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The Stakeholder Approach in the
Marketing Discipline
Speakers
 Madhu Viswanathan, Professor of Business Administration,
College of Business, University of Illinois
 Daniel Korschun, Assistant Professor of Marketing, LeBow
College of Business, Drexel University
Moderator
 Mary C. Gentile, Ph.D., Giving Voice to Values and Babson
College
Company, Community, and Beyond
(Or Me, Us, and Beyond):
A Sustainable Market(ing)
Orientation for Stakeholders of the
21st Century?
Madhu Viswanathan
University of Illinois, UrbanaChampaign
Overview
• Who are the stakeholders of the 21st
century?
• What is a sustainable market(ing)
orientation to address all stakeholders?
• What are businesses doing about it?
• Qualifications
Perspectives on Poverty
Macroeconomic approaches
Business strategy approaches –
e.g., Bottom of Pyramid
Subsistence marketplaces approach –
microlevel buyer, seller, and
marketplace behaviors
Research
Consumption and Entrepreneurship
Across Literacy and Resource Barriers
Marketing and Management in Subsistence
Marketplaces
Literacy, Poverty, Culture
and Psychology
Consumer and
Entrepreneurial
Literacy Program
- India
Nutrition Education
Materials - USA
Social Initiatives
Sustainable Prod. & Mkt. Dev. for
Subsistence Marketplaces
Sustainable Businesses for
Subsistence Marketplaces
Sustainable Marketing
Enterprises
Teaching
A market vendor sells mud cookies at the La Saline market in Port-au-Prince,
Friday, Jan. 25, 2008. The cookies are made of dirt, salt and vegetable
shortening. (AP | Ariana Cubillos)
Disappearing Lake Chad
The Sustainability of Water Bottles?
Climate Change
Source: http://www.news.wisc.edu/11878
Source: http://watersecretsblog.com/archives/reports/index.html
Some Collision Courses?
Population Explosion
Source:
http://phillips.blogs.com/goc/2006/02/population_expl.html
http://www.geography.learnontheinternet.co.uk/topics/popn1.ht
ml
Characteristics of Subsistence Marketplaces
Sustainable Market Orientation
Purposeful Understanding of
Subsistence Marketplaces
PRODUCTS
Resource constraints – Lack of affordability
Betterment of Life
Circumstances
(Make or) buy or
forgo decisions
Immediacy
of basic
needs
Business Implications
Understanding life circumstances
Multifaceted product offerings to improve
welfare (educational campaigns, etc.)
RELATIONSHIPS
Resource constraints - Interdependence
among individuals
Addressing Customer Needs and
Welfare
Development of
consumer skills
Business Implications
Fairness and trustworthiness
Emphasis on individual and community
welfare
MARKETS
Resource constraints – Lack of mobility
& dependence on groups
Implementing Business Plans through
Social Good
Negotiation of the
Social Milieu
Fragmented,
small and myriad
differences
Lack of Knowledge
or Expertise with
Subsistence Contexts
Preconceptions
About Subsistence
Marketplaces
Emphasis on the
Human Dimension
1-1 Interactions
and strong word
of mouth
Characteristics of Businesses
Varied group
influences
Business Implications
Working with diverse groups
Social good as common denominator
Lack of Personal
Connection to
Subsistence
Contexts
Doing Good For Doing Well
Doing Good
Business
Doing Well
A Sustainable Marketing Orientation
Beyond Subsistence Marketplaces?
• Sustainable market orientation - ingraining product-relevant
social good
– development of a deep-seated organizational understanding
of individual and community welfare as it relates to product
offerings
– incorporation of the goal of enhancing such welfare into
business processes, outcomes, and assessments
– inculcation of product-relevant social good into the
organizational culture
• Why?
–
–
–
–
Resource constraints arriving soon or already here
Connectivity
Interconnectedness and interdependencies
Interest groups
• “Blessed Unrest” by Paul Hawken
Cradle to cradle?
• What is cradle to cradle?
• “This book is not a tree”
– Durable, waterproof,
recyclable
– Technical nutrient – can be
broken down and circulated
infinitely in industrial
cycles
Product Design Example
• My inventory – Avalon versus Prius
• Because we can versus because we
cannot!
– As consumers
– As producers
Wal-Mart
•
Has launched a host of sustainable supply chain
programs
•
Implemented a new supplier packaging scorecard
on February 1 that formally rates suppliers on
their progress toward developing sustainable
packaging, as well as their ability to help Wal-Mart
reach its company-wide sustainability goals to
reduce waste, use renewable energy and sell
sustainable products
•
Collaboration with GE to use fluorescent lights
Source:
http://franklycsr.wordpress.com/
2008/02/04/sustainable-supplychain-initiatives-booming/
Source:
http://www.unglobalcompact.org/docs/news_events/9.1_news_archives/2007_11_
28/US_Starbucks.pdf
Source:
http://www.unglobalcompact.org/docs/news_events/9.1_news_archives/2007_11_28/US
_Starbucks.pdf
From Conventional to
Sustainable Marketing?
• Central role of consumption in both the problems and
the solutions for the twenty-first century
– Consumption, overconsumption, and underconsumption
• What is the role of marketing in sustainable
development?
• How should the marketing discipline adjust to looming
opportunities and challenges related to accelerated
development, poverty alleviation, and ecological
disaster?
– Has led to sophisticated techniques to understand consumer
preferences and create valuable offerings
– Can it address the deeper aspirations of vast populations?
– And in ecologically and socially sustainable ways?
Sustainable Marketing
• Marketing ideally suited?
– Focus on consumption and exchanges
– Interface with the marketplace
– Understanding broader environmental trends
• Adopt a long-term perspective based on a deep understanding
–
–
–
–
of cultures
of radically different contexts of poverty
of ecological challenges
and of the nature of sustainable development
• Understand shortcomings of a predominant focus on consumption with
seemingly endless resources.
• Understand the potential to create sustainable value in the broadest
sense of the word
• Adopt a sustainable market orientation that enables sustainable
consumer behavior through sustainable product design….
• Explicitly infuse values such as ecological and social sustainability into
the core of the marketing concept
Sustainable Marketing: From
Customer Wants to Human
Aspirations?
Thank You!
Marketing in Multi-Stakeholder Environments:
Lessons from Corporate Social Responsibility
Daniel Korschun
Drexel University
The Aspen Institute
September 3, 2009
Stakeholder Theory and Marketing:
A Lengthy Courtship

