Week 2 Flashcards
What is a stake
any interest, share or claim that a group or individual has in the outcome of an organization’s policies, procedures, or actions toward others (expectations of the stakeholders)
What is a stakeholder?
any group or individual who can affect or is affected by the achievement of the organization’s objectives
- external driving force for sustainability
Milton Friedman on stakeholder theory
a firm should create value for all stakeholders, not just shareholders
What matters: difference between social and economic goals are no longer relevant, only the survival of the organization
Benefits of stakeholder engagement (4)
- Allow companies to understand the impact they are making on society
- Driver of learning and organizational change
- Means to manage and reduce risk
- Generates trust and social capital
Greenwood on stakeholder engagement
practices the organization undertakes to involve stakeholders in a positive manner in organizational activities process of consultation, communication, dialogue and exchange
Different models of identifying stakeholders (3)
Internal vs external
According to their position in the supply chain
Primary stakeholders, secondary stakeholders and interested parties
Internal vs external Friedman model
Internal: owners, employees, investors, board of directors
External: suppliers, customers, governments, competitors
According to their position in the supply chain (Searcy)
a. Focal Firm Stakeholders (employees)
b. Supply Chain Stakeholders (suppliers)
c. Stakeholders Beyond the Supply Chain (NGO’s)
Primary stakeholders, secondary stakeholders and interested parties (Garvare and Johansson)
a. Primary stakeholders: direct control of essential means of support required by the organization
b. Secondary stakeholders: do not directly provide any essential means of support for the organization but still have influence
c. Interested parties: interest in organizational activities but no ability to take action if their needs are not met
Stakeholder salience
the degree to which managers give priority to competing stakeholder claims (Mitchell).
Different salience of stakeholders
Latent: one attribute, low salience
Expectant: two attributes, moderate salience
Definitive: three attributes, high salience
Determining the stakes (attributes)
- Power: the ability of those who possess power to bring about the outcomes they desire.
- Urgency: the degree to which stakeholder claims call for immediate attention.
- Legitimacy: a generalized perception that the actions of an entity are desirable, proper or appropriate.
Stakeholder types (7)
- Dormant
- Discretionary
- Demanding
- Dominant
- Dangerous
- Dependent
- Definitive
Dormant stakeholder
possess power to impose their will through coercive, utilitarian or symbolic means, but have little or no interaction/involvement with the firm as they lack legitimacy or urgency
Discretionary stakeholders
likely to be recipients of corporate philanthropy. No pressure on managers to engage with this group, but they may choose to do so. Ex.: beneficiaries of corporate philanthropy
Demanding stakeholder
those with urgent claims, but no legitimacy or power. Irritants for management, but not worth considering. Ex.: are people with unjustified grudges or serial complainers
Dominant stakeholder
the group that many theories position as the only stakeholders of an organization or project. Likely to have a formal mechanism in place acknowledging the relationship with the organization or project
Dangerous stakeholder
those with powerful and urgent claims will be coercive and possibly violent. Ex.: employee sabotage or coercive/unlawful tactics used by activists
Dependent stakeholder
stakeholder who are dependent on others to carry out their will, because they lack the power to enforce their stake. Ex.: local residents & animals impacted by the BP oil spill
Definitive stakeholder
an expectant stakeholder who gains the relevant missing attribute. Often dominant stakeholders with an urgent issue, or dependent groups with powerful legal support
Responsibility
Optimal level stakeholder agency
High stakeholder engagment
Neoclassic
Low stakeholder agency
Low stakeholder engagement
Paternalism
High stakeholder agency
Low stakeholder engagement
Strategic
Low stakeholder agency
High stakeholder engagement
Dialogue skills and techniques for stakeholder engagement
- Best alternative to a negotiated agreement
- Don’t make assumptios
- Focus on shared interests and value
- Co-create solutions, avoid paternalism
Areas and guiding questions for firms
Financials
Customer
Internal
People
Environment
Society
2 types of indicators
- Lagging indicators
- Leading indicators
These indicators are linked by cause and effect relationships
Lagging indicator
indicate whether the strategic objectives in each perspective are achieved ➔ Reflect strategic core issues
Leading indicator
express the specific competitive advantages of the firm and represent how the results – reflected by the lagging indicators – should be achieved ➔ Reflect performance drivers
