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Part II: A Stakeholder Perspective Chapter 3: Stakeholder Theory

The document discusses stakeholder theory and defines stakeholders. It provides multiple definitions of stakeholders and proposes a new definition. It also discusses identifying and prioritizing among stakeholders and issues.

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Jesslyn Wong
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© © All Rights Reserved
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572 views

Part II: A Stakeholder Perspective Chapter 3: Stakeholder Theory

The document discusses stakeholder theory and defines stakeholders. It provides multiple definitions of stakeholders and proposes a new definition. It also discusses identifying and prioritizing among stakeholders and issues.

Uploaded by

Jesslyn Wong
Copyright
© © All Rights Reserved
Available Formats
Download as PDF, TXT or read online on Scribd
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Part II: A Stakeholder Perspective

Chapter 3: Stakeholder Theory


1. 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.”
—Eric Rhenman (1964)

“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.”
—Post, Preston, and Sachs (2002)

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3. A New Definition of a Stakeholder

An individual or organization that is affected by the firm


(either voluntarily or involuntarily), and possesses
the capacity and intent to affect the organization.

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4. Is the Environment a Stakeholder?
An argument for including the environment as one of
the firm’s societal stakeholders is to reinforce the
importance of sustainability within the CSR debate,
while recognizing that the environment requires actors
to speak and act on its behalf in order to be protected.
In Figure 3.1, however, the environment is excluded due
to its lack of agency. Since the environment is unable to
speak for itself, the manager’s priority (in relation to
sustainability issues) should be to attend to those
stakeholders who speak most vigorously (and
knowledgeably) on the environment’s behalf.

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5. Concentric Circles of Stakeholders

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6. Prioritizing Stakeholders
• Stakeholders can be divided into three categories:

 Organizational stakeholders:
 For example, employees, managers, directors
 Economic stakeholders:
 For example, consumers, shareholders,
competitors
 Societal stakeholders:
 For example, media, regulators, local
communities

• These sit within the larger business context, shaped by the


five driving forces of CSR (affluence, sustainability,
globalization, communication, and brands)
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7. Analyzing Issues

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9. The Firm, the Issue, and the Stakeholder
• Three components define the firm–environment relationship:

1. The strategic interests of the firm


2. The evolution of the issue
3. The motivation of the stakeholder(s)

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10. Prioritizing Among Issues

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11. Prioritizing Among Stakeholders

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12. The Five Steps of Stakeholder
Management

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13. The Five Steps of Stakeholder Management

 Identify and engage the set of stakeholders relevant to the


firm (Figure 3.1).
 Analyze the nature of the issue to see how it relates to the
firm’s operations and what stage it is at in its evolution
(Figures 3.2 and 3.3a).
 Prioritize among competing stakeholder interests and
demands in relation to the issue at hand (Figure 3.3b).
 Act as quickly as is prudent, seeking to satisfy as many
stakeholders as possible, in order of priority (while avoiding
excessive harm to any one stakeholder).
 Evaluate the effect of the action to optimize the outcomes
for the firm and its stakeholders. When necessary, repeat
the process (Figure 3.4).

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14. Strategic CSR Debate

• Motion:

The natural environment is a stakeholder of the firm.

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15. Questions for Discussion and Review
1. What is your definition of a stakeholder? Can an individual or a group
self-appoint itself as a stakeholder, or does the firm need to recognize it
as a stakeholder in order for it to qualify as such?
2. With the advent of artificial intelligence (AI) and computer learning, if a
computer is able to gain consciousness, does that make it a potential
stakeholder of a firm?
3. What are the three main factors that should be used to prioritize among
competing stakeholders? What dimensions do you think should be
used? Why?
4. Of the “five steps of stakeholder prioritization,” which step, if missed, is
likely to have the most adverse effect on the firm’s ability to build
effective stakeholder ties?
5. Using a real-life firm, list its stakeholders and use the model presented
in Figure 3.4 to prioritize their importance (from the firm’s perspective).

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CORPORATE SOCIAL
RESPONSIBILITY (CSR)
Lecturer: Dr. Xuanwei Cao
Office: BS226
Office Hour: 15:00-17:00 Wed.
Email: [email protected]

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