Roles of stakeholders Every organisation has stakeholders. Examples of stakeholder groups (beyond stockholders) are employees, suppliers, customers, creditors, competitors, governments, and communities. They often affect the corporation, law and markets but actually it consists of senior management, managers and employees. In this assignment, we will discuss role of stakeholders in terms of identification of learning and development within organisation, what is the nature and application of the practice of learning and development in context of relevant theories and models.
Before describing anything, we need to understand the actual meaning of ‘stakeholders’ term.
The term “stakeholder” appears to have been invented in the early ’60s as a deliberate play on the word “stockholder” to signify that there are other parties having a “stake” in the decision-making of the modern, publicly-held corporation in addition to those holding equity positions. Professor R.
Edward Freeman, in his book Strategic Management: A Stakeholder Approach (Pitman, 1984), defines the term as follows: “A stakeholder in an organization is (by definition) any group or individual who can affect or is affected by the achievement of the organization’s objectives” (cited in Freeman, 2010).
The classic de? nition of a stakeholder is ‘any group or individual who can affect or is affected by the achievement of the organisation’s objectives’. At its broadest and most ambitious, the stakeholder concept represents a rede? ition of all organisations: how they should be conceptualised and what they should be (Friedman and Miles, 2006, pp. 1–2). Yamak and Suer (2005, p. 111) state that CSR has emerged as a major topic following recent corporate scandals, which may also be interpreted as the demise of shareholder theory (a manager’s duty is to maximise shareholders’ returns) and the rise of stakeholder theory. The shareholder theory and the stakeholder theory are two patterns that stand out as explanation of corporate behaviour.
Stakeholders are entitled to some rights and interests because they are central to the existence of any business. Problems of corporate governance arise when the rights of stakeholders are violated (Bhasa, 2004, p. 6). Expectations of stakeholders—but also their risk-taking behaviour and interdependencies—will differ according to changing levels of risk. Managers are assumed to ensure that the ethical rights of all stakeholders are respected and balanced. To balance pro? maximisation with the long-term ability of the corporation to remain a going concern, therefore, surfaces as the ultimate goal of the ? rm or organisation. In a study that enabled multiple stakeholder discourses, the stakeholder–agency perspective where the organisation is viewed as a ‘nexus of contracts between resource holders (stakeholders)’ was developed (Cited in Beer & Rensburg, 2011). Although many existing models contain constructs that can explain certain aspects of the stakeholder governance phenomenon, a strategic management model and a communication management model were identi? d in this article, to address the phenomenon of stakeholder relationship governance in a holistic manner. The main aim is to develop a new theoretical framework from the stakeholder-oriented integrative strategic management model (Katsoulakos and Katsoulacos, 2007) and the de? nitive model of the identity management process (Stuart, 1999). These models encapsulate in different ways the interrelationships between the relevant concepts of this article, namely corporate governance, sustainability, strategy, communication, stakeholder relationships and corporate reputation.
However, a new theoretical framework that explains the phenomenon of stakeholder relationship governance will have to be developed. It will contain the relationships and outcomes that will be needed to understand a new paradigm for the academic ? eld of strategic communication management (cited in Beer & Rensburg, 2011). The first systematic discussion of stakeholder theory goes back to Freeman’s book ‘‘Strategic management: a stakeholder approach’’, which was published in 1984.
Over the course of the past 20 years stakeholder theory has developed significantly: The functional understanding of stakeholders as being a means to corporate ends has evolved to a moral understanding of stakeholders as being ends in themselves – individuals/groups with own interests that the firm was constructed to serve (Freeman and Gilbert, 1989). The research perspective on stakeholder theory has broadened from a descriptive and instrumental perspective to a normative viewpoint (Donaldson and Preston, 1995).
The underlying individualistic and masculine assumptions have been unveiled with the consequence that the stakeholder concept has been re-interpreted from a feminist perspective, putting emphasis on the structure of relationships (Wicks et al. , 1994) and the quality of interactions (Freeman, 2004). Instrumental, theoretical constructs such as agency theory, transaction cost and contract theory have been replaced by ethical ways of explaining stakeholder relations (Freeman, 2004). According to Freeman et al. 2004) stakeholder theory starts with ‘‘the assumption that values are necessarily and explicitly a part of doing business. It asks managers to articulate the shared sense of th value they create, and what brings its core stakeholders together. It also pushes managers to be clear about how they want to do business, specifically what kinds of relationships they want and need to create with their stakeholders to deliver on their purpose. ’’ (364). ultimately, stakeholder theory asks two key questions: ‘‘what is the purpose of the firm? ’’ and ‘‘what responsibility does management have to stakeholders? ’’ .
