Stakeholder engagement as a dynamic capability

Abstract

How can some firms gain and manage competitive advantage over their peers? In a dynamic scenario, what makes a firm stand out from its competitors? This paper attempts to answer these questions by taking a dynamic capability lens and proposing that stakeholder engagement is a key reason for a firm to attain competitive advantage. This paper attempts to explain how and why stakeholder engagement is a dynamic capability by establishing (a) stakeholders as a resource, (b) capability required to explore this resource, and (c) dynamics of the firm–stakeholder relationship. Finally, this paper describes the four different strategies adopted by the firm, namely, reactive, defensive, accommodative, and proactive, and recommends the suitable stakeholder engagement techniques for each of these strategies.

Does better environmental, social, and governance induce better corporate green innovation: The mediating role of financing constraints

“…Although RBV acknowledges that resources affect a firm's ability to implement strategies, it does not address the “black box” between resources and firm performance (Kraaijenbrink et al, 2010). Stakeholder engagement, meanwhile, refers to the dynamic ability of a firm to regard stakeholders as a resource and explore that resource; it is a key reason for a firm's ability to obtain competitive advantage (Panda & Sangle, 2020). Thus, this study provides a more detailed examination of how firms can integrate resources to foster sustainable competitive advantage through stakeholder engagement.…”

“…ST extends agency theory from shareholders' relationship with managers to all stakeholders and shifts business objectives toward maximizing stakeholder interests to achieve sustainable development (Freeman, 2017). In an increasingly volatile market environment, strategic stakeholder communication is a crucial institutional solution to the knowledge problem, a dynamic capability to attain competitive advantage (Panda & Sangle, 2020), a key driver of corporate reputation (Murè et al, 2021), and an important way to supply the firm with special critical resources and a distinctive legitimate claim (Lin et al, 2015).…”

Capacidades dinâmicas para gestão de stakeholders

“…O engajamento de stakeholders se refere à capacidade da empresa em envolver os stakeholders em diferentes atividades organizacionais, a fim de encontrar soluções colaborativas para a criação de valor (Sharma, Aragon-Correa, & Rueda-Manzanares, 2007;Mention et al, 2019;Panda & Sangle, 2019;Peters, Hofstetter, & Hoffmann, 2011;Watson, Wilson, Smart, & Macdonald, 2018). Essa capacidade pode ser desenvolvida por meio de diferentes estratégias, que vão desde uma reativa, envolvendo minimamente os stakeholders nos processos organizacionais, até aquelas com alto grau de envolvimento, em que os stakeholders têm uma participação ativa no processo decisório da empresa (Panda & Sangle, 2019). Dessa forma, a maneira como uma empresa interage com seus stakeholders estabelece a extensão da cooperação deles e os benefícios obtidos com essa relação (Panda & Sangle, 2019).…”

Stakeholder relationship capability and investment efficiency: a mosaic theory test

“…Stakeholders often play an important role in the changing environmental conditions for business. When the interests of stakeholders are affected, they have the power to affect the business (Panda and Shirish, 2020). Stakeholders have begun to request that companies provide information on the risks resulting from financial change to assist in their decision-making.…”