IntroductionThe concept of stakeholders has indeed achieved wide spread popularity among many organizations across the globe. Increasing numbers of clientele in organizations has significantly advanced the centrality and engagement of stakeholders in business, social and environmental performance of the organization. Constructive stakeholder relationships open up a business to a vast number of opportunities while poor relationships risks survival of the organization. Therefore, companies have realized the importance of actively establishing and sustaining relationships with stakeholders and the larger community in a bid to succeed through their projects (Laplume et al, 2008).
The purpose of this paper is to obtain a conceptual understanding of stakeholders. It begins by giving definitions and typologies of stakeholders which have been discussed widely in literature. The report further discusses the concept of accountability to stakeholders as an obligation of management. Besides that, it will give reasons why the government consults stakeholders on particular issues that concern them and the organization. Lastly, the report will give a stakeholder analysis of the University of Sidney. Definitions and typologies of stakeholdersAn overview of literature on stakeholders creates a confusing impression about concepts underlying stakeholders.
This ambiguity particularly regards concepts of the stakeholder theory, the stakeholder model, stakeholder analysis, stakeholder management and the stakeholder approach. Moreover, the stakeholder theory has suffered from numerous imperfections and shortcomings owing in part to ambiguity, vagueness and breadth of the terms stakeholders and partly due to its wide-ranging intuitive appeal, factors that have contributed to massive critiques. Similar sentiments have been expressed by Symons (2008) who maintains that it is difficult to conclusively define the term since it is context-specific and idiosyncratic. Nevertheless, there are several definitions that have been developed to elaborate the term stakeholders.
The term stakeholder was first defined by Freeman (1984) who stated that “it is any group or individual who affects or is affected by the achievement of the organization’s objectives”. This definition has been accepted and at the same time contested depending on the position of the scholar. Many scholars have argued that this Freeman’s definition is rather too broad and could possibly include competitors and even terrorists who, obviously, affect the organization negatively. As a result, scholars have tried to propose narrower definitions of stakeholder.
This further underlines the ambiguity and vagueness in scope of the stakeholder concept. The various understandings are based on differences between legal interpretations as well as managerial interpretations of the concept. They have been introduced through various stakeholders definitions such as the influence definition, which states that stakeholders are those who are affected by the organization or affect it a certain way, and the claimant definition which defines stakeholders as variables which determine survival of the organization (Venkataraman, 2002). The legal interpretation of the stakeholders is indeed a philosophical analysis and rests upon contracts and rights.
In this case, the organization has duties and obligations while stakeholders have claims. On the contrary, the managerial approach, with origin from sociology and organization theory, is quite pragmatic and emphasizes on stakeholder-firm concrete relationships. The broad view of stakeholders as any individual or group that can be affected or affect the organization implies that care and respect has to be accorded to all of them and they have to be taken into account. The legal interpretation is more abstract and narrower in view of stakeholders.
It suggests that it’s a selected number of legitimate individuals linked to the organization through a contractual relationship. Moreover, definition based on the claimant and influencer points of view are not mutually exclusive; a stakeholder can have a claim whether he is affected by or affects the organization; while one with no claim can still be affected or affect it. The claimant definition excludes competitors while the influencer definition integrates then since they can benefit or harm the firm.
Essentially, competitors should be included in the strategic analysis.