Engaging With Stakeholders

A Relational Perspective on Responsible Business

Adam Lindgreen,Francois Maon,Joelle Vanhamme,Beatriz Palacios Florencio,Christine Vallaster,Carolyn Strong

• Éditeur: Routledge
• Année: 2018
• ISBN:
  9780429833397
• Édition: 1
• Sujet: Negocios y empresa
• Sous-sujet: Negocios en general

Engaging with Stakeholders: A Relational Perspective on Responsible Business contends that meaningful and constructive stakeholder engagement efforts should be rooted in a deep relational process of shared understanding, expectations, and viewpoints, through honest, continued dialogue between stakeholders and company management. This anthology follows and reaffirms this view, which also establishes the increasing need to explore the subtleties of how companies can respectfully engage their stakeholders in ways that reflect the corporate strategy and contribute to the ongoing development of business activities and creation of value, for themselves and stakeholders, from social, environmental, and economic perspectives.

Stakeholder engagement practices, however, remain highly complex and difficult to manage; their ability to generate value in an inclusive way requires critical consideration. Sound stakeholder engagement efforts also constitute a keystone for responsible business activities.

Drawing on a wide range of literature and studies, this book addresses key dimensions of stakeholder engagement, through a responsible business lens, and thereby contributes to identifying the opportunities, challenges, and key organizational implications associated with their unfolding. The four main topics covered are:

• Delineating the nature and multiple raisons d'être of stakeholder engagement

• Dialogical and communicational foundations of stakeholder engagement

• Engaging with diverse stakeholders throughout the value chain

• Reaping organizational returns and relational rewards of stakeholder engagement efforts

Part I

Delineating the nature and multiple raisons d’être of stakeholder engagement

1.1 Integrative stakeholder engagement

A review and synthesis of economic, critical, and politico-ethical perspectives

Pasi Heikkurinen and Jukka Mäkinen

Introduction

Contemporary business organisations operate in a dynamic and an increasingly complex environment. Such dynamism and complexity that companies face can be the central after effects of the progressively global production and consumption network. While the geographical and cultural variety in the supply of goods and services adds to the complexity of the overall organisation, the fast-paced alterations on the demand side additionally signify that constant change is a rule rather than an exception in business. Moreover, the recent phenomena of the sharing economy and collaborative consumption that blur the boundaries of production and consumption (see e.g. Belk, 2014; Binninger et al., 2015) add another layer of complexity to business activity. In that context, firms, and particularly those that operate across national borders, become embedded in a multifaceted set of constantly changing relations with not only consumers and other organisations from the international private and public sectors but also within an expanding body of individuals and groups dispersed in time and place.

These so-called stakeholders of the corporation, often defined as ‘any group or individual who can affect or is affected by the achievement of the firm’s objectives’ (Freeman, 1984, p. 46), certainly have varying interests and needs vis-à-vis the company. The expectations of shareholders, employees, and environmental activists, for instance, are often competing and even antagonistic. Hence, the modern multinational corporation is no longer a mere producer or distributor of goods and services but a nexus for stakeholder negotiation and contestation. With a legislative status and interests of its own, the corporation is also an active participant in the societal dialogue that takes place in and around the organisation. This combined with the recent upsurge of corporate power (Anderson and Cavanagh, 2000; Vitali et al., 2011) has led to a new, political role for business.

As a further consequence, large corporations that operate in the international arena are moving outside the command and control of national laws and regulations, as well as increasingly being able to exert power on policy making through lobbying practices and production decisions. Some influential scholars even argue that many companies are already to a large extent self-regulating manufacturing processes and taking over the traditional governmental responsibilities of social and environmental regulation – and hence have begun operating as the new provider of basic rights and public goods in society (Matten and Crane, 2005; Scherer et al., 2006).

This sort of voluntary political activity and responsibility of the corporation, in which stakeholder engagement plays a central part, is found to have both intended and unintended impacts on the political governance mechanisms (Frynas and Stephens, 2015) and power relations between the corporation and its stakeholders (Banerjee, 2007). According to Scherer et al. (2012, p. 473), a significant impact in this setting is ‘the democratic deficit’ that may arise when private firms participate in public policy, either by providing basic rights and public goods or by lobbying for their interests.

This democratic deficit is significant, especially when multinational corporations operate in locations where national governance mechanisms are weak or even fail, where the rule of law is absent and there is a lack of democratic control. This deficit may lead to a decline in the social acceptance of the business firm and its corporate political activities and, thus, to a loss of corporate legitimacy.

(Scherer et al., 2012, p. 473)

This chapter examines the corporation–stakeholder relationship in the contemporary, increasingly global and politicised business environment. This chapter aims to develop an integrative perspective on stakeholder thinking by first reviewing and then synthesising the existing perspectives on stakeholder engagement. The focus of the chapter is to answer the following questions: (a) what is stakeholder engagement about and (b) what should guide corporations when they engage with their stakeholders. The chapter provides answers to these questions from three distinct viewpoints – namely the economic, critical, and politico-ethical perspectives – and then synthesises the views under the integrative perspective.

