Lecture 2: Pressures: From Stakeholders To Social Movements

Question 1

What is the concept of stakeholder?

Answer 1

There are narrow and broad views on the concept of stakeholders. Freeman (1984 ) describes it broadly by “ any group or individual that can affect or is affected by the achievement of an organization’s objectives”

Question 2

What is stakeholder theory?

Answer 2

Stakeholder theory aims to explain the nature of relationships between organizations and those persons with a stake in the operations and outcomes of business activity. They have 3 focus areas:
→ normative - prescribe the role/ purpose of the firm
→instrumental - identify effective practices
→ descriptive - map critical relationships

Question 3

What is normative stakeholder theory?

Answer 3

We have discussed this also in the first lecture. According to freeman & elm’s (2018) the old story was maximizing the value of shareholder and the new are is to maximize the stakeholders ‘ value. The social responsibility of businesses is to create value for stakeholders.

Question 4

What is instrumental stakeholder theory?

Answer 4

To identify effective practices catering the stake holders should be done. Sustains ability issues are about proper stakeholder management. The question is: which stakeholders are driving the sustainability issues?

Question 5

What is descriptive stakeholder theory?

Answer 5

To map critical relationships they are outlined.
→ stakeholder identification
→ stakeholder mapping
→ stakeholder prioritization

Question 6

What is stakeholder mapping?

Answer 6

Stakeholder mapping is a strategic tool used by organizations to identify, analyze and prioritize stakeholders based on their level of influence and interest in the organization. This process involves categorizing stakeholders into different groups based on criteria such as their power, legitimacy, urgency or proximity to the organization. By creating a stakeholdermap, organizations can better understand the dynamics of their state holder relationships, anticipate potential issues and develop tailored strategies to engage with, - and manage their stakeholders effectively.

Question 7

What is stakeholder prioritization? Mitchell, agle & wood, 1997)?

Answer 7

Stakeholder prioritization is the process of determining which stakeholders are most critical or important to an organization based on various criteria. By prioritizing state holders; organizations can focus their resources and effects on building and maintaining with key stakeholders who have the greatest potential to affect the organization’s success.

Question 8

What is stakeholder salience by Mitchell, Agle and Wood (1997)?

Answer 8

Stakeholder salience refers to the degree to which stakeholders are perceived as important or relevant by an organization. Based on factors such as power, and legitimacy urgency stake holders are defined. Latent, expectant, definitive and non-stakeholders. Latent stakeholders are the ones that has holding one of the criteria ( power = dormant stakeholder, legitimacy = discretionary stakeholder, urgency = demanding stakeholder ), expectant state holders are holding two criterion ( power & legitimacy = dominant stakeholder, power& urgency = dangerous stakeholder, legitimacy & urgency = dependent stakeholder) and lastly definitive stakeholders are holding all of the criteria.

Question 9

When are businesses are at risk of activist targeting?

Answer 9

→ offers lifer threatening a unhealthy products (alcohol, tobacco.)
→ produces significant effects on the natural environment( mining, forestry, oil drilling)
→does business in different regions with differing ethical and social norms (textiles)
→ based on new technologies (genetic engineering)
→ enjoys high brand awareness
Example, oatly a vegan milk producer sold a stake to trump-linked blackstone, oatly was targeted because this company was linked to destroying the rainforest he violating human rights for profit which was totally in adverse to what was oatly showing as a brand image

Question 10

How firms respond to activism (Spar & La Mure, 2003)?

Answer 10

Firms respond to activism in various ways based on factors such as transaction costs, brand impact and competitive positioning. Some firms may choose to comply with NGO demands if the costs of compliance are low or the benefits are high. Managers evaluate the costs associated with capitulating to activity demands, considering factors like abandoning existing investments, creating new facilities, row switching production methods, additionally firms may run cost-benefit analysis to weigh the benefits of compliance against the estimated costs of addressing activist demands.

Question 11

How did Unocal respond to activism?

Answer 11

Unocal responded with resistance.it was characterized by a combination of public relation efforts, legal battles, and maintaining its operations in Burma despite the sustained pressure from activists. The company’s stance on the Yadana project remained firm, leading to a prolonged conflict wit activist groups over its business practices in Myanmar.

