Since a stake can be defined as “something of value, some form of capital – human, physical or financial – that is (placed) at risk, either voluntarily or involuntarily” (Clarkson, 1998, p. 2), organisational stakeholders can be understood as “individuals or groups who incur and/or impose risk in their relationships with the organisation.” (Vidaver-Cohen, 2007, pp. 278-304). The stakeholder groups that can both incur and impose risk, cannot only
Stakeholders have an interest in an organisation and they are affected by all decisions and actions taken by an organisation to attain its objectives. Stakeholders can be internal or external to the organisation. Stakeholder relationships are categorised in to the following four categories participative, collaborative, informative and defending. (Anon., 2017) Stakeholder engagement is a process of engaging with the relevant stakeholders (Morphy, 2015-2017). Stakeholder engagement is about addressing problems by providing strategies, infrastructure and processes.
Argument 1 Prior to the stakeholder theory, companies were following shareholder theory, in which suggested that company focus should be on maximizing profit for shareholders and decisions are based in benefiting the shareholders. In 2001 and 2002, The American corporate world was rocked by scandals from companies such as Encron, AOL, Worldcom and others due to manipulation of the company accounts in order to provide more profit for their shareholders. Such scandals provided the justification for companies to use stakeholder theory (Smith, 2003). Stakeholder theory advocates that all the stakeholders, in which include employees, suppliers, customers, local community, key government agencies and management should be involved in the decision
The Stakeholder Salience Theory, created by Mitchell, Agle and Wood, are based upon the combination of the three relationship attributes to generate general types of stakeholders. These attributes include: Power; Legitimacy; Urgency. “Stakeholder salience” is defined as the degree to which managers give priority to competing stakeholder claims. Therefore if a stakeholder consist of all three attributes, he/she/it will be of most importance and will have more rights and privileges than a stakeholder that consists of only one of the three attributes. As seen in the picture on the right, you can differentiate between the different types of stakeholders, according to where they get placed given the attributes they consist of.
How Should You Prioritize Your Stakeholders Working in a global organization gives us the opportunity to interact with various sorts and varieties of stakeholders, the actions we take and the projects we run will affect more and more people. The people we affect are those who can contribute to our overall growth or fail the projects. If we can prioritize correctly, they can provide industry insight, highest commitment or even powerful outcome that can help our organization achieve the goals. To clarify, a stakeholder is any individual or group of people who will be impacted by changes resulting from the business initiative, and can influence the success of the business initiative. An organization has a variety of key groups, different group will bring different expectations due to their relationship with the organization.
Both the stakeholder model and shareholder primacy provide views into the important question as to whose interests businesses should act in. When the interests of shareholders and that of a different stakeholder group are in conflict it is imperative for the business to know where they stand surrounding the issue of which group’s interests they should support. This essay presents the reasons behind taking a position in favour of the stakeholder model and argues that acting in the interests of the group which has the most merit surrounding the conflict, as this model suggests, is most appropriate. This is done by critically evaluating the arguments for shareholder primacy that state that by prioritising shareholders’ interests will ultimately benefit everyone and the argument that claims that shareholders are the owners of the business and their interests should thus be favoured. It also presents and critiques the argument in favour of the stakeholder model that claims that contributions are made by all stakeholders and therefore businesses should act in everyone’s interest.
The stakeholder theory initially developed by Freeman (1984), Perez, Martinez and Rodriguez (2013). They defined stakeholders as those groups or individuals who can affect or are affected by the achievement of the organization’s objectives or those with direct or indirect interest in the company. According to Freeman (1984), when companies doing business, they need to consider the interest of their stakeholders (as cited in Öberseder, Schlegelmilch, & Murphy, 2013). This view is supported by Perez (2013), where he addressed that companies need to satisfy the stakeholders because they are the main target of audience. Typically, stakeholders include employees, customers, suppliers (McWilliams, Siegel, & Wright, 2006), shareholders, non- governments
It aims to create and optimise value for all stakeholders of the business, where this act is suggested to be able to lead a healthy, sustainable and resilient business, thereby to maximise the shareholders’ wealth. Conscious business comprises four arms: Purpose, Culture, Leadership and Stakeholders (Figure 1). With reference to the title, this text focuses on the Stakeholder Theory of conscious capitalism. Figure 1. Conscious Capitalism
Ekta (2014) found an upward shift in the CSR trend in terms of awareness and initiatives practiced by the business organizations. He advocated that business practices in this era created so many damages to the society and environment which make the business to solve the problems created by them. Thus businesses should consider CSR as an important activity. The authors studied the different aspects of classification of CSR, outcomes that they get out of CSR, current scenario of CSR in India and Corporate Social Responsibility as a top driven approach. The CSR activities were found to have a positive impact on the society as well as corporate image.
The following chapter will deal with the definition of stakeholders in general and then go over the different stakeholders that are influencing the tourism industry in the Fiji Islands. Furthermore, it will explain what their role is in this industry. To start off, anyone that is involved in a business is defined as a stakeholder. Now, a stakeholder can be an individual, a group or even an organization that either profits or suffers from the activities a business takes. Stakeholders are owners who show interest in the amount of money that the business make.