2 - Pressure

• Stakeholder definitions: Narrow view:

  • Those who have placed something at risk in relationship with the firm (Clarkson, 1995)
• Stakeholder definitions Broader views:

  • Those who "benefit from or are harmed by, and whose rights are

  violated or respected by, corporate actions“ (Evan & Freeman &

  1988)

  • "any group or individual that can affect or is affected by the

  achievement of an organization’s objectives” (Freeman, 1984)
• Stakeholder theory aims to explain the nature of relationships between organisations and those persons with a ‘stake’ in the operations and outcomes of business activity.
• Stakeholder theory has three focus areas (Donaldson & Preston, 1995):

  • Normative– prescribe the role/purpose of the firm
  • Instrumental– identify effective practices
  • Descriptive– map critical relationships
• Normative stakeholder theory (Freeman & Elms 2018): “The social responsibility of business is to create value for stakeholders”
• Instrumental stakeholder theory: Catering to stakeholders should be

  done because (or insofar as) it IS good business!
• Descriptive stakeholder theory: Outlining critical relationships: stakeholder identification, mapping & prioritisation
• Stakeholder prioritisation (Mitchell, Agle & Wood, 1997): based on Salience: The degree to which a firm positively responds to a specific stakeholder request.
• Stakeholder salience positively related to:

  • Power: Relative access to resources for the stakeholder

  group with respect to the firm being targeted.

  • Legitimacy: Degree to which there is a general perception or

  assumption that a stakeholder’s actions are desirable, proper or appropriate (difference between stakeholder and specific request).

  • Urgency: The degree to which a specific stakeholder request calls

  for immediate action.
• Firm strategy responding to activism:

  • Resistance
  • Capitulation
  • Preemption
• Factors determining firm's response to activism:

  • Transaction cost: How costly are the demands?
  • Brand impact: Will it shift the consumer preference?
  • Competitive position: Is there a possibility to capture a strategic advantage?
• Business-NGO collaborations: Drivers for business:

  • Resources: Knowledge, networks, expertise
  • Reputation: NGO credibility with public - brand image
  • Risk Management: Desire to prevent negative public confrontations
  • Engagement: Genuine desire to engage with stakeholders
  • Company Welfare: Employee satisfaction
• Business-NGO collaborations: Drivers for NGOs:

  • Credibility: Partnering with MNCs
  • Resources: Need for funding, technical skills, management, etc..
  • Impact: Greater potential of market-based solutions, greater leverage
• Business-NGO collaborations: Cons for business

  • Different end goals, worldviews or values
  • Trust and concern over information sharing
  • Short-term financial and opportunity costs
• Business-NGO collaborations: Cons for NGOs

  • Inconsistency in implementation "walk the talk"
  • Perceptions of co-optation (succumb to big corp)
  • Conflicts with membership and fundraising base
  • Opportunity cost, could be working with other (eg: regulatory) channels
• Social movements: “collective coalitions that engage in sustained action to promote ideas and preferences for changing prominent social, cultural and business practices”
• The radical flank effect refers to the positive or negative effects that radical activists for a cause have on more moderate activists for the same cause.

  • Positive: shifting boundaries of discourse
  • Negative: discrediting movement/moderates
• At the level of the organizational field, social movement campaigns and the use of framing by social movement organizations (SMOs) elicit support from other critical stakeholders, which in turn expect or even demand from firms to engage with social issues. -> creating resonance with external stakeholders
• At the organizational level, social movement activists attack firms or collaborate with them to shape corporate reputation and legitimacy, modifying the costs, and benefits of engaging in social initiatives. -> direct engagements through conflicts and/or collaboration
• At the individual level, social movements affect managers’ cognition and movement ideas manifest inside corporations in the form of organizational members’ value orientations. -> creating resonance with internal stakeholders