Page 70 - Corporate Communication

Cornelissen-03.qxd 10/9/2004 9:04 AM Page 59

Stakeholders, Identity and Reputation 59

Governments Investors Political groups

Suppliers FIRM Customers

Trade
Employees Communities
associations

Figure 3.2 Stakeholder model of strategic management

firm is merely financial.The stakeholder model (Figure 3.2) contrasts explicitly with
the input–output model in all its variations. Stakeholder management assumes that
all persons or groups with legitimate interests participating in an enterprise do so to
obtain benefits and there is no prima facie priority of one set of interests and bene-
fits over another.Hence,the arrows between the firm and its stakeholder constituents
run in both directions.All those groups which have a legitimate stake in the organi-
zation, whether purely financial, market-based or otherwise are recognized, and the
relationship of the organization with these groups is not linear but one of inter-
dependency. In other words, instead of considering organizations as immune to govern-
ment or public opinion, the stakeholder management model recognizes the mutual
dependencies between organizations and various stake-holding groups – groups that
are themselves affected by the operations of the organization, but can equally affect
the organization, its operations and performance.
The picture that emerges from all this is a far more complex and dynamic one
than the input–output model of strategic management that preceded it. More
persons and groups with legitimate interests in the organization are recognized and
accounted for, and these individuals and groups all need to be considered, addressed
and/or accommodated by the organization to bolster its financial performance and
secure continued acceptance of its operations. One further significant feat of the
stakeholder model of strategic management is that it suggests that an organization
needs to be found ‘legitimate’ by both ‘market’ and ‘non-market’ stake-holding
groups, the notion of legitimacy stretching further than financial accountability to
include accountability for the firm’s performance in social (social responsibility,
community involvement, labour relations record, etc.) and ecological (e.g. the
reduction of harmful waste and residues, the development of ecologically friendly
production processes, etc.) terms.
True, organizations have always, even before the widespread adoption of the
stakeholder philosophy in the early 1990s, dealt with so-called ‘non-market’ groups