pruh_TITL text logoC 1 Stakeholder approach and stakeholder analysis Ondřej Částek castek@econ.muni.cz text pruh_normal pruh_normal www.econ.muni.cz 2 Content 1.Shareholder and stakeholder approach 2.A move between these approaches 3.Who is a stakeholder 4.Stakeholder classification 5.Stakeholder analysis 6.Stakeholder attributes 7.Stakeholder mapping 8.Stakeholder segmentation 9.Results of researches text pruh_normal pruh_normal www.econ.muni.cz 3 nShareholder approach n A business is an organization, which is supposed to create value for owners. nStakeholder approach n A business is a place where interests of stakeholders meet – interests of those, who are involved in or affected by the business operations. The business is then supposed to create value not only for shareholders, but should be responsible for all stakeholders. text pruh_normal pruh_normal www.econ.muni.cz 4 The corporation and its stakeholders Post, Preston, Sachs, 2002 text pruh_normal pruh_normal www.econ.muni.cz A move between the shareholder and the stakeholder approach n 5 text pruh_normal pruh_normal www.econ.muni.cz Who is a stakeholder 6 Authors, year Definitions (Stakeholders are...) [1] Stanford Research Institute 1963 those groups without whose support the organization would cease to exist [2] Rhenmnan 1964 are depending on the firm in order to achieve their personal goals and on whom the firm is depending for its existence [3] Thompson 1967 anything influencing or influenced by the firm [4] Ahlstedt & Jahnukainen 1971 driven by their own interests and goals are participants in a firm, and thus depending on it and whom for its sake the firm is depending (cited in Näsi, 1995) [5] Einshoff & Freeman 1978 any group where collective behaviour can directly affect the organisation´s future, but which is not under the organization´s direct control [6] Ackoff 1981 anyone inside or outside te organization who are directly or primarily affected by the actions of a corporation. [7] Freeman & Reed 1983 Wide: can affect the achievement of an organization´s objectives or who is affected by the achievement of an organization´s objective. Narrow: on which the organization is dependent for its continued survival. text pruh_normal pruh_normal www.econ.muni.cz 7 Authors, year Definitions (Stakeholders are...) [8] Freeman 1984 can affect or is affected by the achievement of the organization´s objectives [9] Freeman & Gilbert 1987 can affect or is affected by a business [10] Cornel & Shapiro 1987 “claimants” who have “contracts” [11] Evan & Freeman 1988 have a stake in or claim on the firm benefit from or are harmed by, and whose rights are violated or respected by, corporate actions [12] Bowie 1988 without whose support the organization would cease to exist [13] Alkhafaji 1989 groups to whom the corporation is responsible [14] Caroll 1989 asserts to have one or more of these kinds of stakes – ranging form an interest to a right (legal r moral) to ownership or legal title to the company´s assets or property text pruh_normal pruh_normal www.econ.muni.cz 8 Authors, year Definitions (Stakeholders are...) [15] Freeman & Evan 1990 contract holders [16] Thompson et al. 1991 in relationship with an organization [17] Savage et al. 1991 have an interest in the actions of an organization and … the ability to influence it [18] Hill & Jones 1992 constituents who have a legitimate claim on the firm … established through the existence of an exchange relationship [who supply] the firm with critical resources (contributions) and in exchange each expects its interests to be satisfied (by inducements) [19] Brenner 1993 having some legitimate, non-trivial relationship with an organization [such as] exchange transactions, action impacts, and moral responsibilities [20] Caroll 1993 asserts to have one or more of the kinds of stakes in business – may be affected or affect [21] Freeman 1994 participants in “the human process of joint value creation” text pruh_normal pruh_normal www.econ.muni.cz 9 Authors, year Definitions (Stakeholders are...) [22] Wicks et al. 1994 interact with and give meaning and definition to the corporation [23] Langtry 1994 the firm is significantly responsible for their well-being, or ghey hold a moral or legal claim on the firm [24] Starik 1994 can and are making their actual stakes known – are or might be influenced by, or are or potentially are influencers of, some organization [25] Clarkson 1994 bear som form of risk as a result of having invested some form of capital, human or financial, something of value, in a firm [or] are placed at risk as a result of a firm´s activities [26] Clarkson 1995 have, or claim, ownership, rights, or interests in a corporation and its activities [27] Näsi 1995 interact with the firm and thus make its operation possible [28] Brenner 1995 are or which could impact or be impacted by the firm/organization [29] Donaldson & Preston 1995 persons or groups with legitimate interests in procedural and/or substantive aspects of corporate activity text pruh_normal pruh_normal www.econ.muni.cz nA relationship exists nThe firm and stakeholder are in relationship [15], [18], [20], [21] nThe stakeholder exercises voice with respect to the firm [23] nPower dependence: stakeholder is dominant nThe firm is dependent on the stakeholder [1], [6], [11], [26] nThe stakeholder has power over the firm [7], [8], [16], [19], [23], [27] nPower depencence: Firm dominant nThe stakeholder is dependent on the firm [22] nThe firm has power over the stakeholder [6], [7], [8], [19], [23], [27] nMutual power-depencence relationship nThe firm and stakeholder are mutually dependent [2], [4] nBasis for legitimacy of relationship nThe firm and stakeholder are in contractual relationship [9], [13], [14], [17] nThe stakeholder has a claim on the firm [10], [12], [13], [17], [22], [25] nThe stakeholder has something at risk [24] nThe stakeholder has a moral claim on the firm [10], [13], [22], [25], [28] nStakeholder interests – legitimacy not implied nThe stakeholder has an interest in the firm [13], [16], [19], [25] Criteria used to narrow the definition of a stakeholder 10 text pruh_normal pruh_normal www.econ.muni.cz Owners Employees Management Creditors Suppliers Customers State 11 text pruh_normal pruh_normal www.econ.muni.cz Owners Employees Management Creditors Suppliers Customers State Company Company Company Company Company Company Competitive Behaviour 12 text pruh_normal pruh_normal www.econ.muni.cz Stakeholder classification n nVoluntary vs. involuntary stakeholder n nActual vs. potential stakeholder n nClassification according to proximity to the firm n 13 text pruh_normal pruh_normal www.econ.muni.cz Classification according to proximity to the firm n Post, Preston, Sachs (2002) Corporation Investors: Shareowners and lenders Supply chain associates Customers and users Employees Regulatory auhorities Unions Political groups Local communities and citizens Resource base Industry structure Joint Venture partners Social-political environment Strategic alliances Governments 14 text pruh_normal pruh_normal www.econ.muni.cz Other used classifications nPrimary and secondary stakeholders according to Clarkson [1] n nPrimary and secondary stakeholders according to Näsi[2] n nEnvironmental and process according to Atkinson et al. [3] n n[1] CLARKSON, M. B. E. A Stakeholder Framework for Analyzing and Evaluating corporate Social Performance. Academy of Management Review, 1995, vol. 20, no. 1, s. 92 - 117. s. 106. n[2] NASI, J. What Is Stakeholder Thinking? A Snapshot of the Social Theory of the Firm. In Understanding Stakeholder Thinking. Helsinki : 1995. LSR Publications. n[3] ATKINSON, A. A., WATERHOUSE, J. H., WELLS, R. B. A Stakeholder Approach to Strategic Performance Measurement. In Sloan Management Review. 1997, 3/38. s. 25 – 37. 15 text pruh_normal pruh_normal www.econ.muni.cz Stakeholder management Identify Stakeholders Classify/Map Stakeholders Record Needs Uncover Expectations Assess Achievability Negotiate Trade-offs Agree Goals & Value Criteria Implement Actions Review Status & Iterate Analyze Influence Monitor 16 text pruh_normal pruh_normal www.econ.muni.cz Stakeholder analysis A technique used to identify key people/subjects, which will be subsequently focused by the firm. The advantage is the better balance of power and influence of stakeholders, early risk identification and formulation of a better fit strategy. 17 text pruh_normal pruh_normal www.econ.muni.cz 18 Stakeholder analysis 1.set the goal of the analysis, 2.identify stakeholders, 3.analyze values and segment stakeholders, 4.analyze attributes, 5.analyze possible development of values and attributes, 6.draw a stakeholders map, 7.adopt corresponing measures, 8.analyze effects of these measures and act accordingly. text pruh_normal pruh_normal www.econ.muni.cz Stakeholder segmentation n1. WHAT n- types of benefits does the customer seek? n- factors affect the demand? n- functions does the product represent for the customer? n- criteria are important while purchasing? n- is compared to the other products? n- risks are perceived by the customer? n- services does the customer expect? n n2. HOW n- do the customers shop? n- long does the purchasing process také? n- do the customers use the product? n- does the product fit the customers´ life style? n- much are the customers willing to spend? n- often do they buy? n 19 text pruh_normal pruh_normal www.econ.muni.cz Stakeholder segmentation n n3. WHERE n- is the decision to buy or not to buy taken? n- do the customers seek information needed for the purchase? n- do the customers purchase the product? n n4. WHEN n- is the first decision to buy taken? n- is the decision to buy again taken? n n5. WHY n- do customers buy this product? n- do the customers choose this brand? n n6. WHO n- are the customers in specific segments? n- buys our products and why? n- buys our competition products and why? 20 text pruh_normal pruh_normal www.econ.muni.cz nSavage et al.