Strategic Stakeholder Management

Knowledge Center

• About
• Home
• Dictionary
• Encyclopedia
• Question?
• Views

• Register
• Log in
• Help

• Change & Organization
• Communication & Skills
• Decision-making & Valuation
• Ethics & Responsibility
• Finance & Investing
• HRM
• Knowledge & Intangibles
• Leadership
• Marketing
• Program & Project
• Strategy
• Supply Chain & Quality

The instrumental approach for stakeholder management. Explanation of Strategic Stakeholder Management of Berman, Wicks, Kotha, Jones ('99) after Freeman. ('84)

The view regarding Strategic Stakeholder Management, described by Berman, Wicks, Kotha, Jones using earlier work of Edward Freeman is an Instrumental Approach. (Academy of Management Journal; Oct99, Vol. 42 Issue 5).

Instrumental approaches towards stakeholder theory hold that:

To maximize shareholder value over an uncertain time frame, managers ought to pay attention to key stakeholder relationships.

Firms have a stake in the behavior of their stakeholders. Prudent management of firms' operating environments, including relationships with their stakeholders, is a part of proper management in general. Therefore good stakeholder management has clear instrumental value for the firms.
 

A fundamental assumption of this type of model is that the ultimate objective of corporate decisions is marketplace success. Firms view their stakeholders as part of an environment that must be managed in order to assure revenues, profits, and ultimately, to provide returns to shareholders. Attention to stakeholder issues may help a firm avoid decisions that might prompt stakeholders to undercut or thwart its objectives. This possibility arises because stakeholders can control resources that can facilitate or enhance the implementation of corporate decisions (Pfeifer & Salancik, 1978); in short, Stakeholder Management is a means to reach an end; something what you have to do so that you can achieve something else. The end, or the ultimate result, is generally not the welfare of stakeholders. Instead, the firm's goal is the advancement of the interests of only one stakeholder group: its shareholders. Employing the terminology used by Donaldson and Preston (1995) and Quinn and Jones (1995), we see the concern of the firm for stakeholder relationships as instrumental and contingent on the value of those relationships to corporate financial success. Quinn and Jones stated: "Instrumental [strategic] ethics enters the picture as an addendum to the rule of wealth maximization for the manager-agent to follow" (1995: 25).

In this formulation, stakeholder management is part of a company's strategy but in no way drives that strategy. Implicit in this perspective is the assumption that modes of dealing with stakeholders that prove upon adoption to be unproductive will be discontinued, as will those that involve resources that are no longer needed. The concerns of stakeholders only enter a firm's decision-making processes if they have strategic value for the firm.

Two variants of the Strategic Stakeholder Management approach are the direct effects model and the moderation model. In the direct effects model, the attitudes and the actions of managers toward stakeholders (their stakeholder orientation) are perceived as having a direct effect on firm financial performance, independent of the corporate strategy. In the moderation model, the managerial orientation toward stakeholders does impact the corporate strategy by moderating the relationship between strategy and financial performance.

Strategic Stakeholder Management Forum   Treating Patients as Strategic Stakeholders After working for more than 4 years and on 4 different health care concepts I realized that though the patient is a strategic stakeholder, in the health care industry it is one without power. In India patients are still a customer which is quite far ...           Stakeholders Involvement in the Strategic Change Management Process in Public Organizations I would really appreciate to receive some positive input on stakeholders involvement in the strategic change management process in public organizations....           Involving Stakeholders in the Introduction of Change What are the systems to involve apporariate stakeholder in the introduction of change?...           Stakeholders Management and Partnering I need some help to explore the relations between Stakeholders Management and Partnering. Are they the same thing or are there some differences between them? What are the linking points and dilemmas?...           Include Stakeholder Management in Strategy I would appreciate to receive some views to the position that "Stakeholder Management should be part of the Corporate Strategy"...?...         Begin a new topic

Strategic Stakeholder Management Special Interest Group Special Interest Group

Strategic Stakeholder Management Education & Events Find Trainings, Seminars and Events

Best Practices - Strategic Stakeholder Management Premium   Stakeholder Definition? I need a comprehensive definition of a Stakeholder. Who can help mee?...

Expert Tips - Strategic Stakeholder Management Premium   Stakeholder Capitalism (Freeman) Professor Freeman has recently published a formidable article about this subject in the Journal of Business Ethics (2007-74:303-314). In his article c... Usage (application): Stakeholder Management       How to Effectively Conduct a Stakeholders Meeting? Here are a few tips to effectively manage a stakeholders meeting: 1. Try to avoid getting into details and drawn into a conversation about a lo... Usage (application): Stakeholder Meetings, Best Practices       The Role of the CEO in Strategic Change Initiation In management literature the role of the CEO in formulating and implementing strategic change has often been emphasized. An interesting view to s... Usage (application): Communicating Strategic Change       The Maturity Stages of Corporate Responsibility Simon Zadek provides a useful best practice five-stage maturity model of how organizations deal with Corporate Responsibility: - Defensive: deny ... Usage (application): Organizational Development, Corporate Responsibility Maturity

Resources - Strategic Stakeholder Management Premium The Purpose of Business: Stockholder versus Stakeholder Theories This presentation elaborates on the objectives and purposes of businesses according to different views: those of stockholders and those of stakeholder... Usage (application): Stakeholder Analysis; Stakeholder Commitment   Strategy, Society and CSR Presentation about the relationship between CSR and Competitive Advantage. It includes the following sections: - Business and society are interde... Usage (application): CSR Strategy, Competitive Advantage, Strategic Corporate Social Responsibility, Strategy and Society   The Dawn of Conscious Capitalism This presentation provides an introduction into the concept of conscious capitalism, and includes the following sections: 1. Introduction 2.... Usage (application): Conscious Capitalism, Value-driven Consumer, Socially Responsible Investing, Corporate Responsibility   CSR Implementation and Communication Model (Schmeltz) Because Corporate Social Responsibility is a value-based concept, it is highly connected with an organization’s values and corporate identity. Actuall... Usage (application): CSR Communication, CSR Implementation, CSR Strategy, Corporate Identity, Corporate Values, CSR Stages,   Introduction to Stakeholder Management David Butter explains what stakeholders are and their importance for organizations, distinguishing internal from external stakeholders.... Usage (application): Introduction to Stakeholder Management   Strategic Stakeholder Management Diagram Download and edit this 12manage PowerPoint graphic for limited personal, educational and business use. Republishing in intranets, websites, books, ma... Usage (application): Strategic Stakeholder Management   Stephen Covey on the Speed of Trust Steven Covey hints at some of the reasons why trust is so fundamental for corporations, the banking system, financial institutions and the global econ... Usage (application): Corporate Strategy, Global Economy, Banking System, Leadership Development, Stakeholder Management     News Strategic Stakeholder         News Instrumental Stakeholders         Videos Strategic Stakeholder         Videos Instrumental Stakeholders         Presentations Strategic Stakeholder         Presentations Instrumental Stakeholders         More Strategic Stakeholder         More Instrumental Stakeholders

Compare with Strategic Stakeholder Management: Intrinsic Stakeholder Commitment  |  Normative Approach of Stakeholder Theory  |  Shareholder Value Perspective  |  Stakeholder Value Perspective  |  Stakeholder Analysis  |  Stakeholder Mapping  |  Value Based Management  |  Strategic Intent  |  Moral Purpose

Return to Management Hub: Ethics & Responsibility  |  Human Resources  |  Leadership  |  Strategy

More Management Methods, Models and Theory