Our latest reading on interesting articles on the topic of stakeholders.
Stakeholder theory classification: A theoretical and empirical evaluation of definitions
Stakeholder theory is widely accepted but elementary aspects remain indeterminate as the term ‘stakeholder’ is an essentially contested concept (Miles, J Bus Ethics 108:285–298, 2012; Mitchell, Organ Stud 33:1407–1411, 2012), being variously describable, internally complex and open in character (Gallie, Proc Aristot Soc 56:167–198, 1956). Such contestability is highly problematic for theory development and empirical testing.
The extent of essential contestability, previously unknown, is demonstrated in this paper through a bounded systematic review of 593 different stakeholder theory definitions. As an essentially contested concept, the solution does not lie in a universal stakeholder definition, but in debating the boundaries of stakeholder identification. To this end, this paper presents the first major attempt at sorting, filtering and ordering stakeholder theory and stakeholder definitions to produce a comprehensive, multi-dimensional classification of stakeholder theory.
The constructs of the classification model juxtapose existing stakeholder theories and contributions from across the multi-contextual applications of stakeholder theory, thereby providing an invaluable overview of what we know about stakeholder theory in one model. The classification model is then tested with positive results. The paper concludes with a comprehensive discussion of the implications of classification stakeholder theory definitions, which has for future research.
Miles, S. 2017. Stakeholder Theory Classification: A Theoretical and Empirical Evaluation of Definitions.
Journal of Business Ethics, 142(3), 437–459.
Does corporate governance enhance common interests of shareholders and primary stakeholders?
Employing a unique dataset of Chinese non-listed firms, this paper investigates the effects of the presence of 19 governance structures on 20 employees’ interest indicators. In general, the researchers find that firms with the governance structures pay workers higher hourly wages, require less monthly working hours, and have a smaller chance of wage arrears.
Meanwhile, the shares of total wage and welfare expenditures in total sales revenue are lower in these firms, which results in higher profitability. Moreover, firms with the governance structures invest significantly more into training and provide employees with better fringe benefits. Considering the low labour protection standard and the weak external regulations of China’s labour market, the authors explain the positive findings thusly: corporate governance structures induce managers to adjust wage payments to the “efficiency wage” level, which is the best balance point for the interests of both shareholders and employees and, therefore, for maintaining the stakeholder relationships.
The authors also find the governance structures that give blockholders superpower are negatively associated with employees interests. These results highlight the importance of giving enough discretion to managers in order to successfully find the common ground for creating mutual values for shareholders and employees.
Zhong, N., Wang, S. & Yang, R. 2017. Does Corporate Governance Enhance Common Interests of Shareholders and Primary Stakeholders?
Journal of Business Ethics, 141(2), 411–431.
A framework for understanding stakeholder evaluations of CSR activities
These authors explore the essential contestedness of corporate social responsibility (CSR) by framing the interplay between CSR activities and stakeholder evaluations as a contest for jurisdiction over what it means to be socially responsible. This contest arises because firms and stakeholders are often guided by incompatible sensemaking systems.
To show why context matters the authors show how stakeholders evaluate the authenticity of CSR activities on the basis of schemas for responsible behaviour on one hand and their perceptions of firm identity on the other. This process can generate complex evaluations whose meaning depends on the distribution of power in fields and the extent to which pluralistic sensemaking systems are compatible.
By positioning authenticity evaluations within a framework that describes the state of power and pluralism within which they are produced, the researchers are able to present a systematic explanation of how and why stakeholder responses to CSR vary over a range of settings.
Paul F. Skilton & Jill M. Purdy. 2017. Authenticity, Power, and Pluralism: A Framework for Understanding Stakeholder Evaluations of Corporate Social Responsibility Activities.
Business Ethics Quarterly, 27(1), 99-123.
