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 Special Interest Group

Special Interest Group (229 members)

Strategic Stakeholder Management Forum  

Recent topics

  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 heal...
  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 organization...
  Involving Stakeholders in the Introduction of Change
What are the systems to involve apporariate stakeholder in the introduction of change?...

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

Expert Tips - Strategic Stakeholder Management

Stakeholder Capitalism (Freeman)


CEOs Time Spent per Stakeholder / Constituency


How to Effectively Conduct a Stakeholders Meeting?


The Role of the CEO in Strategic Change Initiation


The Maturity Stages of Corporate Responsibility


Advance yourself in business administration and management

Resources - Strategic Stakeholder Management

The Purpose of Business: Stockholder versus Stakeholder Theories


Strategy, Society and CSR


The Dawn of Conscious Capitalism


CSR Implementation and Communication Model (Schmeltz)


Introduction to Stakeholder Management


Strategic Stakeholder Management Diagram


Stephen Covey on the Speed of Trust


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


About 12manage | Advertising | Link to us / Cite us | Privacy | Suggestions | Terms of Service
© 2018 12manage - The Executive Fast Track. V15.0 - Last updated: 13-11-2018. All names ™ of their owners.