Question 12

How did Nike respond to activism?

Answer 12

Nike responded with capitulation. Nike faced significant activism and public pressure regarding its labor practices in overseas factories, including issues related to wages, working conditions, and the use of child labor. In response Nike adopted a code of conduct in 1992, addressing labor issues but remained firm in the subject of wages, arguing their importance in economic growth. The company hired civil right leader to adress labour issues and engaged in public relation efforts to defend its practices. Despite these responses, Nike continued to face criticism, protest, boycotts, and negative media coverage highlighting the ongoing challenges of addressing labor right concerns in it global chain.

Question 13

How did Novartis respond to activism?

Answer 13

Novartis responded with preemption. Novartis responded to activism proactively by establishing a code of conduct in 1999, committing to responsible actions and ongoing dialogue with NGOs and stakeholders. The company’s transparent approach and collaboration with the UNED Forum in 2001, showcased a preemptive strategy to address activists concerns, despite not being directly involved in certain controversies. Novartis’ response exemplified a proactive stance towards corporate social responsibility and stakeholder engagement , demonstrating a commitment to responsible corporate citizenship.

Question 14

What are the drivers for businesses to collaborate with NGOs? (Georgallis ,2017)

Answer 14

→ Resources: knowledge, expertise, networks
→ Reputation: NGO credibility with public (using their brand image)
→ Risk management: desire to prevent negative public confrontations
→ Engagement: genuine desire to engage with stakeholders
→ Company welfare: employee satisfaction

Question 15

What are the drivers for NGOs to collaborate with businesses (Georgallis,2017)?

Answer 15

→ Resources: need for funding, technical skills, management
→ Credibility : partnering with MNCs (multinational corporations)
→ Impact: greater potential of market-based solutions, greater leverage

Question 16

What are the brakes of the business-NGO collaborations on business side?

Answer 16

→ different end goals, worldview and values
→ trust and concerns over what information is shared with NGOs
→ short term financial concerns and opportunity costs

Question 17

What are the brakes of business-NGO collaborations from the NGO side? (Georgallis, 2017 )

Answer 17

→ Inconsistency in company talk and walk.
→ perceptions of co-optation
→ Conflicts with membership and fundraising base
→opportunity costs: working via other channels

Question 18

What are the shades of green by the US environmental movement? (Hoffman,2009)

Answer 18

In the environmental movement the concept of shades of green refers to the varying approaches and ideologies adopted by different ENGOs. These shades of green represent the spectrum of strategies and tactics employed by environmental groups , ranging from extreme to moderate positions.

Question 19

Why are both extremes and moderates are needed (Hoffman, 2009)?

Answer 19

The coexistence of both extremes and moderates within the environmental movement allows for a diversity of tactics and strategies. Ultimately , contributing to a more comprehensive and effective approach to addressing environmental challenges.

The tension between publicity and pragmatism in the environmental movement reflects the balance between raising awareness through bold actions and achieving tangible results through practical strategies:

—publicity (extremism): publicity driven actions often aim to draw attention to environmental issues through dramatic protests, campaigns or stunts that capture media and public interests. These actions can raise awareness, mobilize support and pressure stakeholders including corporations and governments to take an action.
Greenpeace’s high profile campaigns such as occupying oil rigs at international summits are known for their dramatic and attention grabbing tactics.

Pragmatism(moderation): pragmatic approaches prioritize collaboration negotiation and incremental change to achieve concrete outcomes.

By working within existing systems and engaging with diverse stakeholders, pragmatic strategies can lead to policy changes, corporate sustainability initiatives and long term environmental improvements.

Environmental defense fund’s collaborative efforts with corporations to develop sustainable business practices demonstrate a pragmatic approach to driving environmental change.

Question 20

What is a social movement (Georgallis, 2017)?

Answer 20

“Collective coalitions that engage in sustained action to promote ideas and preferences for changing prominent social, cultural and business practices”

Question 21

How do social movement affect corporations (responsible) behavior? What are their pathways of influence?

Answer 21

Social movement can influence corporations to engage in responsible behavior through various mechanisms and strategies such as individual level, organizational level and field level.