Enhancing stakeholder capability to promote human dignity and cooperative advantage
Promoting dignity is at the heart of the human capability approach to development. The authors introduce the concept of stakeholder capability enhancement, beginning with a discussion of the capability approach to development proposed by Sen (1985) and further advanced by Nussbaum (1990) to incorporate notions of dignity.
Thereafter follows a review of the literature on value creation stakeholder management and convergent stakeholder theory (Freeman, 1984; Freeman, Harrison, Wicks, Palmer, & DeColle, 2010; Harrison & Wicks, 2013; Jones & Wicks, 1999), as the foundation for their concept of stakeholder capability enhancement.
The remainder of this article develops a model that integrates stakeholder management with the human capability approach to detail the cooperative advantage that accrues to business and its stakeholders, as well as the gains in social wellbeing and dignity, when stakeholder capability enhancement becomes a common enterprise strategy. The model also explores the risks and boundary conditions firms face when seeking to profit from stakeholder capability tradeoffs. In explaining the model, the researchers explore normative responsibilities and consequences with regard to human capabilities and dignity. The authors conclude with implications for future research.
Read the full article for free: Michelle K. Westermann-Behaylo, Harry J. Van Buren, Shawn L. Berman. 2017. Select Stakeholder Capability Enhancement as a Path to Promote Human Dignity and Cooperative Advantage.
Business Ethics Quarterly, 26(4), 503-528.
Stakeholder judgments of value
Although central to stakeholder theory, stakeholder value is surprisingly neglected in the literature. The authors draw upon prospect theory to show how stakeholder judgments of value depend crucially on the reference state, how there are several alternative reference states that may be operative when stakeholders judge value, how the choice of reference state for stakeholders’ value judgments can occur intuitively or deliberately, and how the level of the operant reference state may change with time and may also be incorrectly perceived by stakeholders or managers.
The authors’ theorising results in a fundamentally different way of perceiving the value of corporate actions to stakeholders and shifts understanding of the avenues available for companies and others to influence stakeholder judgments of value. This novel perspective has implications both for theory and management practice, and not least for normative business ethics, if business is about stakeholder value creation.
Lankoski, L., Smith, N., & Van Wassenhove, L. 2016. Stakeholder Judgments of Value.
Business Ethics Quarterly, 26(2), 227-256.
Investigating the dynamics of stakeholder salience
Using data collected through semi-structured open-ended interviews and archival material, the authors examined the transience of stakeholders’ salience in the organisational field going through institutional change process. The researchers found strong support for the dominant institutional logic-stakeholder salience relationship.
More importantly, the results of this study reveal that changes in stakeholders’ salience are directly related to changes in stakeholders’ attributes. Moreover, the researchers uncover mutual associations among various types of salience attributes and show that the degree of mutual association of various types of attributes depends upon the stage the organisation has reached during the process of institutional change.
Khurram, S. & Charreire Petit, S. 2017. Investigating the Dynamics of Stakeholder Salience: What Happens When the Institutional Change Process Unfolds?
Journal of Business Ethics, 143(3), 485–515.
Stakeholders in a wicked issue in health care
In this article, the authors offer an approach of how participative stakeholder innovation can be evaluated in complex multistakeholder settings that address wicked issues. Based on the principle of mutual value creation, Rühli et al. present an evaluation framework that accounts for the social interaction process during which stakeholders integrate their resources and capabilities to develop innovative products and services.
To assess this evaluation framework, the researchers collected multiple data from the case study of the Swiss Cardiovascular Network, which represents a multistakeholder setting related to the prevention of cardiovascular disease.
The findings indicate that the evaluation dimensions of the stakeholders’ mindsets, the process and context of the stakeholder interactions, as well as the outcomes are useful concepts to account for a cooperative process of innovation in a multistakeholder setting. The authors discuss both the theoretical and practical insights of their analysis for participative stakeholder innovation.
Rühli, E., Sachs, S., Schmitt, R. et al. 2017. Innovation in Multistakeholder Settings: The Case of a Wicked Issue in Health Care.
Journal of Business Ethics, 143(2), 289–305.