The Corporation and Its Stakeholders by Clarkson Max.;

Author:Clarkson, Max.; [Clarkson Max B.E.]
Language: eng
Format: epub
Publisher: University of Toronto Press
Published: 2016-04-15T00:00:00+00:00

Managerial Implications

A full discussion of the managerial implications of this analysis would require much more discussion. As a summary, the two points we emphasize are (a) the recognition of specific stakeholders and their stakes by managers and other stakeholders and (b) the role of managers and the management function, as distinct from the persons involved, within the stakeholder model. These two issues are intimately intertwined.

It is the responsibility of managers, and the management function, to select activities and direct resources to obtain benefits for legitimate stakeholders. The question is, Who are the legitimate stakeholders? Some answers in the literature are, in our view, too narrow; others are too broad. The firm-as-contract view holds that legitimate stakeholders are identified by the existence of a contract, expressed or implied, between them and the firm. Direct input contributors are included, but environmental interests such as communities are also believed to have at least loose quasi-contracts (and, of course, sometimes very specific ones) with their business constituents.

We believe that the firm-as-contract perspective, although correct, is incomplete as a description of the corporation. For example, many business relationships with “communities” are so vague as to pass beyond even the broadest conception of “contract.” The plant-closing controversy of the last couple of decades clearly shows that some communities had come to expect—and sometimes were able to enforce—stakeholder claims that some firms clearly did not recognize. As another example, potential job applicants, unknown to the firm, nevertheless have a stake in being considered for a job (but not necessarily to get a job). Lacking any connection to the firm, these potential employees are difficult to view as participating in the firm by reason of a contract, either implied or explicit. (We do not mean, however, to rule out possible relevance of so-called social contracts to such situations; cf. Donaldson & Dunfee, 1994b.) Stakeholders are identified through the actual or potential harms and benefits that they experience or anticipate experiencing as a result of the firm’s actions or inactions. In practice, and in addition to legal requirements, appraisal of the legitimacy of such expectations is an important function of management, often in concert with other already recognized stakeholders.

Excessive breadth in the identification of stakeholders has arisen from a tendency to adopt definitions such as “anything influencing or influenced by” the firm (Freeman, 1984, quoting with approval Thompson, 1967). This definition opens the stakeholder set to actors that form part of the firm’s environment—and that, indeed, may have some impact on its activities—but that have no specific stake in the firm itself. That is, they stand to gain no particular benefit from the firm’s successful operation. The two types of interests that have cropped up most frequently in this connection are (a) competitors and (b) the media. Competitors were introduced as factors that have “an influence on managerial autonomy” in Dill’s (1958) article, which is appropriately cited in the literature as a precursor of stakeholder analysis. However, neither the term stakeholder nor the notion of a stake (i.e., potential benefit) was explicitly introduced in Dill’s analysis.

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