By applying the Rawlsian idea that various conceptions of society suggest different divisions of responsibilities between institutions and societal actors (Rawls, 1996, pp. 266–267; Scheffler, 2005; Mäkinen and Kourula, 2012), this chapter maps and reviews previous literature on stakeholder engagement. The chapter finds that since each of the stakeholder engagement perspectives holds a different conception of society, their definitions of and purpose ascribed to stakeholder engagement are also distinct. The synthesis part of the chapter discusses the strengths and weaknesses of each of the three perspectives and develops an integrative perspective based on them. The chapter ends with a concise discussion on the managerial and policy implications on the new, more holistic perspective on stakeholder engagement.

Reviewing stakeholder engagement

The notion of the ‘stakeholder’ has enjoyed considerable attention in recent decades in the business and management literature. Stakeholders as a relevant concept for the business management, was first introduced in Northern Europe. Swedish scholar Eric Rhenman in his book on industrial democracy (Rhenman, [1964] 1968) and Finnish scholar Juha Näsi in his dissertation on corporate planning (Näsi, 1979) were the first people to use the notion of stakeholder explicitly. And then some years later, stakeholder thinking was popularised by an American scholar Edward Freeman in his seminal book Strategic Management: A Stakeholder Approach (Freeman, 1984). Today, the consideration of stakeholders is a widely accepted idea in both the theory and practice of organisations and comes in different forms (see e.g. Phillips et al., 2003; Jamali, 2008; Miles, 2017).

But who are these stakeholders? According to Miles (2012), the concept of ‘stakeholder’ classifies as an essentially contested concept, implying that a universally accepted definition will never evolve. Some scholars, however, hold that ‘stakeholders are [at least] those individuals and groups which have a valid stake in the organization’ (Carroll and Näsi, 1997, p. 47) or have a ‘claim, ownership, rights, or interests in a corporation and its activities, past, present, or future’ (Clarkson, 1995, p. 106). Freeman (1984, p. 46) again adds that a stakeholder can be ‘any group or individual who can affect or is affected by the achievement of the firm’s objectives’. Several authors even discuss including non-human entities among the group of stakeholders, such as trees (Starik, 1995) and Nature as a whole (Laine, 2010). An inclusive definition would thus consider a stakeholder as any entity that:

• has an interest in the organisation and/or
• can be affected by the corporation and/or
• can influence the organisation.

This extremely relational way of thinking about the management of an organisation extends the consideration of interests beyond the shareholder demands. Such an ‘interest or stake might be manifested as a legal or moral right, or claim, on the organization’ (Carroll and Näsi, 1997, p. 47). While the ‘legal stakes are established by the accepted legal system extant in a country, … [m]oral claims, by contrast, are justified based upon some ethical or moral claim on the organization’ (ibid, p. 47). According to the mainstream interpretation of the stakeholder approach (Freeman, 1984; Freeman et al., 2010), the task of the business management is then to manage the diversity of stakeholder claims by identifying and prioritising the different interests, and to take these interests into account in strategic – as well as operational – decision making.

In order for a corporation to know its stakeholders’ needs and desires, and hence to consider their interests in its business decisions, the company must engage with its stakeholders. In principle, this stakeholder engagement is rather straightforward: managers ought to take into consideration any group and individual ‘who can affect or is affected by the achievement of the firm’s objectives’ (Freeman, 1984, p. 46). Practical challenges, however, start to arise immediately as soon as one tries to compile a list of stakeholders. The realisation of the aims of multinational corporations affects millions and millions of people (as well as non-humans), both directly through their broad customer, employee, and ownership bases, and also indirectly through their suppliers and behaviour in the market place that also has a political effect. In practice, this forces corporations to select certain stakeholders from the vast mass of stakeholders. In the process of stakeholder identification, exclusion is unavoidable and particularly evident in the global business setting where the actions of the 100 largest multinational corporations affect almost every citizen on the planet. Unfortunately, not everyone’s stake can or will be considered. Trade-offs will always be present.

Stakeholder theory certainly always includes morals and values (Phillips et al., 2003), but the kind of ethical position that emerges for the organisation depends on the stakeholders that are considered. Thus, another set of managerial challenges then appears when attempting to prioritise the interests, or stakes, of the stakeholders. To assist in identifying whose stakes matter, scholars have suggested different models and principles. For instance, the following categorisations have been employed: internal and external stakeholders (Johnson et al., 2008; Heikkurinen, 2010); salient and non-salient stakeholders (Mitchell et al., 1997); primary and secondary stakeholders (Clarkson, 1995); key and other stakeholders (Blair and Fottler, 1990; Heikkurinen, 2010); social and non-social stakeholders (Wheeler and Sillanpää, 1997); and human and non-human stakeholders (Starik, 1995). But who then are the most important stakeholders that the managerial decision making is to account for?

Table 1.1.1 Three perspectives on stakeholder engagement

Perspective	Economic	Critical	Politico-ethical
What is stakeholder engagement about?	An opportunity to increase profit and competitiveness	A means to curtail critical voices and gain power	A necessity for legitimacy and ethical conduct
What should guide stakeholder engagement?	The free market through economic instrumentali...

Table des matières

• Cover
• Title
• Copyright
• Dedication
• Contents
• List of figures
• List of tables
• About the editors
• About the contributors
• Foreword and acknowledgments
• Part I Delineating the nature and multiple raisons d’être of stakeholder engagement
• Part II Dialogical and communicational foundations of stakeholder engagement
• Part III Engaging with diverse stakeholders throughout the value chain
• Part IV Reaping organizational returns and relational rewards of stakeholder engagement efforts
• Index