Stakeholders

Dr. John Egan

Stakeholders

Dr. John Egan

Director of Marketing & Communications
Faculty of Business
London South Bank University
1

Stakeholders
Dictionary definition

1. (In gambling) an independent party with whom each of those

who make a wager deposits the money or counters wagered
2. A person with an interest or concern in something,
especially a business… denoting a type of organisation
or system in which all the members or participants
are seen as having an interest in its success
Oxford English Dictionary

Stakeholders
History

Corporate Relationship
Communications Marketing
Literature Literature

Importance
of Stakeholders

Alternative view Alternative view to Traditional

to the Neo-classical Exchanged-based
Economic Theory (Transactional) Marketing
of the Firm

Firms are Profit “Bad Profits” Firms are Profit

3 Maximisers Reicheld 2006 Maximisers

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 Stakeholders
Dr. John Egan

Stakeholders
History (2)

Corporate Relationship
Communications Marketing
Literature Literature
Reciprocal That to properly
expectations service customers
Importance
of the role a firm has to take
of Stakeholders
and responsibilities care of this and
of parties other relationships

The importance
The importance
of developing
of building relationships
communication links

Communications Theory
• Argues that the company is viewed through its numerous
interactions (communications)
• “Managers must develop relationships, inspire their stakeholders,
and create communities where everyone strives to give their best
to deliver the value the firm promises” Freeman 2004

Relationship Marketing Theory

• “Identify and establish, maintain and enhance and, when necessary,
terminate relationships with customers and other stakeholders,
at a profit so that the objectives of all parties involved are met;
and this is done by mutual exchange and fulfilment of promises.”
Grönroos 1994

Stakeholder Theory

• Ethics pays?
• ‘Where conditions of trust, trustworthiness and cooperativeness
exists between organisations and their stakeholders,
opportunistic behaviour is minimised and the contracts between
the parties may be executed more efficiently, thereby reducing
costs and creating a source of competitive advantage’
De Bussy, Ewing & Pitt 2003

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 Stakeholders
Dr. John Egan

Stakeholder Theory (2)

Emphasis has moved from a focus on stakeholders

to a focus based on a relational and process-orientated view
Andriof & Waddock 2002

Implies How managers can

How managers can movement manage stakeholder
manage stakeholders
relationships

Stake holder relationships assumed to consist

of “interactive”, mutually engaged and responsive relationships
that establish the very context of doing modern business’
Andriof et al., 2002

Stakeholder Classification
‘Any group or individual who can affect or is affected
by the achievement of the organisation’s objectives’ Freeman 1984

8 …but are all stakeholders equal

Stakeholder Classification
Stakeholder management

• Greenwood 2001 suggests the 2 major issues

in stakeholder management are:
1. Stakeholder Identification:
who are they & what differentiates them?
2. The nature of the relationships amongst
and between various stakeholders

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 Stakeholders
Dr. John Egan

Stakeholder Classification
The importance of classification

• Many other authors argue the importance of classifying

stakeholders by suitable criteria
• According to Cooper et al., 2001 when stakeholder theory
is used as a managerial tool it is specifically concerned
with identifying which of the company’s stakeholders
are more important and, therefore, which should receive
the greater proportion of management time

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Stakeholder Classification
Stakeholder groups
• According to Podnar & Jančič 2006 the stakeholder
groups mentioned most often are:
– Consumers
– Employees
– Shareholders
– Media
– Business partners
– Competitors
– Government etc.

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Stakeholder Classification
Urgency, Legitimacy and Power

Mitchell, Agel & Wood 1997

Suggest that the important stakeholder attributes
are Urgency, Legitimacy and Power

Based on time Based on Based on the ability

sensitivity and the the perception of one actor to make
importance of the claim or belief that another actor do
to the stakeholder the stakeholder’s something they would
claims are proper, otherwise not have done
desirable
or appropriate

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 Stakeholders
Dr. John Egan

Stakeholder Classification
• Cornelissen 2004 suggests once identified they can be further
classified and prioritised on the basis of power, legitimacy and urgency
(see Mitchell, Agel & Wood 1997)

POWER LEGITIMACY
Dominant
stakeholder
Dormant Discretionary
stakeholder stakeholder
Definitive
stakeholder

Dangerous Dependent
stakeholder stakeholder

Demanding
stakeholder

13 URGENCY

Stakeholder Classification
Primary and Voluntary Stakeholders

Clarkson 1995
Primary vs. Secondary Voluntary vs. Involuntary
Stakeholders Stakeholders

Primary Stakeholders Voluntary Stakeholders

Those individuals or groups
whose continuous support
is needed if the company
wants to avoid serious
reputational damage
Have a choice whether
to enter into a relationship
and can withdraw at any time

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Stakeholder Classification
Primary and Voluntary Stakeholder(2)
Clarkson 1995

Primary Stakeholders Secondary Stakeholders

Voluntary

Shareholders, Community
Customers groups
Involuntary

Staff Government

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 Stakeholders
Dr. John Egan

Stakeholder Classification
Primary and Social Stakeholders

Wheeler & Sillanpää 1997

Primary Stakeholders Secondary Stakeholders

Government, Social
Shareholders, Investors,
pressure groups, Trade
Social

Employees & Managers,

bodies, Civic institutions,
Local communities,
Media, Academics
Suppliers and Partners
and Competitors
Non-social

Natural environment, Environmental pressure

Future generations, groups and Animal
Non-human species welfare organisations

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Stakeholder Classification
Contractual & Community Stakeholders

