Companies that adopt a reactive posture generally act

company’s initial response was simply to deny there was a problem.
• Companies that adopt a reactive posture generally act only when forced to do so, and
then in a defensive manner. For example, in the film A Civil Action , based on a true
story, W.R. Grace (a company that was later bought by Beatrice Foods) allegedly
dumped toxic chemicals that leaked into underground wells used for drinking water,
causing illness and death in the community of Woburn, Massachusetts. The company
paid no attention to the problem until forced to defend itself in a lawsuit brought by
a crusading lawyer on behalf of community members.
• Proactive companies try to anticipate stakeholder concerns. These firms often have
specialized departments, such as public affairs, community relations, consumer affairs,
and government relations, to identify issues that are, or may become, of concern to
key stakeholders. These firms are much less likely to be blindsided by crises and neg-
ative surprises. Stakeholders and their concerns are still, however, considered a prob-
lem to be managed, rather than a source of competitive advantage.
• Finally, an interactive stance means that companies actively engage with stakeholders
in an ongoing relationship of mutual respect, openness, and trust. Firms with this
approach recognize that positive stakeholder relationships are a source of value and
competitive advantage for the company. They know that these relationships must be
nurtured over time. The term stakeholder engagement is used to refer to this process
of ongoing relationship building between a business and its stakeholders.
The process of engagement can take many forms, but it often involves stakeholder
dialogue . One management theorist has defined dialogue as “the art of thinking
together.”
11
In dialogue, a business and its stakeholders come together for face-to-face
conversations about issues of common concern. They attempt to describe their core inter-
10
This typology was introduced in Lee Preston and James E. Post, Private Management and Public Policy . For a more
recent discussion, see Sandra Waddock, Leading Corporate Citizens: Visions, Values, and Value Added (New York:
McGraw-Hill, 2002), Ch. 1.
11
William Isaacs, Dialogue and the Art of Thinking Together (New York: Doubleday, 1999).
Law81305_ch01pg02_21 2/17/04 5:31 PM Page 15

The Dynamic Environment of Business
16 Part One The Corporation in Society
ests and concerns, define a common definition of the problem, invent innovative solu-
tions for mutual gain, and establish procedures for implementing solutions. To be suc-
cessful, the process requires that participants express their own views fully, listen care-
fully and respectfully to others, and open themselves to creative thinking and new ways
of looking at and solving a problem. The promise of dialogue is that together they can
draw on the understandings and concerns of all parties to develop solutions that none of
them, acting alone, could have envisioned or implemented.