In fact, it stresses the importance of considering the ‘‘legitimate interests of those groups and individuals who can affect (or be affected by)’’ (Freeman et al. , 2004: 365) the activities of the corporation and ‘‘emphasizes the importance of investing in the relationships with those who have a stake in the firm’’ (Freeman, 2004: 234). Against this background, we will discuss in the following the meaning of responsible leadership. First, the concept of responsible leadership suggests not looking at leadership from a descriptive and instrumental perspective as traditional leadership theory does, but from a normative point of view.
Instead of understanding leadership as being values free we understand it as a moral, values-based and thus normative phenomenon. Second, it implies to understand leadership as a social-relational phenomenon (Smircich and Morgan, 1982; Berger and Luckmann, 1966) that occurs in interaction with different groups of followers. As a consequence, the focus of the leader–follower relationship is broadened: instead of focusing solely on the leader–subordinate relationship in the organization we consider a wider range of relevant stakeholders as followers, inside and outside the organization (i. . , peers, clients and NGOs)( Maak, T. and Pless, N. M, 2006) The main objective of this article is the integration and synthesis of two existing models in order to explain the phenomenon of the governing of stakeholder relationships. The ? rst is a communication model developed by Stuart in 1999 and is called: A de? nitive model of the corporate identity management process. The second is a management model developed by Katsoulakos and Katsoulacos in 2007 and is called: A stakeholder-oriented integrative strategic management framework. The ? st model describes the communication and management processes that take place in the organisation, which contribute to corporate identity and corporate reputation formation. Because it illustrates some of the most signi? cant communication and management processes in an organisation, it can also be used to illustrate the governing of organisation–public relationships. The second model illustrates the integration of stakeholder-oriented theories into mainstream strategy and also refers to sustainability and governance in its development.
Although both models are most suitable for the purpose for which they were developed, they can also be adapted and integrated for the purpose of illustrating the process of the governing of stakeholder relationships. Responsible leaders mobilize people and lead teams, often across business, countries and/or cultures to achieve performance objectives that are derived from the strategic objectives of the firm. They also coach and reinforce employees to achieve these objectives in an ethical, respectful and ‘‘relationally intelligent’’ way (Pless and Maak, 2005).
They create incentives to encourage respectful collaboration inside and outside the organization, to foster responsiveness to stakeholders (Freeman, 2004) and advocate ethical behaviour. They safeguard freedom of speech and support the voicing of ethical wrongdoing. They ensure that employment standards are adhered to (worldwide, and also in the supply chain); that working conditions are humane, safe, healthy and non-discriminatory; that employees regardless of background (nationality, gender, age, etc. are provided fair and equal employment opportunities and that the needs of employees for recreation, work-life balance and meaningful work are addressed. At The Body Shop, e. g. CEO Paul Saunders ‘‘has ultimate responsibility for the safety, health and well-being of employees. He also has a moral obligation to ensure that fair and decent labour practices are upheld in our franchisee and supply chain networks’’ (The Body Shop, 2004: 6).
If we understand the purpose of leadership in the context of stakeholder theory and the corporate responsibility debate, it seems more feasible to link it to both the concept of the ‘‘triple-bottom-line’’ (Elkington, 1998) and the idea of sustainable development at large. Both concepts imply that corporations are no longer solely accessed against their economic bottom line, but also against their ability to preserve and improve the state of the natural environment and to contribute to the wellbeing of society, helping to meet ‘‘the needs of the resent without compromising the ability of future generations to meet their needs’’ (Brundtland, 1987: 8). In this context the purpose of leadership can be understood as to build and cultivate sustainable and trustful relationships to different stakeholders inside and outside the organization and to co-ordinate their action to achieve common objectives (e. g. triple bottom- line goals), business sustainability and legitimacy and ultimately to help to realize a good (i. e. , ethically sound) and shared business vision.
The necessity to understand customers’ needs is widely recognised as a key success factor in new product performance (Cooper 1999; Earnst 2002). However, traditional market research methodologies have been found wanting (Leonard-Barton &c Rayport 1997; Ulwick 2002; Chadwick 2006) and many organisations still fail to adequately incorporate the ‘voice of the consumer’ into new product innovation (Cooper 1999, 2008). Consequently, organisations are looking for other ways to gather insights and are turning to various non-traditional approaches such as ethnography, need-states, semiotic analysis and emphatic design (Karkkainen et al. 001; Baker & Mouncey 2004). Recently, there is also evidence of a growing trend towards co-creating with consumers for product and service innovation (Matthing et al. 2004; Roberts et al. 2005; Blazevic & Lievens 2008). This necessitates the collaborative practice of ‘working with’ and ‘learning with’ consumers, and requires conversation and dialogue (Vargo & Lusch 2004). Co-creation recognises ‘active’ consumer participation in the process and requires moving beyond the traditional passive one-sided approach of listening to consumers.
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