Cornelissen 2004

Contractual Stakeholders Community Stakeholders

• Customers • Consumers
• Employees • Regulators
• Distributors • Government
• Suppliers • Media
• Shareholders • Local communities
• Lenders • Pressure groups

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Stakeholder Classification
Stakeholders Exchange & Communication

Jančič 1999
1st
Level 2nd Level 3rd Level
Stakeholders Stakeholders Stakeholders
Exchange & Exchange & Exchange &
Communication Communication Communication
Inevitable Necessary Desirable

• According to Podnar & Jančič 2006 the most significant difference

between this and other models was that it was based
on a marketing relationship model where the main emphasis
was on the breadth of relationships

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 Stakeholders
Dr. John Egan

Stakeholder Classification
Unemployed

Employee Sports
families organisations
Trade orgs. Financial Public

Schools Universities
& Media Employees Political
Non-comp Customers Competition parties
company
Desirable

Necessary

Inevitable

Foundations
Company
Cultural orgs.

Regulation Suppliers
Shareholders
Local Natural
community environment
Civil Opinion
initiatives leaders

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Pressure groups
Jančič 1999

Stakeholder Classification
Power to Influence

Keep satisfied Manage closely

Power to influence

Government, Staff,
Media Trade unions

Keep informed
Minimal effort Students,
Community? Local business

Interest in your organisation

20 Baines et al., 2004

Stakeholder Classification
Weaknesses
All very neat in theory but in practice…
• Very wide definition (potentially everyone)
• Level of influence changes over time
• Some stakeholders can become very influential for a short time
because of specific events
• Different industries have different values/drivers
• Some individuals/groups can be multi-stakeholders
In addition…
• Need to balance the claims of stakeholders
• Recognise that stakeholders may hold homogenous or divergent views

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 Stakeholders
Dr. John Egan

Stakeholder Analysis

A process of analysis aimed at identifying,

prioritising and understanding stakeholders of an organisation

Stakeholder Audit
A systematic survey of stakeholders to determine the nature
of the relationship, issues and possible reactions
to corporate actions Cornelissen 2004

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Stakeholder Mapping

23 Emeraldinsight.com

Summary

• A stakeholder is person or other entity with an interest

or concern in something, especially a business
• Not all stakeholders are equal
• Stakeholders can be classified in numerous ways
• The influence of stakeholders can change over time
• Stakeholder analysis should be part of the planning process

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 Stakeholders
Dr. John Egan

Stakeholders

Dr. John Egan

Director of Marketing & Communications
Faculty of Business
London South Bank University
25

References

• Andriof, J. and Waddock, S. (2002) Unfolding Stakeholder Engagement in Andriof, J. , Waddock, S.,
Husted, B. and Rahman, S.S. (Eds) Unfolding Stakeholder Thinking: Theory, Responsibility
and Engagement pp 19-42 Sheffield, Greenleaf
• Andriof, J. , Waddock, S., Husted, B. and Rahman, S.S. (2002) Unfolding Stakeholder Thinking: Theory,
Responsibility and Engagement Sheffield, Greenleaf
• Baines, P., Egan, J. and Jefkins, F. (2004) Public Relations: Contemporary Issues and Techniques,
Oxford, Elsevier
• Clarkson, M. (1995) A Stakeholder Framework for Analysing and Evaluating Corporate Social
Performance; Academy of Management Review 20 (1) pp 92-117
• Cornelissen, J. (2004) Corporate Communications: Theory and Practice, London, Sage Publications.
• Cooper, S., Crowther, D., Davies, M. and Davis, E. (2001) Shareholder or Stakeholder Value:
The Development of Indicators for the Control and Measurement of Performance;
London, Chatered Institute of Management Accountants
• De Bussy, M.M., Ewing, M.T. and Pitt, L.F. (2003) Stakeholder Theory and Internal Marketing
Communications: A Framework for Analysing the Influence of New Media; Journal of Marketing
Communications 9 pp 147-61
• Egan, J. (2011) Relationship Marketing: Exploring Relational Strategies in Marketing 4th Ed.
Harlow, Pearson/FT

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References (2)
• Freeman, R.E. (1984) Strategic Management: A Stakeholder Approach, Boson, Pitman
• Freeman, R.E. (2004) Stakeholder Theory and “The Corporate Objective Revisited”; Organization Science
15(3) pp 364-9
• Friedman, A.L. and Miles, S. (2002) Developing Stakeholder Theory; Journal of Management Studies
39(1) pp 1-21
• Greenwood, M.R. (2001) Community as a Stakeholder in Corporate Social and Environmental Reporting,
Working Study Series, Victoria, Monash University
• Grönroos, C. (1994) Quo Vadis, Marketing? Towards a Relationship Marketing Paradigm,
Journal of Marketing Management, 10, pp.347-360
• Jančič, Z (1999) Celosti Marketing Ljubljana, FDV
• Mitchell, R.K., Agle, B.R. and Wood, D.J. (1997) Towards a Theory of Stakeholder Identification
and Salience: Defining the Principle of Who and What really Counts; Academy of Management Review
22(4) pp 853-86
• Podnar, K. and Jančič, Z (2006) Towards a categorization of Stakeholder Groups: An Empirical Verification
of a Three-level Mode; Journal of Marketing Communications 12(4) pp 297-308
• Reichheld, F.R. (2006) The Ultimate Question, Harvard, Harvard Business School
• Stevenson, A. (2010) (Ed). Oxford English Dictionary, Oxford, Oxford University Press
• Wheeler and Sillanpãã (1997) The Stakeholder Corporation: A Blueprint for Maximising Stakeholder

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Value, London, Pitman Publishing

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 Stakeholders
Dr. John Egan

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