contribution of Stakeholders: Theory and Practice is not, as for Freeman http:// Request PDF on ResearchGate | On Jan 1, , Friedman AL and others published Stakeholders: Theory and Practice. Strategic Management of Stakeholders: Theory and Practice. Article (PDF Available) in Long Range Planning 44(3) · June with.

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change management practice. 2. Basic idea of the Stakeholder Theory and Definition. The traditional definition of a stakeholder is “any group or individual who. Stakeholders: Theory and. Practice. Fran Ackermann and Colin Eden. This article explores reactions to its utility e was grounded in both theory and practice. Get Instant Access to PDF File: Read D0wnl0ad. Online Free Now eBook Stakeholders Theory. And Practice By Andrew L Friedman PDF. EBOOK EPUB.

The findings are analyzed and implications drawn regarding the usefulness of a stakeholder approach to CSR. Preview Unable to display preview.

Stakeholders : theory and practice

Download preview PDF. References Abreu R. Google Scholar Brammer S. Google Scholar Brickson S. Corporate Social Responsibility. Google Scholar De Madariaga G. Corporations and Morality. Stakeholder Relationships: The Dialogue of Engagement.

Strategic Management: A Stakeholder Approach. Pitman Publishing, Boston. Google Scholar Freeman E.

Stakeholder theory

Stakeholder Theory: A Libertarian Defense. Capitalism and Freedom.

Google Scholar Longo M. Moreover, it is necessary from a social point of view to identify improvement aims for the common good of the community in which firms operate.

With this argument Bowen, generally called the father of the term social responsibility, pointed out that companies can have a significant influence on the lives of citizens, and consequently firms should intervene in improving and solving their main economical and social imbalances. Therefore, in addition to considering the economic function, organizations should contemplate the social consequences resulting from their actions.

From this work, the concept of social responsibility starts to take on increased interest as a research topic as Carroll postulates, a work which examines in detail the evolution of the concept, subdividing the decade into different key periods that have helped the progressive institutionalization of this mental attitude of responsibility between business and academia.

Among these works, it is necessary to highlight the ideas of Drucker who discusses the need to take the factor of public opinion into account in the decision making process of any organization, regardless of size or industry. These companies had to take further action to regain the trust of these customers creating channels of communication, collaborating with environmental organizations, implementing a social volunteer programme for employees, etc.

With these arguments Drucker reflects that even major companies are subjected to an environment of wide social pressure, which consequently determine their actions in the market in the long term.

Policies & Information

Regarding these ideas, in the early sixties, Davis contributed to the concept of social responsibility, suggesting that, depending on the number of agents affected by organizational actions, they must look after their interests in order to win their endorsement and support. Therefore, Davis advised that organizations that use their power without worrying about causing impact on the environment might lose the respect and trust of their stakeholders customers, suppliers, employees, shareholders, etc.

So far, the works published highlight how the assumption of greater responsibility on the part of the companies could improve their results in relation to particular interest groups.

This process, according to Davis, is what helps companies to redefine their responsibilities and commitments regarding their agents, who make up their community. Taking into account the previous contributions, Walton stressed that social responsibility emerges as a set of actions that managers try to implement for companies to improve their relationship with the broad range of interest groups that make up their environment.

In addition, Walton made a decisive contribution to the understanding of what social responsibility is, and how it can be activated among organizations.

In this regard, Walton highlights that the essential ingredient of social responsibility is the degree of voluntariness by business, because such action is not mandatory, and the decision to carry it out involves the assumption of a significant cost and risk, which can affect the success or failure of a business in a decisive way.

Therefore, considering the imbalances and the investment required to develop social responsibility actions, authors like Wallich and Mcgowan added that, with regard to the viability of social responsibility action, which may ensure a company's success, and to conduct their activities without restrictions, they must maintain a balance between the economic and social interests of their stakeholders.

The contributions examined in the fifties, sixties and early seventies help academics to understand the role that social responsibility plays in the adjustment process of the company, with the environment and with stakeholders. Among the advantages of the legitimation process, organizations could achieve more efficient access to resources from certain stakeholders — investor funds, support from government, increased sales and customer loyalty, access to the negotiation of contracts with different suppliers and distributors, obtaining the respect and commitment of employees, etc.

Regarding this, DiMaggio and Powell point out that companies will adapt more efficiently to their environment and can achieve legitimacy and the benefits they derive from it if they: i Consider the legal and political pressure exerted externally by agencies such as the Government — coercive isomorphism — due to the fact that there is a creator and regulatory power enhancer and promoter of change rules, which inspects and punishes accordingly; ii Mimic the processes, practices and strategies of the most successful companies — mimetic isomorphism.

In this process it could be argued that cognitive power, i. These contributions, framed within the approach of old institutionalism, help to explain why organizations view the imitation of behaviours identified in their environment as able to ensure the legitimacy of the groups and institutions that shape it.

Support of this neo-institutional basis might explain what influence these factors have on the socially responsible actions undertaken by companies. Significant within this institutional contemporary framework is the theoretical support of Keim , who identifies several institutions that should be considered in the analysis of the context: i Formal institutions, which are constitutions, laws, policies and formal agreements created and validated by citizens from different localities and countries; ii informal institutions, which rule behaviour and mental models and are generated by individuals via cultural heritage, religious beliefs or policies.

These rules, in the field of business, are coded as informal practices and routines. In addition, there are some key institutions for national and supranational political, legal and social legislation, from which jurisdiction specific to a particular territory or geographic area emanates.

