Chapter 4: Stakeholder Theory
Stakeholders' Model (Werther and Chandler)
1. Societal Stakeholders: Governments, Communities 2. Economic Stakeholders: Shareholders, Consumers 3. Organizational Stakeholders: Employees, Unions
Stakeholder Defined
A stakeholder is any individual, group or institution who is affected, positively or negatively, by the achievement of an organization's purpose. The stakeholders in a firm are individuals and groups that contribute, either voluntarily or involuntarily, to its wealth-creating capacity and activities, and who are therefore its potential beneficiaries and/or risk bearers
Secondary Stakeholders
Competitors, Activists, Critics, Unions, Media, Government
Major Stakeholders
Customers,Team members, Investors, Suppliers, Communities, Environment
Internal Stakeholders
Employees, owners, board of directors. Include individuals and groups within the organization that affect or are being affected by the organization's actions and goals
New Definition of a Stakeholder
Any entity who is affected by the organization (either voluntarily or involuntarily) and possesses the capacity to affect the organization.
External CSR
encompasses ethical behavior towards external stakeholders, and includes philanthropy and community contributions. It also reflects the way in which the firm interacts with the physical environment and its ethical stance towards consumers and other external stakeholders
Evolution of the issue
has the issue become law or institutionalized or a business practices
Strategic interests of the firm
how important is the issue to a firm's core competency or their competitive advantage
Motivation of the stakeholder(s)
how important is the issue to the firms defined stakeholders. How likely are they to act.
External Stakeholders
include individuals and groups that have no direct affiliation to the organization
Internal CSR
is a company's ethical behavior towards its internal stakeholders, mainly employees
Definitions of a Stakeholder
Stakeholders in an organization are the individuals and groups who are depending on the firm in order to achieve their personal goals and on whom the firm is depending for its existence. A stakeholder in an organization is any group or individual who can affect or is affected by the achievement of the organization's objectives. The stakeholders in a firm are individuals and constituencies that contribute, either voluntarily or involuntarily, to its wealth-creating capacity and activities, and who are therefore its potential beneficiaries and/or risk bearers
Stakeholder Management Capacity(Freeman,1994)
The Rational Level: Mapping the Stakeholders The Process Level: Managing the relationships with the stakeholders The Transaction Level: Interacting with stakeholder The three levels must be consistent.