firm
fi
itself, but also among each other. These
relationships
l ti
hi can in
i tturn influence
i fl
th
the
process of value creation of a firm
i di tl
indirectly.
21
B&S-Vorlesung, Universität Zürich - Prof. Dr.
Sybille Sachs
St k h ld networks
Stakeholder
t
k
Sachs & Rühli (2011)
22
B&S-Vorlesung, Universität Zürich - Prof. Dr.
Sybille Sachs
ISV - License to compete
p
as a perspective of the Stakeholder Paradigm
The traditional ISV
The License to compete perspective
Distribution of the whole residual profit to shareholders (capital owners)
Exploitation of imperfect markets and fighting for rents
Positioning of the firm in the industry
Attractiveness of the industry
Distribution of value to contributing stakeholders
Superior value creation based on the ability to realize cooperation advantages and to motivate value creation in and between the networks
Positioning in and among the stakeholder g
networks: benchmarking Nature and attractiveness of stakeholder networks
Contributions from direct and indirect stakeholders
Sachs & Rühli (2011)
23
B&S-Vorlesung, Universität Zürich - Prof. Dr. Sybille Sachs
Requirements
q
in the p
perspective
p
of the license to compete
|
Both firms and stakeholders should have opportunities and
incentives to contribute their potentials to mutual value creation
in order to develop superior value for all involved parties
parties.
|
Developing transparent benchmarks of stakeholder networks is
essential so that firms and the stakeholders can favor specific
p
networks for superior value creation. Competition is seen as a
stimulant for the parties involved.
|
Mutual value creation means the interaction of a cast of
stakeholders as indispensable contributors and receivers of
benefit and risks. A one-sided
one sided orientation towards competition
based on reaping rent has to be overcome in all markets.
24
B&S-Vorlesung, Universität Zürich - Prof. Dr.
Sybille Sachs
Lit t
Literature
|
Asher, C. C., Mahoney, J. M. & Mahoney, J. (2005): Towards a
Property Rights Foundation for a Stakeholder Theory of the Firm,
Journal of Management and Governance, 9(1): 5-32.
|
Barney, J.
Barney
J B.
B (1991): Firm Resources and Sustained Competitive
Advantage, Journal of Management, 17(1): 99-120.
|
Blair, M. M. (1995): Ownership and control – Rethinking corporate
governance for
f the
th twenty-first
t
t fi t century.
t
W hi t
Washington,
D.C.:
DC
Brookings Institution.
|
Hall, R. (1992): "The
The Strategic Analysis of Intangible Assets
Assets",,
Strategic Management Journal, 13(2): 135-144.
|
Porter, M. E. (1979): How Competitive Forces Shape Strategy,
Harvard Business Review,
Review March-April:
March April: 137
137-145.
145
|
Porter, M. E. (1980): Competitive Strategy: Techniques for
y g Industries and Competitors.
p
Free Press: New York.
Analyzing
25
B&S-Vorlesung, Universität Zürich - Prof. Dr.
Sybille Sachs
Lit t
Literature
|
Porter, M. E. (1985): Competitive Advantage: Creating and
Sustaining Superior Performance. Free Press: New York.
|
Porter, M. E. (1991): Towards a Dynamic Theory of Strategy.
Strategic Management Journal
Journal, 1(Special Winter Issue): 95
95-117.
117
|
Porter, M.E. (1996): What is Strategy? Harvard Business Review,
74(6): 61-78.
|
Porter. M. E. & Kramer, M. R. (2006): Strategy & Society. Harvard
Business Review, Dec. 2006: 78-92.
|
Porter, M. E. (1991): Towards a Dynamic Theory of Strategy,
Strategic Management Journal, 1(Special Winter Issue): 95-117.
|
Porter M
M. E
E. & Kramer
Kramer, M
M. R
R. (2006): Strategy & Society,
Society Harvard
Business Review, Dec. 2006: 78-92.
26
B&S-Vorlesung, Universität Zürich - Prof. Dr.
Sybille Sachs
Lit t
Literature
|
Post,
P
t J.
J E.,
E Preston,
P t
L.
L E.
E & Sachs,
S h S.
S (2002):
(2002) Redefining
R d fi i th
the
Corporation: Stakeholder Management and Organizational Wealth.
Stanford: Stanford University Press.
|
Prahalad, C.K. & Hamel, G. (1990): The Core Competence of the
Corporation, Harvard Business Review, May-June: 79-91.
|
Sachs, S.,
Sachs
S Rühli,
Rühli E.
E & Kern,
Kern I.
I (2007): Lizenz zum Managen.
Managen Mit
Stakeholdern zum Erfolg: Herausforderungen und Good Practices,
Bern, Haupt.
|
Sachs,
S
h
S & Rühli,
S.,
Rühli E
E. (2011).
(2011) Stakeholders
St k h ld
M tt
Matter:
A New
N
Paradigm for Strategy in Society, London: Cambridge University
Press.
27
B&S-Vorlesung, Universität Zürich - Prof. Dr.
Sybille Sachs