A selection of interesting articles we found recently on valuing stakeholders.

Who and what really counts? Prioritising for stakeholders and social value
Research in stakeholder management has theorized extensively the prioritization of stakeholders as a key dynamic of firms’ value creation, but has paid less attention to the organisational practices involved in the process of deciding ‘who and what really counts.’ Matthew Hall and his team examine changes underpinning managers’ prioritisation of stakeholders and focus on how managers’ attention to salient stakeholders is represented and communicated in a firm’s accounting and reporting system.

The authors study the emergence and development of Social Return on Investment (SROI): an accounting methodology intended to permit managers both to incorporate stakeholders’ voices and to communicate the social value created by the firm for those stakeholders. They find that the ability of SROI to account for specific stakeholders, thus categorising them as salient for the firm, is shaped by managers’ epistemic beliefs and by the organisation’s material conditions.

Findings contribute to stakeholder theory by showing that the prioritisation of stakeholders is not solely a managerial decision, but instead is dependent on the construction of an appropriate accounting and reporting system, as shaped by managers’ epistemic beliefs and by the organisation’s material conditions.

Read further details in: Matthew Hall, Yuval Millo & Emily Barman. 2015. Who and What Really Counts? Stakeholder Prioritization and Accounting for Social Value.
Journal of Management Studies, Special Issue: Accounting for Stakeholders, 52(7), 907–934.


Assigning financial values to stakeholder claims 
This paper examines the role of accounting in assigning financial values to stakeholder claims. Stakeholder theorists have called for metrics which managers can use to coordinate stakeholder claims. The authors argue that accounting already serves as the dominant example of such a tool, and that its role in measuring and representing stakeholder claims, and how those representations are used by stakeholders and managers, is not well understood.

Andrew Crane and his colleagues suggest that accounting financialises stakeholder claims along three inductively-developed dimensions, namely time, security, and priority. The authors analyse the case of pension accounting at General Electric to theorise how these dimensions shape stakeholder claims and are used by stakeholders and managers to trade-off claims, demarcate claimants into groups, and reconstruct claims during negotiations.

Find more details at: Andrew Crane, Cameron Graham & Darlene Himick. 2015. Financializing Stakeholder Claims.
Journal of Management Studies, Special Issue: Accounting for Stakeholders, 52(7), 878–906.


Stakeholder view in sustainability reporting
Sustainability reporting is the process by which companies describe how they deal with their own economic, environmental, and social impacts, thus making stakeholders able to recognise the value of sustainable practices. As stressed in the Global Reporting Initiative guidelines, which act as a de facto standard for sustainability reporting, sustainable reports should take into account the stakeholders’ view.

In particular, engaging stakeholders is essential to carry out the materiality analysis, by which organisations can identify their own more relevant sustainability aspects. Yet, on the one hand, the existing guidelines do not provide specific indications on how to get stakeholders actually engaged; on the other hand, research on quantitative techniques to support stakeholder engagement in materiality analysis is scarce. Therefore, the purpose of this paper is the development of a quantitative structured approach based on multi-attribute group decision-making techniques to effectively and reliably support stakeholder engagement during materiality analysis in sustainability reporting.

As it more strictly guides the reporting process, the proposed approach at the same time simplifies materiality analysis and makes it more reliable. Though any company can adopt the approach, small- and medium-sized enterprises (SMEs) are expected to particularly benefit from it, due to the quite limited implementation effort that is required. With this respect, the approach has been validated on a sample of Italian SMEs belonging to different sectors.

Read the full text for free in this Open Access article: Nicola Bellantuono, Pierpaolo Pontrandolfo & Barbara Scozzi. 2016. Capturing the Stakeholders’ View in Sustainability Reporting: A Novel Approach.
Sustainability 2016, 8(4), 379


Don’t forget secondary stakeholders! 
The challenges firms face increase with their product diversification levels because different product markets possess different sociopolitical issues. Weichieh Su & Eric Tsang argue that secondary stakeholders, as represented by various nonprofit or non-governmental organizations, serve as agents mitigating the external constraints embedded within sociopolitical environments.

Firms should therefore maintain relationships with different secondary-stakeholder scopes commensurate with their product diversification levels in order to enhance financial performance. Analysing a sample of U.S. Fortune 500 firms during the period from 1996 to 2003, the authors found that secondary stakeholders play a positive moderating role in the relationship between product diversification and financial performance. Furthermore, this moderating effect was stronger in the case of unrelated diversification than in related diversification.

Find out more at: Weichieh Su & Eric W. K. Tsang. 2015.  Product Diversification and Financial Performance: The Moderating Role of Secondary Stakeholders.
Academy of Management Journal, 58(4), 1128-1148. 


Better customer responses to service failures in firms engaging in CSR 
The present research investigates whether corporate social responsibility (CSR) reduces negative and promotes positive responses to service failures among value-aligned customers. Study 1 shows that customers are less likely to experience anger and spread negative word of mouth following a service failure when a firm engages in high (donating 15% of profits to environmental conservation) but not low (donating 2% of profits) levels of environmental CSR, but only if customers are high in environmental concern. In Study 2, the authors explore the benefits of CSR policies that target a broader range of beneficiaries versus policies that offer customers a choice over the firm’s CSR allocations.

Compared with a no-CSR policy, CSR with choice has a stronger effect on customers’ emotions and intentions by enhancing perceived value alignment, reducing anger and regret over choosing the firm, and increasing guilt over harming the firm. These emotions subsequently reduce negative word of mouth and increase positive word of mouth and repurchase intentions. The results support the benefits of value-aligned and choice-based CSR policies in the wake of service failures.

Read details at: Jeff Joireman, Dustin Smith, Richie L. Liu & Jonathan Arthurs. 2015. It’s All Good: Corporate Social Responsibility Reduces Negative and Promotes Positive Responses to Service Failures Among Value-Aligned Customers.
Journal of Public Policy & Marketing, 34(1), 32-49.


Actor and institutional dynamics in the development of multi-stakeholder initiatives
As forms of private self-regulation, multi-stakeholder initiatives (MSIs) have emerged as an important empirical phenomenon in global governance processes. At the same time, MSIs are also theoretically intriguing because of their inherent double nature. On the one hand, MSIs spell out CSR standards that define norms for corporate behaviour. On the other hand, MSIs are also the result of corporate and stakeholder behaviour.

We combine the perspectives of institutional theory and club theory to conceptualize this double nature of MSIs. Based on a stage model that looks at the interplay of actor and institutional dynamics, we generate insights into why actors join a voluntary MSI, how the various motivations and intentions of the actors influence the standard development, and how these as well as the MSI design are subsequently influenced by both external (institutional) and internal (club) dynamics.

See: Anica Zeyen, Markus Beckmann & Stella Wolters. 2016. Actor and Institutional Dynamics in the Development of Multi-stakeholder Initiatives. 
Journal of Business Ethics, 135(2), 341-360.