1. Toward a Theory of Stakeholder Identification and Salience: Defining the Principle of WHO and WHAT really coounts. Ronald K. Mitchell, Bradley R. Agle and Donna J. Wood Academy of Management Review, 1997, Vol.22. N.4,

2. Stakeholder Theory Overview
This article of Stakeholder theory deals with two prominent concepts:
Identifying who the stakeholders are
Normative (Stakeholder Identification): Logic to consider certain classes as stakeholders.
Salience of the various Stakeholder classes and their claims to the organization
Descriptive (Stakeholder Salience) – conditions to identify stakeholders.
Who is a Stakeholder?
“Any group or individual who can affect or is affected by the achievement of the organization’s objectives” ~ Freeman (1984)
Say that this definition of stakeholder is in layman terms.
Some questions answered in the article:
Who is a stakeholder?
What is at stake?
What types of Shareholders exist?
The theory explains why managers pay certain kinds of attention to certain stakeholders and why they respond to them the way they do

3. What is a Stake?
Various possible shareholders for a company in an eg.

4. Defining Stakeholders - Broad Vs Narrow View
Concerned with only the risk factor and includes:
Voluntary Stakeholders & Involuntary Stakeholders
Broad View
Takes into account all those groups who can affect or are affected by the achievement of the organization’s objectives.
who can affect the organization – Influencers
who are affected by the organization – Claimants
Explain Voluntary and Involuntary shareholders
Explain Influencers and claimants
Influencers: Those who have the power to influence the firm’s behaviour, direction, process and outcomes
Claimants: Those who have a legal, moral or presumed claim on the firm but not the ability to influence its functioning

5. Stakeholder Attributes
1. Power
A relationship among social actors, in which A can get B to do something which B would not have otherwise done (Dahl et al, 1957)
Categorization of power
Coercive power: based on the Physical resource of force, violence or restraint
Utilitarian power: Based on material or financial resources
Normative power: Based on symbolic resources such as being able to comand the attention of the media
“To influence the firm"
Explain the three categorizations of power (check from booklet)
Explain the three types of legitimacy
Additional points on Power
- A party to a relationship has power to the extent it has or can gain access to coercive, utilitarian or normative means, to impose its will in the relationship
- Power is transitory – it can be acquired as well as lost

6. Stakeholder Attributes
2. Legitimacy: A generalized perception or assumption that the actions of an entity are desirable, proper or appropriate within some socially constructed system of norms, values and beliefs (Suchman, 1995)
LEGITIMACY
INDIVIDUAL
ORGANIZATIONAL
SOCEITAL
Explain the three categorizations of power (check from booklet)
Explain the three types of legitimacy
Additional points on Power
- A party to a relationship has power to the extent it has or can gain access to coercive, utilitarian or normative means, to impose its will in the relationship
- Power is transitory – it can be acquired as well as lost
“It is the legitimacy of the relationship in terms of desirability or appropriateness with the firm”

7. Stakeholder Attributes
3. Urgency is defined as the degree to which stakeholder claim for immediate action
The degree depends on:
When a relationship or claim is of a time sensitive
How critical/important is the claim to the stakeholder
“Calling for immediate attention or pressing”
Urgency - Stakeholder attribute of urgency helps move the model from static to dynamic

8. Broad v/s Narrow Definition
Narrow view – pragmatic reality that managers can’t and don’t consider all stakeholder claims.
Emphasize legitimacy via contract, exchange, legal title, legal rights, moral rights, at-risks status, or moral interest in the harms and benefits generated by corporations actions.

9. SALIENCE
The degree to which managers give priority to competing stakeholder claims.
The more attributes the more the SALIENCE
The role of Manager?
They are group of stakeholders who enter into a contractual relationship with all stakeholders
Direct control over the decision-making apparatus of the firm (Hill&Jones, 1992)
They determine which stakeholders are salient and to whom they should pay attention.

10. Stakeholder Classes
Stakeholder salience will be positively related to the cumulative number of stakeholder attributes – power, legitimacy, and urgency – perceived by managers to be present.
Three classes:
Low salient class (LATENT)
Moderate salient class (EXPECTANT)
HIGH SALIENT CLASS
All attributes are tran

11. Stakeholder Classes Power Urgency Legitimacy Dormant Discretionary
Demanding
Power
Dangerous
Dominant
Definitive
Not in detail
Dependent
Urgency
Legitimacy

12. Stakeholder Classes Class 1 - Latent Stakeholders Dormant
One Attribute & Low Salience
Managers may choose to do nothing
Consists of – Dormant,
Demanding and Discretionary shareholders
Dormant Stakeholders
Possess power to impose their will but little or no interaction as they lack legitimacy or urgency
Examples – Those who have a loaded gun, those who can spend a lot of money
Power
Dormant
Discretionary
Demanding
Urgency
Legitimacy
Latent stakeholders
stakeholders & may not even recognize them as stakeholders

13. Class 1 - Latent Stakeholders (Continued)
Discretionary Stakeholders
Likely to be recipients of corporate philanthropy
Examples – Beneficiaries of charity, Non-profit organizations such as schools & hospitals
Demanding Stakeholders
Those with urgent claims but no legitimacy or power
Irritants for management but not worth considering
Examples – People with unjustified grudges, serial complainers
Dormant
Discretionary
Demanding
Power
Legitimacy
Urgency
Discretionary stakeholders
No pressures on managers to engage with this group, but they may choose to do so

14. Class 2 - Expectant Stakeholders
2 Attributes & Moderate Salience
Active rather than Passive
Consists of – Dominant, Dependent and Dangerous Stakeholders
Dominant Stakeholders
Many theories position them as the only stakeholders of an organisation
Possess Power + Legitimacy
Examples – Board of Directors, Public relations
Expectant - Seen by mangers as ‘expecting something’
Dominant - Likely to have a formal mechanism in place acknowledging the relationship with the organisation

15. Class 2 - Expectant Stakeholders (Continued)
Dangerous Stakeholders
Those with powerful and urgent claims and can be coercive and possibly violent
Dependent Stakeholders
Stakeholders who are dependent on other bodies to carry out their will, because they lack the power to enforce their stake
Examples – Residents & animals impacted by incidents like Oil Spill, Mining etc.
Dangerous Stakeholders
Examples – Strikes and Terrorist activities
Employee Sabotage or coercive/unlawful tactics used by activists
Religious or political terrorists using bombings, shootings

16. Class 3 - Definitive Stakeholders
Often dominant stakeholders with an urgent issue
Dependent groups with powerful legal support
Examples –
Democratic legitimacy achieved by a ‘Dangerous’ nationalist party by winning national elections
Suyash
Definitive Stakeholders
Possess all three attributes
An expectant stakeholder who gains the relevant missing attribute
Those classified as dangerous could gain legitimacy

18. DYNAMISM in RELATIONS
A stakeholder can increase/decrease their salience by acquiring or losing one of the attributes: power, legitimacy or urgency
Example: Samarco’s community moves from being a Latent to a definitive stakeholder
Non-stakeholder
Latent
Expectant
Definitive

19. Questions??