Strategic Stakeholder Management

Knowledge Center


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



strategic stakeholder managementThe 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 diffe...
  Stakeholders Involvement in the Strategic Change Management Process in Public Organizations
I would really appreciate to receive some positive...
  Involving Stakeholders in the Introduction of Change
What are the systems to involve apporariate stakeh...
  Stakeholders Management and Partnering
I need some help to explore the relations between ...
  Include Stakeholder Management in Strategy
I would appreciate to receive some views to the po...

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...

Expert Tips - Strategic Stakeholder Management Premium

Stakeholder Capitalism (Freeman)

Professor Freeman has recently published a formida...
Usage (application): Stakeholder Management

CEOs Time Spent per Stakeholder / Constituency

Research by Porter, Nohria and Higgins among 27 CE...
Usage (application): CEO Coaching, CEO Time Management, Stakeholder Management

How to Effectively Conduct a Stakeholders Meeting?

Here are a few tips to effectively manage a stakeh...
Usage (application): Stakeholder Meetings, Best Practices

The Role of the CEO in Strategic Change Initiation

In management literature the role of the CEO in fo...
Usage (application): Communicating Strategic Change

The Maturity Stages of Corporate Responsibility

Simon Zadek provides a useful best practice five-s...
Usage (application): Organizational Development, Corporate Responsibility Maturity

Advance yourself in business administration and management

Resources - Strategic Stakeholder Management Premium

The Purpose of Business: Stockholder versus Stakeholder Theories

This presentation elaborates on the objectives and...
Usage (application): Stakeholder Analysis; Stakeholder Commitment

Strategy, Society and CSR

Presentation about the relationship between CSR an...
Usage (application): CSR Strategy, Competitive Advantage, Strategic Corporate Social Responsibility, Strategy and Society

The Dawn of Conscious Capitalism

This presentation provides an introduction into th...
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...
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 th...
Usage (application): Introduction to Stakeholder Management

Strategic Stakeholder Management Diagram

Download and edit this 12manage PowerPoint graphic...
Usage (application): Strategic Stakeholder Management

Stephen Covey on the Speed of Trust

Steven Covey hints at some of the reasons why trus...
Usage (application): Corporate Strategy, Global Economy, Banking System, Leadership Development, Stakeholder Management

News about Strategic Stakeholder


News about Instrumental Stakeholders


Videos about Strategic Stakeholder


Videos about Instrumental Stakeholders


Presentations about Strategic Stakeholder


Presentations about Instrumental Stakeholders


Books about Strategic Stakeholder


Books about Instrumental Stakeholders


More about Strategic Stakeholder


More about Instrumental Stakeholders


Accelerate your management career

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

Special Interest Group Leader

You here

About 12manage | Advertising | Link to us / Cite us | Privacy | Suggestions | Terms of Service
© 2018 12manage - The Executive Fast Track. V14.1 - Last updated: 23-9-2018. All names ™ of their owners.