Following this classification, to examine the implementation of socially responsible behaviours among companies, the institutional environment is interpreted in contexts such as Europe and North America, traditionally marked by different historical and political factors, which affect the particular way in which respective companies make decisions about social responsibility.

Focusing the analysis on European territory, due to Spain being the country in which the research is framed, it should be mentioned that there has been a high turnover of policies at the community level by different Member States, determining the generation of a large number of legislations to harmonize laws and regulations. The integration of these countries under a monetary system and common government influence can affect the reformulation of traditional relationships between businesses and Governments, aimed in this case at achieving a coherent system of welfare in these European countries Doh, Concretely, bodies such as the European Commission, the Parliament and the Spanish Council of Ministries are positioned as expert advisors on negotiation and improvement of these collective European interests.

In terms of CSR at the European level, the elaboration and publication of the Green Book of CSR by the European Commission is highlighted as one of the prime manuscripts to promote a common framework in which responsible behaviour for entrepreneurs and managers may be developed within the European Union. Despite the importance of these European figures in the formulation of policies and procedures which promote social responsibility, according to Doh and Teegen and Doh and Guay , reflect that NGOs and the general public have been two of the main promoters at institutional level to have driven the imperative to develop socially responsible behaviours in firms during recent decades.

More specifically, negative ecological impacts such as discharges of toxic air pollution by companies, or socially negative impacts such as gender inequalities or the use of child labour have led to several platforms being built and to NGOs expressing their dissatisfaction, expressing the need for more regulation of these aspects.

Other factors such as the financial position in the market, the level of enterprise competitiveness, or a history of political baggage in some countries, encourage firms to position themselves as complementary constraints in the course of implementing socially responsible behaviour Campbell, ; Sementelli, This framework represents the main support of stakeholder theory.

Given the multitude of parties involved in organizational activities, such as those stated by Freeman , Goodpaster and Clarkson it is necessary to differentiate between and prioritize them according to a single criterion in order to meet their expectations with a logical order.

These previous works use a double distinction of stakeholders by way of consensus regarding their nature and the relationship established with the organization: i a primary group, which usually has a formal contract with the firm and is essential for its proper functioning owners, shareholders, employees, unions, customers, suppliers, etc.

The influence, power and claims that each of these parts have on the company has been analyzed in works such as Mitchell, Agle, and Wood Specifically, Goodpaster , Donaldson and Preston and Fassin argue that there are different forms of analysing and studying the management of interest by companies.

Thus, Goodpaster appreciates three theoretical trends that explain the behaviour of firms in relation to their stakeholders. Firstly, the strategic approach, which argues that stakeholders can facilitate or hinder the achievement of the organizational aims. Secondly, the responsibility approach, which explains how establishing a quality relationship with those groups of interest, can provide more benefits for companies through achieving their satisfaction.

Thirdly, the convergent approach which stands as an intermediate trend from both previous approaches. Additionally, Donaldson and Preston propose another three trends to examine and analyze stakeholders management with accuracy: i the descriptive approach, which aims to explain that companies are defined by a broad set of different interests that must be balanced, a process that can induce better or worse results; ii the instrumental approach, which explains how the stakeholder management of the company is an instrument or a tool to meet specific, traditional organizational goals: profitability, stability and growth and iii the normative approach, supported by the fact that the management and satisfaction of stakeholder interests should be the main goal to be achieved by the company, leaving economic benefits in second place.

In connection with the implementation of CSR actions according to Mitchell et al. For example, Henriques and Sadorsky found that the perception of interests and environmental demands of particular interest groups did significantly influence the level of environmental commitment adopted by companies in their practices.

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For these reasons, Phillips, Freeman, and Wicks proposed to adapt and modernize stakeholder's theory into a version able to capture and simplify these groups into five internal categories: financial control agents e.

Phillips also proposes six specific external groups: the Government, environmental organizations, NGOs, professional critics or experts, the media and others in general citizens, local or those which affect or will be affected by companies.

The reason why these groups may have an influence on the company, although they do not control essential resources, is explained by the legitimacy concept Lee, This idea leads us to uncover a natural and complementary theoretical link between institutional theory and stakeholder approach, given the influence that interest groups could have on the implementation of socially responsible behaviour required of the companies by society.

Influence of institutional and stakeholder perspectives in the introduction of socially responsible behaviours. In this way, the institutional pillars proposed by DiMaggio and Powell , reflect how the pressure on companies may condition their decisions in terms of social responsibility actions.

According to Clarkson , it will be necessary to distinguish and consider the influence they can further exert upon external groups affected by or affecting business activity interest. Internally, the micro-context would consist of those domestic interest groups with links to the company, able to exercise power over decisions on social responsibility as expressed in Fig.Capitalism and Freedom.

Theoretical monographs that comprehensively deal with a single theory … Research Interests: Additionally, Donaldson and Preston propose another three trends to examine and analyze stakeholders management with accuracy: i the descriptive approach, which aims to explain that companies are defined by a broad set of different interests that must be balanced, a process that can induce better or worse results; ii the instrumental approach, which explains how the stakeholder management of the company is an instrument or a tool to meet specific, traditional organizational goals: profitability, stability and growth and iii the normative approach, supported by the fact that the management and satisfaction of stakeholder interests should be the main goal to be achieved by the company, leaving economic benefits in second place.

Considering the approaches reviewed in the current article, the concept of shared value is implicitly related to the essence of institutional perspectives and stakeholders, trying to provide a value in response to the needs and requirements of society and stakeholders. Therefore, this European initiative highlights the altruistic value of social responsibility actions, and its progressive support at European level. Koning, When identifying stakeholders, it may be helpful to first determine the most relevant dimensions:

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