Toward_a_theory_of_stakeholder_identific.pptx

Presentation of the framework used to map stakeholders raking into account interest, power and legitimacy

1. Toward a Theory of Stakeholder and Salience: Defining principle who and what really counts Darko Milosevic Università LUM Jean Monnet Environmental Management & Innovation (EMI)

2. The theoretical context ( 1 ) Primary ( broad view ) “can affect or is affected by” individual or group; ( 2 ) Secondary ( narrow view ) reality of limited: ( 1 ) resources, ( 2 ) time and attention, and ( 3 ) patience of managers “on which the organization is dependent for its continued survival”; Freeman and Reed ( 1983 ) identified stakeholders as: Stakeholder power and legitimacy - explanations of stakeholder status, reflected in theory of the firm in Agency , Behavioral , Institutional , Population ecology , Resource dependence , and Transaction cost theories .

3. The theoretical context By Mitchell ( 1997 ) two different component of the question in stakeholder theory considering classes of entities as stakeholders: (1) normative theory - “ who ” should be considered as a stakeholder and “ why ”? (2) descriptive theory - “ whom or what ” calls for a of stakeholder salience, under which conditions? Three critical relationship attributes: power , legitimacy , and urgency . Mitchell predict that the salience of a particular stakeholder to the firm's management is: ( 1 ) low if only one attribute is present; ( 2 ) moderate if two attributes are present; ( 3 ) high if all three attributes are present;

4. The theoretical context These three organizational theories teach us why power is a crucial variable in a theory of stakeholder-manager relations and identification. (1) Agency theory addresses is how principals can control the behavior of their agents to achieve their, rather than the agent's, interests. (2) Resource dependence theory suggests that power accrues to those who control resources needed by the organization, creating power differentials among parties ( Pfeffer , 1981 ). (3) Transaction cost theory proposes that the power accruing to economic actors with small numbers bargaining advantages will affect the nature of firm governance and structure (Williamson, 1975 , 1985 ). According to institutional and population ecology theories , managerial perception and degree of attention, implicit in Agency theory and Behavioral theory .  

5. The research question(s)/hypotheses (1) In which stakeholder attributes and managerial values influence managers' perceptions of stakeholder salience . (2) Are present descriptions of stakeholder attributes adequate? (3) Are power , legitimacy , and urgency really the correct and parsimonious set of variables in understanding stakeholder-manager relationships? Future empirical research, can testable hypotheses and answers on questions:

6. Concept of stakeholders Concept of stakeholders' possession of power , legitimacy , and urgency , done with dynamic model . Power . is “the probability that one actor within a social relationship would be in a position to carry out his own will despite resistance” (Weber, 1947 ). Symbols for control purposes is normative , normative-social, or social power . Legitimacy . legitimacy and power are distinct attributes that can combine to create authority but that can exist independently (Weber, 1947 ). “ Perception or assumption that the actions of an entity are desirable, proper, or appropriate within some socially constructed system of norms, values, beliefs, and definitions ”. Suchman ( 1995 ) Urgency . is degree to which stakeholder claims call for immediate attention Dynamic model exists only when: (1) when a relationship or claim is of a time-sensitive nature and (2) when that relationship or claim is important or critical to the stakeholder

7. Framework Dynamic theory of stakeholder - consider implications of model, and test whether “new maps” result in “new methods”. Attributes : Stakeholder attributes are variable, not steady state; Stakeholder attributes are socially constructed, not objective, reality; Consciousness and willful exercise may or may not be present. With respect to power , access to the means of influencing another behavior is a variable: Power may be coercive, utilitarian, or normative; Power is transitory it can be acquired as well as lost; Latent power exists in the other two attributes of the stakeholder relationships: legitimacy and urgency; Power gains authority through legitimacy, and it gains exercise through urgency; Stakeholder attributes-variable will lay the groundwork for a future analysis of the dynamic nature of stakeholder-manager relations.

8. The relationship exists Power Dependence: Stakeholder Dominant The firm is dependent on the stakeholder The stakeholder has power over the firm   Power Dependence: Firm Dominant The stakeholder is dependent on the firm The firm has power over the stakeholder   Mutual Power - Dependence Relationship The firm and stakeholder are mutually dependent   Basis for Legitimacy of Relationship The firm and stakeholder are in contractual relationship The stakeholder has a claim on the firm The stakeholder has something at risk The stakeholder has a moral claim on the firm   Stakeholder Interests-Legitimacy Not Implied The stakeholder has an interest in the firm Fig. 1. Stakeholder Typology Model One, two, or three attributes present

9. Methodology Proposition 1: Stakeholder salience will be positive ly related to the cumulative number of stakeholder attributes-power, legitimacy, and urgency-perceived by managers to be present. Latent Stakeholders Possessing only one attributes, include dormant, discretionary, and demanding stakeholders. Proposition la : Stakeholder salience will be low where only one of the stakeholder attributes-power, legitimacy, and urgency-is perceived by managers to be present. Dormant stakeholders. Possess power to impose their will through coercive, utilitarian or symbolic means, but have little or no interaction /involvement as they lack legitimacy or urgency.  Discretionary stakeholders. Likely to recipients of corporate philanthropy. No pressure on managers to engage with this group, but they may choose to do so. Examples are beneficiaries of charity. Demanding stakeholders . Those with urgent claims, but no legitimacy or power. Irritants for management, but not worth considering. Examples are people with unjustified grudges, serial complainers or low return customers.

10. Methodology Expectant Stakeholders Possessing two attributes, and include dominant, dependent, and dangerous stakeholders Proposition lb : Stakeholder salience will be moderate where two of the stakeholder attributes-power, legitimacy, and urgency-are perceived by managers to be present. Dominant stakeholders. The group that many theories position as the only stakeholders of an organization or project. Likely to have a formal relationship with organization or project. Dependent stakeholders. Stakeholders who are dependent on others to carry out their will, because they lack the power to enforce their stake. For example local residents & animals impacted by the BP oil spill. Advocacy of their interests by dominant stakeholders can make them definitive stakeholders. Dangerous stakeholders. Those with powerful and urgent claims will be coercive and possibly violent. For example employee sabotage or coercive/unlawful tactics used by activists. Note that Mitchell identify these stakeholders, but don't require them to be acknowledged & thus awarded legitimacy

11. Methodology Definitive Stakeholders An expectant stakeholder who gains the relevant missing attribute. Often dominant stakeholders with an urgent issue, classed as dangerous could gain legitimacy e.g. democratic legitimacy achieved by a nationalist party. Proposition lc : Stakeholder salience will be high where all three of the stakeholder attributes-power, legitimacy, and urgency-are perceived by managers to be present.

12. Conclusion This article aims to give a new contribute to a theory of stakeholder identification and salience , attempting to give answer on question in a systematic way: “ Which groups are stakeholders deserving or requiring management attention, and which are not? ” Mitchell have not developed hypotheses, but he recommended next logical step that stakeholder can move into the “ definitive stakeholder ” category . By Mitchell dynamic perspective model explain measurement of stakeholder salience; permits of managerial perception; and behavior and implication.   FUTURE DEVELOPMENT Circumstances under which firm's managers might attempt to acquire salience in different categories