Stakeholder as Other
‘Stakeholder theory is a theory of organisational management and ethics’ (Phillips et al.
2003, p. 480). It is fundamentally relational in nature because it ‘attempt[s] to articulate the meaning of the corporation and the sense of responsibility that businesses feel to those both inside and outside the ‘walls’ of the firms’ (Wicks et al.
1994, p. 477).
Given that our interest is in how the self is conceptualised within the literature, it is striking to note that most definitions of ‘stakeholder’ imply that stakeholders are something different and separate to organisations—they are ‘other’. For instance in one of the earliest definitions of stakeholder, the Stanford Research Institute defined them as ‘groups without whose support the organisation would cease to exist’ (Freeman et al.
2010, p. 207). Friedman and Miles similarly depict stakeholder theory as based on ‘the dynamics of the organisation/stakeholder relation’ (
2002, p. 2). Mainardes et al. (
2011) demonstrate this divide between organisations and ‘their’ stakeholders most clearly in their synthesis of Clarkson’s paper. They state that ‘according to Clarkson (
1995), the stakeholder concept contains three fundamental factors: one, the organisation; two,
the other actors; and three, the nature of the company-actor relationships’ (
2011, p. 228 emphasis added). The presumption of these definitions is that managers represent the organisation, and other stakeholders are different to that of the organisation.
The conflation of managers and the organisation is common throughout the literature. For instance, the Clarkson Centre for Business Ethics makes it very clear that ‘managers should
acknowledge and actively
monitor the concerns of all legitimate stakeholders, and should take their interests appropriately into account in decision-making and operations’ (emphasis in original) (
1999, p. 4). The taken for granted nature of this assumption is still found in recent literature. Bundy et al. (
2013) for instance view managers as those that determine salience of stakeholder claims based on their perception of the links between the issue, organisational identity and the strategic frame of the firm. This is crucial, because it implicitly suggests that not only are stakeholders different from each other, but that manager/organisation is different from stakeholders as a whole.
This leads to managers who are to ‘consider’ interests and ‘balance’ conflicts between stakeholders (e.g. Frederick et al.
1992), and thus further deepen the ‘othering’ of stakeholders. For instance, Freeman argues that ‘the job of management is to keep stakeholder interests “in balance” ’ (Freeman et al.
2010, p. 214). While he stresses that this does not mean equal treatment, the point to note is that it is managers who consider and balance interests, not stakeholders themselves. Reynolds, Schultz and Hekman similarly argue that ‘one of stakeholder theory’s central tenets … is that managers are actively engaged in balancing the interests of their relevant stakeholders’ (
2006, p. 292). In fact, the ubiquitousness of this assumption has resulted in it being taken for granted. Rather than discussing whether managers
should balance stakeholder interests, the question for Ogden and Watson (
1999, p. 527) became the extent to which it is possible to ‘[maintain] an
appropriate balance between different stakeholder interests’ (emphasis added). Stakeholders then, depend on managers to hear them in the first place, and then to interpret their engagement in light of, and in connection with, other groups.
In addition, managers are increasingly depicted as playing an important role in ensuring positive social change through the brokering of stakeholder relationships. Bridoux and Stoelhorst for instance suggest that organisations contribute to social welfare by fostering cooperative stakeholder relationships, which they are able to achieve because ‘managers shape how individual stakeholders relate to the firm and to each other’ (
2016, p. 232). Mitchell et al. (
2016) characterise the role of managers as intermediaries of broad stakeholder groups. Thus in addition to managers deciding between stakeholders, they are also often depicted as neutral parties mediating tradeoffs between these groups. In such cases, managers and the organisation are conflated into one entity, obfuscating key power dynamics, and essentializing
both managers and stakeholders.
Stakeholder as Essentialist Other
This essentialisation of all stakeholders is common from quite early on in the formulation of stakeholder theory—stakeholders are often perceived as having ‘typical’ interests. For instance, Pearce states that:
[i]n general, stockholders claim appropriate returns on their investments; employees seek broadly defined job satisfaction; customers want what they pay for; suppliers seek dependable buyers; governments want to adherence to legislated regulations; unions seek benefits for members in proportion to their contributions to company success; competitors want fair competition; local communities want companies that are responsible “citizens”; and the general public seeks some assurance that the quality of life will be improved as a result of the firm’s existence (
1982, p. 22).
Looking at more recent literature, it is clear that for many, the typical interests ascribed to stakeholders have changed little over time (see for instance Madsen and Bingham
2014), and that in fact, interests may not be a key driver of action (Rowley and Moldoveanu
2003).
