Managing for stakeholders, stakeholder utility functions, and competitive advantage

Abstract

A firm that manages for stakeholders allocates more resources to satisfy the needs and demands of its legitimate stakeholders than would be necessary to simply retain their willful participation in the firm's productive activities. We explain why this sort of behavior unlocks additional potential for value creation, as well as the conditions that either facilitate or disrupt the value‐creation process. Firms that manage for stakeholders develop trusting relationships with them based on principles of distributional, procedural, and interactional justice. Under these conditions, stakeholders are more likely to share nuanced information regarding their utility functions, thereby increasing the ability of the firm to allocate its resources to areas that will best satisfy them (thus increasing demand for business transactions with the firm). In addition, this information can spur innovation, as well as allow the firm to deal better with changes in the environment. Competitive advantages stemming from a managing‐for‐stakeholders approach are argued to be sustainable because they are associated with path dependence and causal ambiguity. These explanations provide a strong rationale for including stakeholder theory in the discussion of firm competitiveness and performance. Copyright © 2009 John Wiley & Sons, Ltd.

Do stakeholders matter in strategic decision making of a sports organization?

“…In this context, considering the co-existence of all the stakeholders involved and ensuring transparent communication between them does not only encourage increased efficiency but also proves a driver of motivation and confidence among and for all stakeholders, and whether contracted or volunteers (Parent & Séguin, 2007;Harrison et al, 2010;Walters & Tacon, 2010). Therefore, decision makers at any organization, but at this club in particular, should constantly strive to identify which stakeholders belong to the organization and which merit its greatest attention.…”

“…This approach is subsequently adopted by several studies (Driscoll & Starik, 2004;Eesley & Lenox, 2006;Parent & Deephouse, 2007;Aaltonen et al, 2008;Mainardes et al, 2012). Power is defined as the stakeholder's capacity to influence the organization, with Harrison, Bosse & Phillips (2010) referring to the concept as the first criterion to prioritize when taking into account the factors influencing the organization's decisions and distribution of value. Legitimacy is defined by Mitchell et al (1997) as the generalized perception that the actions of any given organization are convenient, suitable or appropriate according to social definitions, norms, values and beliefs.…”

“…According to Harrison et al (2010), power is the first criterion to be taken into account in the process of influencing the organization's decisions. However, the results set out above show a curious aspect with regard to this attribute, since internal and external decision makers exhibit the same perception relating to not considering the stakeholder top management as being significant to the power of strategic decision making in the club.…”

Who is Who? Identifying the Different Sub-groups of Secondary Stakeholders within a Community: A Case Study of the Niger Delta Region of Nigeria Communities

“…This further suggests the requirement for a definition to encompass a need for an organisation and its stakeholders to rely on one another for continual of both survival. In addition, this standpoint raises the issue of reciprocity among stakeholders, which involves stakeholders actively coming together in knowledge sharing and value creation activities (Harrison et al, 2010;Bosse et al, 2009). …”

Financial Reporting and the Accounting Expectations Gaap

“…The research study of Frooman (1999) contends that the model introduced by Freeman (1984) to explain that aspect showed that there is mutual independence in the organization to stakeholder relationship. Various researchers (Phillips, 2010;Dunkin, Savage and Ford, 2004) concur that stakeholder theory's core assumptions are explainable in six constructs. Firstly, organizations involve themselves in relationships with numerous groups, which either are influenced by or influence them.…”