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.