This tendency towards seeing stakeholders as having typical interests that are relevant to the specific group, and the relatively unchallenged assumption that it is valid and legitimate to consider stakeholders in this way, represents their treatment as essentialist subjects (Butler
1990). While some contributions do discuss the fact that certain stakeholders are themselves heterogeneous
within-group (e.g. Hart and Sharma
2004; Bridoux and Stoelhorst
2014; Greenwood and Anderson
2009), the vast majority of work ‘probably implicitly, assume[s] homogeneity of interests and priorities within role-based stakeholder groups’ (Wolfe and Putler
2002, p. 66). Each stakeholder category (e.g. customer) is largely depicted as having a stable, fixed identity (e.g. focused on product quality and customer service), determined according to the perspective of the organisation (Friedman and Miles
2002). As a result, stakeholder interests are fixed to the relevant group and treated as relatively homogenous.
Essentialising groups in this way has the tendency to marginalise the experience and interests of much of the group in question (Hekman
2000), resulting in any other interests from this group not being heard. For instance, it is reasonable to suggest that people who are not customers of an organisation may be concerned about product quality. The outcry associated with the levels of pesticides in Coke in Kerala, India was not just from those who did or could presumably be exposed to this product, but from the international community, most of whom would have no risk of drinking the faulty product (see for instance Economist
2005). This is but one example demonstrating that stakeholders have many and varied interests, and that these likely span different social groups.
One of the few works to recognise and discuss heterogeneity of stakeholder interests was Freeman in his original discussion of the stakeholder role set. He indicated ‘an employee may be a customer for XYZ’s products, many belong to a Union of XYZ, may be an owner of XYZ, may be a member of Political Party #1 and may even be a member of a consumer advocate group. Many members of certain stakeholder groups are also members of other stakeholder groups…’ (
1984, p. 58). He then goes on to argue that these will cause conflicts and differing expectations for the organisation, which managers must then balance. Importantly, he highlights that this membership in more than one group at the same time is likely to cause ‘[c]onflict within each person and among group members’ (Freeman
1984, p. 58). This conflict can surely be interpreted as individuals with varied interests who bring all their interests to bear on membership within each specific stakeholder group. Kassinis and Vafeas (
2006) go further to investigate different aspects of within-group heterogeneity of two stakeholders—community and regulatory. They found constituents of communities that were wealthier, had ties to pro-environmental organisations and were more densely populated, were associated with significantly lower toxic emissions levels from local plants. Different constituents of the same stakeholder group therefore, were more influential on organisational activity than others—providing empirical evidence and support to Freeman’s assertion, that ‘most human beings are pretty complex’ (Freeman et al.
2010, p. 7), rather than having homogenous interests.
Thus, the research implies that social intersections across stakeholder groups impact on decisional outcomes. But what it fails to address is the intersectionality
within a ‘single’ stakeholder group (community), and how these intersections (black and impoverished or white and historically wealthy) influence their experience of waste facilities and the structures that impose resulting pollutants on them. Certainly research into intersectionality would suggest that middle-class, white women experience life and have many different interests to black, working-class women (Yuval-Davis
2006). Useful depictions of stakeholders need to better incorporate this complexity, to let the more marginalised within a stakeholder group be identified more consistently.
In addition to this work are a few who question ‘role-based’ identification of stakeholders (e.g. McVea and Freeman
2005), and the view of the self used within management. For instance, Crane and Ruebottom maintain that ‘economic roles and social identities cannot stand independently, but must be analysed simultaneously’ (
2011, p. 78). Their way forward is an interesting step towards recognition of not only the power associated with economic identification of valid stakeholders, but the heterogeneity that exists within traditional stakeholder groups. Recognition of ‘other’ is the first step in removing the distance between self and other.
As we saw earlier, Freeman and Auster (
2011) begin to challenge the concept of the essentialist values in leadership, and instead suggest a more connected self that should be
joining together and engaging in joint understanding and introspection, connection and creating joint aspirations given their histories. This process of ongoing dialogue and conversation about who we are, what we stand for, where we came from and how we want to ‘live’ in the organisation nurtures the conditions in which authenticity is likely to emerge (Auster and Freeman
2013, p. 41).
We are thus encouraged to see ‘others’ for who they are, where they have come from and their future aspirations.
In so doing, these contributions strongly recognise the existence of ‘other’, and a desire to understand and collaborate with them. They demonstrate the need for an enriched depiction of the stakeholder concept, that takes into account both the self and other, and who operates outside the walls of the corporation. Our finding that the stakeholder concept is underpinned by the essentialist self provides both a reason for the concern with self that has bubbled up within the literature, and an important change needed to begin addressing marginalisation—a stakeholder concept enriched by an explicit use of a relational self, where multiple dynamic selves are recognised as comprising the whole self, and selves held in common with others are found outside and inside the organisation.
Therefore, in the final section, we begin to enrich the stakeholder concept to explicitly account for multiple heterogeneous selves. To do so, we first define ‘stakeholder’ in a way that is consistent with the relational self. We then briefly consider how an enriched stakeholder concept might be brought into practice by considering stakeholder identification processes.