[1] propose two attributes: nInterest nPotential to influence the firm nOften used in project management nHow much is the stakeholder affected (weakly-strongly) nAssumed reaction of the stakeholder (positive, neutral, negative) nor: nHow much is the stakeholder affected (weakly-strongly) nPower of the stakeholder n n[1] SAVAGE, G. T., NIX, T. H., WHITEHEAD, C. J., BLAIR, J. D. Strategies for assessing and managing organizational stakeholders. In Academy of Management Executive. 5/1991, s. 61 – 75. n Stakeholder attributes 21 text pruh_normal pruh_normal www.econ.muni.cz nMore elaborated three-dimensional approach is: nPower of the stakeholder nInterest of the stakeholder nAttitude of the stakeholder (supportive/disruptive, positive/negative) n nStrategic management textbooks mention: nPower nAttitude or interest n nMitchell et al.[1] propose three attributes: nPower nLegitimacy nUrgency n n[1] MITCHELL, R. K., AGLE, B. R., WOOD, D. J. Toward a theory of stakeholder identification and salience: Defining the principle of who and what really counts. Stakeholder attributes 22 text pruh_normal pruh_normal www.econ.muni.cz n 23 text pruh_normal pruh_normal www.econ.muni.cz Stakeholder mapping: 4 Quadrant Analysis Disruptive Supportive Finance HR/ Payroll Group Executive IT Audit Line Management Staff Zones of focus Low Impact High Impact Steering Committee Business Mgrs Unions 24 text pruh_normal pruh_normal www.econ.muni.cz Power / Interest Grid Example Keep Informed Monitor (minimum effort) Keep Satisfied High Interest Low Interest Manage Closely HR/ Payroll Staff Low Power High Power Reference: Rachel Manktelow, • Stephanie Powers • Lex Salamon • Bill Brown • Melanie Singh • Robert Lee 25 text pruh_normal pruh_normal www.econ.muni.cz Stakeholder Map Marketing Engineering Finance Peter Reid Shaun Peters Luke Jones Andrew Simons Sue Niel Brian Smith James Russo Asia North America South America Australia HR IT Unions Federal Govt. 26 text pruh_normal pruh_normal www.econ.muni.cz Stakeholder Map Legend Behaviour Green: Staunch / Trusted Support Blue: Fairweathered Friend Red: Public Pain Orange: Not Yet Tested Active Sniper Potential Sniper Leadership Force Leader Opinion Leader Future Leader Shadow Stakeholders that need to be carefully managed Role based power is inferred by relative position from the center (godlike) to the outside edge (serf) 27 text pruh_normal pruh_normal www.econ.muni.cz Key Questions In Stakeholder Management Stakeholder Type 4 Mixed Blessing Strategy: Collaborate Stakeholder Type 3 Nonsupportive Strategy: Defend Stakeholder Type 1 Supportive Strategy: Involve Stakeholder Type 2 Marginal Strategy: Monitor High Low Stakeholder’s Potential for Cooperation With Organization High Low Stakeholder’s Potential for Threat to Organization ? Types of Stakeholders 28 text pruh_normal pruh_normal www.econ.muni.cz n 29 text pruh_normal pruh_normal www.econ.muni.cz 30 Stakeholder chart Legend: U – Users C – Customers P – Positive (Impact, attitude, interest) N – Negative 0 – Not present, not available, not applicable text pruh_normal pruh_normal www.econ.muni.cz Stakeholder Matrix Stakeholder What they Gain from the company How are they impacted by the company What does the company need from them ? What do they know/ think about the company 31 text pruh_normal pruh_normal www.econ.muni.cz n n n n n n n n n n n n n n n n n nSource: ŠIMBEROVÁ, I. Řízení vztahů se stakeholdry na průmyslových trzích v kontextu současných marketingových koncepcí. In Vědecké spisy vysokého učení technického v Brně. Sv. 251. 38 s. ISSN 1213-418X. s. 17. Stakeholders Average SD Customers 9.7 0.9 Employees 9.1 1.2 Management 8.8 1.6 Owners 8.3 2.4 Suppliers 7.9 2.1 Financial institutions 5.9 3.0 Competition 5.8 2.3 Academic centers 5.8 3.4 Municipalities 5.4 2.8 State authorities 5.3 3.0 Consulting companies 4.8 3.1 Citizens 4.7 2.3 Chamber of commerce 4.5 2.4 Innovation centers 3.0 - Significance of stakeholders for the firms success 32 text pruh_normal pruh_normal www.econ.muni.cz Importance of the stakeholder groups 1.Customers (4.65) 2.Owners (4.47) 3.Employees (4.03) 4.Suppliers (3.78) 5.Creditors (2.75) 6.Communities (2.61) 7.State (2.39) 33 text pruh_normal pruh_normal www.econ.muni.cz Importance of the stakeholder groups nLower response rate for the group of creditors nNegative relationship between the firm size and the importance of creditors, employees and state nPositive relationship between the firm size and the importance of customers and communities nImportance of state and creditors depends on industry 34 text pruh_normal pruh_normal www.econ.muni.cz n n n nThank you for your attention 35