{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

From the research that has been done so far some of

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: the world around them. From the research that has been done so far, some of which is not covered here, it appears that stakeholder management is an ancient idea. It is an extension of human social nature that recognises coexistence and interdependence to others. It is, however, more embedded or stronger in certain cultures than others. According to Preston and Sapienza (1990), the substance of the stakeholder concept, if not the term itself, has been reflected in the speeches and writings of thoughtful analysts and executives for many years. The evolution of the theory is more evident in the 1960s, a time referred to as the classical stakeholder theory period (Elias & Cavana, 2000). During this period the theory evolved into various disciplines such as corporate planning, systems thinking, 27 organisation theory and corporate social responsibility theory (Freeman et al, 2010; Elias & Cavana, 2000). However, it was not until Freeman (1984) that a stakeholder approach became an accepted part of mainstream management discipline. Figure 6: A history of the stakeholder concept Ancient History Various communities & cultures Modern History of Idea Adam Smith (1759) Mary Parker Follet (1918) Berle and Means (1932) E. Merrick Dodd (1932) Barnard (1938) Stakeholder Concept SRI (1963) Corporate Planning Systems Theory Corporate Social Responsibility Organisation Theory Strategic Management (1984) Source: Adapted from Freeman (2010) 28 With his 1984 seminal work, Strategic Management: A Stakeholder Approach, Freeman is regarded as the father of stakeholder theory (Frooman, 2002; Elias & Cavana, 2000; Mitchell, Agle, & Wood, 1997; Rowley, 1997). Since then, a phenomenal academic interest in the area has developed (Freeman et al, 2010; Friedmam & Miles, 2002; Donaldson & Preston, 1995). 2.3.2 Definition of a Stakeholder One of the challenges in the study of stakeholder theory is the number of definitions of a stakeholder that exist (Rowley, 1997). An SRI international memorandum in 1963 defines “stakeholder” as “those groups without whose support the organisation would cease to exist” (cited in Freeman et al, 2010, p.8). SRI was concerned with corporate planning and this definition allowed executives to identify groups they needed to be responsive to in order to ensure the continued survival of the firm. Rhenman, in 1964, defines stakeholders as the individuals and groups who depend on the firm in order to achieve their personal goals and on whom the firm depends on for its existence (Freeman et al, 2010). This definition is consistent with the idea of goals being a product of the exchange process among various stakeholders in a firm (Stymne, 1984, cited in Freeman et al, 2010). Freeman (1984) defines a stakeholder as any person or group of people who may affect or be affected by the achievement of the firm’s objectives. Freeman’s (1984) approach to stakeholders is a managerial one in that it is rooted in managers’ concerns of how they can be effective in identifying, analysing and managing key stakeholders. Freeman’s (1984) hub-and-spoke approach as illustrated in Figure 6 views the firm as the hub of relationships with various actors. 29 Although the definition has evolved it still captures the inherent idea that a firm must be concerned about many people and groups beyond its shareholders. Freeman’s definition has been criticised for being too expansive, incorporating everything. Despite this, Hare and Pahl-Wohl (2002) further expanded the definition to include individuals or groups influenced by, and with a significant impact (directly or indirectly), on the firm. Figure 7: Stakeholder view of firm Governments Local Community Organisations Owners Consumer Advocates Suppliers Firm Customers EnvironMentalists SIG Competitors Employers Media Source: Freeman (1984) 2.3.3 Stakeholder Identification and Analysis The key application challenge with stakeholder theory is the identification and sorting of stakeholders. There are many varied approaches proposed or being followed. Frooman 30 (1999), in developing response strategies to stakeholders, proposed that the following three general questions be asked: Who are they? (their attributes) What do they want? (their ends) How are they going to get it? (their means) Similarly, Griseri and Seppala (2010) proposed inter alia a stakeholder mapping which involves identification of stakeholders and their interests. While the approach to this literature review does not directly follow Frooman’s (1999) order, it forms an important guide to the discussion. The identification of stakeholders entails drawing up a list (Frooman, 2002; Preston & Sapienza, 1990). Various authors have come up with lists dependant on their definition of the stakeholders. While no one list is better than the other without understanding the context of each case, a comprehensive list was first provided by Freeman (1984) that mentioned activists (advocacy) groups (customer, environmental, health, minority, religious, women), Chief Executive (President and cabinet), competitors (domestic and foreign), courts, creditors (banks; bondholders), customers, directors, employees, financial analysts, legislature, the media, owners (private, public), political parties, political committees, professional associations, regulatory agencies, suppliers, trade associa...
View Full Document

{[ snackBarMessage ]}

Ask a homework question - tutors are online