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Unformatted text preview: to the owners who pursue their interests regardless of
others. Separating business from ethics creates the problem of the ethics (or lack
thereof) of capitalism. Friedman (1970, cited in Freeman et al, 2010) believes that profits
are what make businesses successful, while Freeman et al (2010) believe that in order
to maximise profits a firm needs great products and a good relationship with
stakeholders, including customers and suppliers. In summary, the stakeholder theorists
begin with the assumption that values are necessarily an important part of doing
business, while separatists maintain that morality should be separated from the
obligation of management to pursue the interest of shareholders.
ii) Instrumentalists vs. descriptive stakeholder theory In contrast to the instrumentalist approach to stakeholder theory that views stakeholders
as an instrument to achieve the shareholder model objective of maximising profits for
shareholders, is the descriptive stakeholder theory which is concerned with the pursuit
and attainment of the interest of all stakeholders. The latter theory implies engagement
with stakeholders as opposed to management thereof (Collins, Kearins & Roper, 2005). 2.4 Stakeholder Management and Retail Entry The literature on internationalisation and stakeholder management, as discussed above,
forms the basis of the discussion on retail internationalisation. That retailers in general
operate in a stakeholder sensitive environment is widely accepted, especially in
management literature (Whysall P. , 2000). Retail entry is a particularly complex task
35 requiring a firm to deal with a variety of political, social or cultural issues (Alexander &
Myers, 2000). Entry requires consideration of a broad range of stakeholders, such as the
government and trade unions, is widely recognised (Elg, Ghauri & Tarnovskaya, 2008;
Palmer & Quin, 2005a). Hadjikhani and Ghauri (2001) argue that MNEs are part of a
network that includes political and social actors.
As discussed earlier, Dupuis and Prime (1996) emphasised harmonious stakeholder
relations as being an important success factor in international retail expansion. Palmer
and Quinn (2005a) correctly argue that stakeholder engagement upon entry requires a
long term approach. However, a big body of literature does not use the classic
stakeholder theory as a foundation. As a result there is no single framework that can be
used. Elg et al (2008) assessed retail engagement with stakeholders during entry into
emerging markets using the networking and matching approach. Networking focuses on
business level contacts with other firms at a micro-level, but some studies have
extended it to include other socio-political actors (Ghauri & Cateora, 2006, cited in Elg et
al, 2008). The matching approach on the other hand focuses on gaining support and
approvals from stakeholders at a macro- and global- level. Elg et al (2008) conducted a
case study on the entry of IKEA, a Swedish furniture retailer, into Russia and China.
They found that different relationships need to be cultivated and nurtured at different
level during different phases of entry, and conclude that that entry was successful due to
the dynamic utilisation of networking and matching capabilities.
Using a stakeholder approach, Uusitalo and Rokman (2004) examine the entry of Lindl,
a large family-owned German grocery retailer, into the Finnish market. They argue that
their study is distinguishable from others because of the particular features of the
Finnish market, which is characterised by the small size of the market, low population 36 density and long distances. They also point out that the Finnish food market had been
heavily regulated until Finland joined the European Union in 1995.
The study describes and analyses the entry process of Lindl from a stakeholder
perspective. Their research questions were: What are the stages of the entry process? Who are the main stakeholders during different stages? How did the stakeholder groups react to the entrant? What are the stakeholders’ roles and motives? In answering these questions, Uusitalo and Rokman (2004) rely on the attributes model.
They adapted a model presented by Vida and Fairhurst (1998) to develop a stakeholder
model for entry that categorises the stakeholders according to the stages of entry
(antecedent, operational and settling), stakeholder attributes (power, legitimacy and
urgency) and stakeholder type (dormant, discretionary, demanding, dominant,
dependent, dangerous and/or definitive)
Table 2: The stakeholder model of foreign retailer entry Stages of entry Stakeholder attributes
Power Antecedent stage Stakeholder type
Legitimacy Urgency x Dormant
x Operational stage x x
x Settling stage Dominant x x Dependent x x
x Demanding Dangerous x Definitive Source: Uusitalo and Rokman (2004) 37 According to the model, stakeholder types were formed by assigning one, two or three of
the attributes to each type of stakeholder. The classes that possess only one attribute
are dormant stakeholders with power, discretionary stakeholders with legitimacy, a...
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- Winter '14