Like it or Not: Companies Dragged into the Stakeholder Perspective
This article is one in a series of reports about the Spring 2010 Journal of Public Policy and Marketing special edition on Stakeholder Marketing. See an introduction to and a summary of our coverage of this edition here.
By Kathleen Hosfeld
While some companies step into a stakeholder orientation by choice, others find it forced upon them by stakeholder activists. In “Stakeholder Marketing and the Organizational Field,” by Jay M. Handelman, Peggy H. Cunningham and Maureen A. Bourass, the authors begin with the story of Starbucks’ capitulation to human rights, environmental and nongovernmental organizations’ demands to carry fair trade coffee. Rather than settling the issue, this agreement unleashed further demands from the activist community. As stakeholder dynamics accelerated, Starbucks was forced to move from a position of trying to “manage” stakeholder issues and perceptions to a stance of collaboration. By building partnerships with activists, the authors say the company achieved a degree of legitimacy that “mitigated” further attacks.
The complexity and rapid evolution of stakeholder demands, as demonstrated in the Starbucks example, can outstrip capacity to respond through what the authors call a “strategic” and what I would call an issues-management approach. As a result companies are forced to recognize their place in a field, which the authors describe as a community of organizations and stakeholders – marketers, consumer activists, government, professional and trade associations, and special interest groups.
In order to respond to stakeholder demands, Starbucks was forced to engage with members of the field, instead of managing them. They had to act as one of several constituents in network of embedded relationships. The authors describe similar dynamics in the food retail business during a period of high inflation, when the industry fought stakeholder influence, and compared it with the same industry’s response to challenges between 1988 to 2005 (e. coli outbreak, 9/11 and childhood obesity) in which members engaged with stakeholders. As a result of engaging, food retailers profited, and found ways to leverage events or issues into marketing opportunities (such as appeals to patriotism during the aftermath of 9/11).
The authors make the point that as market and economic forces trigger stakeholder activism, conflicts between activists and the companies they target are based in ideology. Conflict occurs when companies stand solely for their own interests, while activists and other external stakeholders advocate for those they see as vulnerable – consumers, environment, social groups, etc. Parties that begin to see how their own interests are aligned or compatible can bring resolution to issues more efficiently.
The article concludes with recommendations to carefully monitor trigger events that lead to stakeholder activism, to monitor the firm’s own institutional (social, economic and financial) capital relative to stakeholders, and to be conscious of the ideological assumptions that inform the response to stakeholders.