1. Theory Of Stakeholder

2. Why Required? Organisations are Managers have to
collections of individuals
with different demands and
limited ability to attend to demands
Influenced by actors controlling critical resources and
Have attention of the managers
Managers have to
Balance divergent interests
Allocate resources
Consistent with claims of stakeholder groups
Perception of managers of various demands and their salience is important. They are the only ones with relationships with all other stakeholders.
Managers act on their perception.
Perception and values, therefore, act as moderators of action of managers
Structured and standard way of determining salience removes or reduces perception

3. What To Do? Identify stakeholders
Prioritise stakeholders – decide salience
Act on basis of salience of stakeholders

4. Stakeholder Definitions
1980 – Jones
Corporations have an obligation to constituent groups in society other than stockholders and beyond that prescribed by law or union contract. This indicates that a stake may go beyond mere ownership
1989 – Alkhafaji
groups to whom the corporation is responsible
Thompson, Wartick, and Smith
Groups "in relationship with an organization"

5. Stakeholder Definitions
Broad Definition
Includes practically everyone except those that have nothing to do with the organisation
1984 – Freeman
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
Narrow Definition
Depends upon the stakeholders relevance to the organisation
1983 – Freeman
stakeholders are those groups on which the organization is dependent for its continued survival

6. Stakeholder Classifications
Primary and Secondary
Owners and Non-owners
Owners of capital and Owners of less tangible assets
Actors and those Acted upon
Voluntary relationship and Involuntary relationship with firm
Rights holders
Resource providers to firm
Dependent on the firm
Influencers
Legal principals

7. Stakeholders and Stake “Who and What Counts”
Types of entities that can be stakeholders. Quite well settled. It is “Who Counts”
People
Groups
Neighbourhoods
Organisations
Societies
Institutions
Environment
What is the stake? “What Counts”. Controversial
Depends upon the understanding of what is at stake. The existence and nature of stake.

8. Stakeholders Identification
Theories define conditions under which certain classes of entities are stakeholders
Who are stakeholders
Normative theory of stakeholder identification
What are stakeholders
Descriptive theory of stakeholder identification

9. Who Is A Stakeholder? To understand, differentiate between groups
Influencers vs. Claimants
Actual vs. Potential relationship

10. Stakeholder?
Is the stakeholder defined through influence and claim or by just one of these?
Influencers
Have power over the firm irrespective of the Claim
Claimants
Have a claim over the firm irrespective of the Influence that they may have
Claim can be
Legitimate
Illegitimate

11. Stakeholder?
Can there be a stake without actual relationship or a potential relationship also identifies stakeholders?
Actual relationship
Actual willful relationship
Depends upon
Power
Dependence
Reciprocity
Generally decided through power-dependence
Potential relationship (Latent Stakeholders)
Involuntary stakeholders who are not willfully at risk due to the firm

12. Stakeholder? Nature Of Relationship
Doing something to give meaning to the firm. Relationship could be latent or active
Nature decided by power-dependency
Stakeholder dominant
Organisation depends on stakeholders for survival
Firm dominant
Stakeholders depend upon organisation
Mutually dependent
Each depend upon the other for their goals

13. Narrowing Stakeholders
Relationship
Contractual
Power Dependence
Exchange
In general
Broad Definition
Emphasises power to influence irrespective of legitimacy
Narrow Definition
Emphasises legitimacy

14. Stakeholder? Legitimacy Of Relationship
Bases
Contractual relationship – suppliers etc
Legal claim
Stakeholder has something of value at risk
Moral claim by stakeholder

15. Stakeholder? Ilegitimacy Of Relationship
Bases
Assertion of claim by stakeholder
Ability to influence the organisation

16. Typology Method Identify Prioritise Act on salience of stakeholder
Use broad definition by Freeman to include all stakeholders
Any group or individual who can affect or is affected by the achievement of the organisation objectives
Identify classes of stakeholders using their possession of three attributes
Power to influence the firm
Legitimacy of the stakeholder relationship with the firm
Urgency of the claim on the firm
Prioritise
Use theory of Salience to identify importance of stakeholders
Identifies managerial behaviour towards stakeholders
Predicts movement of stakeholders from one class to another
Act on salience of stakeholder
Firm Centered Purpose
To ensure economic well being of the firm
System Centered Purpose
To balance the stakeholder requirements

17. Stakeholders Attributes
Independent attributes
Power
Legitimacy
Urgency
Salience
Degree of importance to the stake

18. Stakeholders Attributes
Power
Definitions
Ability to get someone do something even against his wishes
Ability to bring the outcome one desires even against wishes of others
Bases of power (how it is exercise)
Coercive
Based on use of physical resources of restraint, force or violence
Utilitarian
Based on use of material resources of reward
Normative
Based on use of symbolic resources such as prestige, love, acceptance

19. Stakeholders Attributes
Legitimacy
Definition
A generalized perception or assumption that the actions of an entity are desirable, proper, or appropriate within some socially constructed system of norms, values, beliefs, and definitions.
Defined and negotiated on levels
Individual
Organisational
Societal
Legitimacy defined by society so definition is Sociologically based
Authority = Power + Legitimacy
Power and Legitimacy are independent

20. Stakeholders Attributes
Urgency
Definition
Degree to which stakeholder claims call for immediate attention
Attributes
Time sensitivity
Degree to which the delay is acceptable to the stakeholder
Criticality
Importance of the claim or relationship to the stakeholder
Some reasons for criticality
Expectation
Sentimentality
Ownership – assets that lose value elsewhere
Exposure - Risk

21. Attributes - Implications
Stakeholder attributes are
Variable i.e. not steady state
Perceptual i.e. Socially constructed
Conscious i.e. willful exercise may not be present

22. Assumptions
Various classes of stakeholders may be identified using three attributes
Power
Legitimacy
Urgency
Managers pay attention to specific classes of stakeholders depending upon what they want to achieve
Manager’s perception dictates salience of stakeholders

23. Stakeholder Classes

24. Stakeholder Classes

25. Salience More the attributes, more the salience
Stakeholder can improve his salience by acquiring the missing attribute or by alliances with stakeholders having such attributes

26. Classes Latent – 1 attribute Expectant – 2 attributes
Dormant
Discretionary
Demanding
Expectant – 2 attributes
Dominant
Dependent
Dangerous
Definitive - 3 attributes

27. Classes Latent Dormant Discretionary Demanding Low salience
Not likely to get attention or acknowledgement of the firm
Dormant
Posses Power
Normally unused Power
Can acquire legitimacy or urgency
Examples
Fired employees
RTI applicants
Discretionary
Posses Legitimacy
Powerless to do anything
No pressure on managers to engage with them
Example
NGOs beneficiaries
Demanding
Posses Urgency
Require passing attention as can be irksome
Few demonstrators

28. Classes Expectant Dominant Dependent Dangerous Two attributes
Active and expectant
Dominant
Power + Legitimacy
May have formal mechanism to exercise both
Example
PR with Government
Dependent
Urgency + Legitimacy
Power is used through existing rules or norms
Needs attention if ties up with dominant stakeholders
Civil society activists
Dangerous
Power + Urgency
Coercive and possibly violent
Examples
Terrorism
Wild cat strikes

29. Classes Definitive Examples All three attributes
Dominant stakeholder can move into this class with urgency
Examples
Change of Management by dissatisfied board

30. Salience ?