An investigation of stakeholder prioritization and engagement: who or what really counts

Following the line of thinking that a firm is a nexus of contracts between stakeholders, with managers as “the central node,” the purpose of this paper is to examine how managers prioritize stakeholder relationships and to what extent firms engage in disclosures with the stakeholder groups they deem to be important.

Data were simultaneously collected from two different national business contexts, Italy and the USA. The sample for this study consisted of 244 managers.

Results of the study show that the power and legitimacy that managers associate with a stakeholder group cumulatively are the most important determinant of how managers go about prioritizing competing claims. The results also provide some evidence to the effect that the greater the priority accorded to a stakeholder group, the greater the efforts aimed at engaging the stakeholder groups (as evidenced by the voluntary disclosures made in the annual report).

Use of self‐report measures, although widely used in behavioral and strategy research, may raise some concerns about the findings. Also, examining annual report's voluntary disclosures as the single source of assessing the stakeholder engagement efforts creates a potential limitation on the findings of the study.

The stakeholder salience framework as examined in this study offers some practical insights into the understanding of which stakeholders do really matter and why. Furthermore, in attempting to relate stakeholder salience accorded to engagement/disclosure efforts, this study shows some potential limitations that managers may face because of prevalent social values and the need to maintain organizational legitimacy.

The main contribution of this paper lies in testing and extending an inferential theory of stakeholder management. The research highlights the unique role that managers play in managing firm‐stakeholder relationships.