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60 Mapping the Field

or publics (see also Chapter 2). However, before stakeholder management, such
non-market groups were seen as necessary to communicate with only because of
their indirect or more direct capacity to block markets within the context of the
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input–output model, or their ability to condition or affect customer relationships and
sales.Igor Ansoff, an eminent strategy professor, illustrated this feat of the input–output
model, in his 1960 Corporate Strategy book in which he made a distinction between
economic or market objectives and social or non-market objectives; with the latter
objectives being a secondary, modifying and constraining influence on the former. 6
The stakeholder concept, in contrast, provides a drastically different view of the
nature of the relationship of an organization with such non-market parties as govern-
ments, communities and special interest groups.These non-market groups are first of
all credited as forces that need to be reckoned with; and the relationship of the orga-
nization with these non-market groups, as well as with market groups, is character-
ized by institutional meaning. In this institutional or socio-economic view, an
organization is seen as being part of a larger social system that includes market and
non-market parties, and as dependent upon that system’s support for its continued
existence. Organizational goals and activities must in this sense be found legitimate
and valued by all parties in the larger social system, where every market or non-market
stakeholder has to be treated by the organization ‘as an end in itself,and not as a means
to some other end’. 7
Accountability of the organization towards all stake-holding groups stretches, as
mentioned, further than financial performance alone into the social and ecological
realms, and is captured with the roomier concept of legitimacy.This notion of legiti-
macy derives from norms and values of each of the stakeholder groups depicted in
Figure 3.2 about what each deems acceptable and favoured of an organization.
Having a reputation as a financially solid organization with a proven social and ecolo-
gical track record (particularly in such areas as labour conditions,environmental perfor-
mance and promotion of human rights) normally provides sufficient ground to be
found legitimate by most, if not all, stakeholder groups. Framing accountability
through the concept of legitimacy also means that organizations engage with stake-
holders not just for instrumental reasons where it leads to increases in revenues and
reductions in costs and risks (as transactions are triggered from stakeholders or as a
reputational buffer is created for crises or potentially damaging litigation) but also for
normative reasons. Instrumental justification points to evidence of the connection
between stakeholder management and corporate performance.Normative justification
appeals to underlying concepts such as individual or group ‘rights’,‘social contracts’,
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morality, and so on. From this normative perspective, stakeholders are persons or
groups with legitimate interests in aspects of corporate activity; and they are identi-
fied by this interest, whether the corporation has any direct economic interest in
them or not.The interests of all stakeholders are in effect seen as of some intrinsic
value in this view.That is,each group of stakeholders merits consideration for its own
sake and not merely because of its ability to further the interests of some other group,
such as the shareowners.
Instrumental or normative motives for engaging with stakeholders, however,
often converge in practice, as social and economic objectives are not mutually exclu-
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sive and as ‘doing good’ with one stakeholder group delivers reputational returns
and easily carries over and impacts on the views of other stakeholder groups.So,while