Stakeholder Theory views an organization as collection
of actors with whom it interacts
 Stakeholders put something at risk
 Stakeholders have legitimate claims on organizational wealth

Continued calls to incorporate stakeholder theory in
marketing (e.g., Kotler 1967-2009; Morgan & Hunt 1994; Wind
2006)
 “More attention to stakeholder theory must be central to marketing
scholarship” (Lusch 2007)
 Failure to acknowledge the importance of stakeholders can feed “a
new form of marketing myopia” (Smith, Drumwright, & Gentile 2009)
29
Tenets of Received Wisdom

Companies form relationships with stakeholder
groups by allocating resources in ways that meet the
diverse interests of each group
30
Tenets of Received Wisdom

Companies form relationships with stakeholder
groups by allocating resources in ways that meet the
diverse interests of each group

Three “tenets”
1. Assess stakeholder
initiatives by expenditures
2. Stakeholders reside in
groups of likeminded others
3. Trading-off stakeholder
interests paramount
31
Substantial Obstacles Remain

Common challenges in stakeholder management:
 Wide array of corporate activities involved
 Diverse demands of stakeholders
 Varied forms of exchange between company and stakeholders

Some lingering questions:
 What do “good” company-stakeholder relationships look like?
 What drives strong and enduring relationships?
 How can managers/researchers address diverse interests of
stakeholders?
32
Corporate Social Responsibility:
A Source for New Insights?

Enacted (frequently) at corporate
level (e.g., Ford Foundation)

Involves wide variety of
stakeholders

Tied closely to corporate identity

Has normative as well as
instrumental elements (see
Donaldson & Preston 1995)
CSR = allocation of corporate resources to initiatives
aimed at improving societal welfare
33
Corporate Social Responsibility:
A Source for New Insights?

Enacted (frequently) at corporate
level (e.g., Ford Foundation)

Involves wide variety of
stakeholders

Tied closely to corporate identity

Has normative as well as
instrumental elements (see
Corporate
Strategy
Donaldson & Preston 1995)
34
The Received Wisdom in Practice:
An Example from a CSR Report
Stakeholder
Example Metric
Investors
Operating Earnings
($1.3 bln.)
Consumers
Number of new low
sodium soups (32 in
U.S.)
Employees
Number of children in
day care at HQ (80100)
Community
Cumulative donation
of food through
“Stamp Out Hunger!”
(900 M pounds)
35
Tenet 1:
Assess Stakeholder Initiatives by Expenditures

Two routes connecting CSR and corporate performance
(Margolis et al. 2008)
36
Tenet 1:
Assess Stakeholder Initiatives by Expenditures

Two routes connecting CSR and corporate performance
(Margolis et al. 2008)
Direct Route
37
Tenet 1:
Assess Stakeholder Initiatives by Expenditures

Two routes connecting CSR and corporate performance
(Margolis et al. 2008)
Direct Route
Indirect Route
38
Tenet 2:
Stakeholders Reside in Groups

Stakeholder groups not homogeneous
Individual
Stakeholder
Company
39
Tenet 2:
Stakeholders Reside in Groups

Stakeholder groups not homogeneous

Stakeholder responses to CSR activity not confined to
single role (Sen, Bhattacharya and Korschun 2006; Bhattacharya
Korschun and Sen 2008)
Individual
Stakeholder
Company
40
Tenet 2:
Stakeholders Reside in Groups

Stakeholder groups not homogeneous

Stakeholder responses to CSR activity not confined to
single role (Sen, Bhattacharya and Korschun 2006; Bhattacharya
Korschun and Sen 2008)
Consumption
Individual
Stakeholder
Investment
Company
Employment
41
Tenet 3:
Trading-off Stakeholder Interests is Paramount

Central mediator of CSR-Behavior link is identification
(e.g., Bhattacharya, Korschun, Sen 2009; Maignan, Ferrell and Ferrell 2004;
Drumwright, Cunningham and Berger 2006)

Stakeholders are drawn to companies that share their
values (repelled by those with value mismatch)

Corporation can serve as super-ordinate identity (Korschun 2008)
42
A Shift in Thinking
Traditional Approach
Recommended Approach
Assess by expenditures
Understand stakeholder psychology
Analyze at group-level
Analyze at individual-level
Advance interests
Encourage expression of values
43
Thank You!
The Stakeholder Approach in the
Marketing Discipline
Speakers
 Madhu Viswanathan, Professor of Business Administration,
College of Business, University of Illinois
 Daniel Korschun, Assistant Professor of Marketing, LeBow
College of Business, Drexel University
Moderator
 Mary C. Gentile, Ph.D., Giving Voice to Values and Babson
College