Stakeholder Salience in Public and Private Firms: Results from Tanzania

It has become evident that Western concepts of business and management must be evaluated within their realms of application. The objective of this research was to analyze the effects of stakeholder attributes of power, legitimacy, and urgency on the stakeholder salience of shareholders, employees, customers, and community in state-owned and privatized firms in Tanzania. In general, the framework developed and used in Western studies proved useful in characterizing Tanzanian management perceptions toward stakeholders. That is, when using a common questionnaire, results were obtained that linked stakeholder saliency with underlying attributes. Nevertheless, the saliency profile for stakeholders was different in the Tanzanian culture from previous studies in the United States and Spain. In a Tanzanian context, employees, customers, and community attained inferior status compared to the results obtained in developed countries for which the theory had been developed. Profiles were also different in comparing state-owned and privatized firms in Tanzania. Results indicated that the effects on salience are similar for shareholders but different for the remaining stakeholder groups in the two categories of firms. Some policy recommendations are made as a consequence of observations, and the need for further work is acknowledged.     

The Relevance of Stakeholder Theory and Social Capital Theory in the Context of CSR in SMEs: An Australian Perspective

The concept of business responsibility, usually termed as corporate social responsibility (CSR), originated in the early 1930s after the Wall Street crash of 1929 exposed corporate irresponsibility in large organisations. The understanding of CSR has evolved since then and its scope has now broadened from mere compliance to corporate laws to active alignment of internal business goals with externally set societal aspirations. Unfortunately, the significance of this multidimensional concept within the small and medium enterprise (SME) sector has continued to be overshadowed by its application in large and multinational organisations. More importantly, this has led to the practice of judging SMEs, which are experiencing increasing pressure to engage in social activities, as if they are no different from their larger counterparts. This study therefore investigates CSR from the perspective of SMEs in Australia without any theoretical presumptions and then comments on the relevance and applicability of the two theories that have been commonly used to investigate business responsibility, namely, stakeholder theory (ST) and social capital theory (SCT). The research findings indicate that CSR within the SME sector is more aligned to the fundamentals of SCT, mainly owing to the unique resource and survival challenges that they face, and which are, arguably, not so pronounced in large organisations.     

Stakeholder Salience Revisited: Refining,Redefining, and Refueling an Underdeveloped Conceptual Tool

This article revisits and further develops Mitchell et al.’s (Acad Manag Rev 22(4):853–886, 1997) theory of stakeholder identification and salience. Stakeholder salience holds considerable unrealized potential for understanding how organizations may best manage multiple stakeholder relationships. While the salience framework has been cited numerous times, attempts to develop it further have been relatively limited. We begin by reviewing the key contributions of other researchers. We then identify and seek to resolve three residual weaknesses in Mitchell et al.’s (1997) framework, thereby strengthening its foundations for further development. We argue, first, that urgency is not relevant for identifying stakeholders; second, that it is primarily the moral legitimacy of the stakeholder’s claim that applies to stakeholder salience; and last, that the salience of stakeholders will vary as the degrees of the attributes vary. These insights inform revised definitions of stakeholder salience and legitimacy, and necessitate a new theoretical underpinning for the role of legitimacy. Finally, we present an extensive agenda for future research with the objective of refueling research in stakeholder salience.     

The Primordial Stakeholder: Advancing the Conceptual Consideration of Stakeholder Status for the Natural Environment

This article furthers the argument for a stakeholder theory that integrates into managerial decision-making the relationship between business organizations and the natural environment. The authors review the literature on stakeholder theory and the debate over whom or what should count as a stakeholder. The authors also critique and expand the stakeholder identification and salience model developed by Mitchell and Wood (1997) by reconceptualizing the stakeholder attributes of power, legitimacy, and urgency, as well as by developing a fourth stakeholder attribute: proximity. In this way, the authors provide a stronger basis for arguing for the salience of the natural environment as the primary and primordial stakeholder of the firm.     

An Adversarial Ethic for Business: or When Sun-Tzu Met the Stakeholder

In the economic literature on the firm, especially in the transaction–cost tradition, a sharp distinction is drawn between so-called “market transactions” and “administered transactions.” This distinction is of enormous importance for business ethics, since market transactions are governed by the competitive logic of the market, whereas administered transactions are subject to the cooperative norms that govern collective action in a bureaucracy. The widespread failure to distinguish between these two types of transactions, and thus to distinguish between adversarial and non-adversarial relations, has led many business ethicists to develop a “uniform” moral code. Yet in market transactions, the checks and balances built into the system of commercial exchange are such as to permit more instrumental forms of behavior. In administered transactions, by contrast, these checks and balances are absent, and thus the institutional context calls for much greater exercise of moral restraint. In this paper, I begin the task of developing an adversarial ethic for business. According to this view, the competitive environment licenses a greater range of “self-interested” behavior, but also imposes its own constraints on the strategies that firms may adopt in the pursuit of their interests. Joseph Heath is Associate Professor in the Department of Philosophy and the Centre for Ethics at the University of Toronto. He is the author of three books: Communicative Action and Rational Choice (MIT Press, 2001), The Efficient Society (Penguin, 2001), and with Andrew Potter. The Rebel Sell (HarperCollins, 2004). His research focuses on practical rationality, normative economics, and critical theory.     

An Empirical Investigation of the Relationship Between Change in Corporate Social Performance and Financial Performance: A Stakeholder Theory Perspective

Stakeholder theory provides a framework for investigating the relationship between corporate social performance (CSP) and corporate financial performance. This relationship is investigated by examining how change in CSP is related to change in financial accounting measures. The findings provide some support for a tenet in stakeholder theory which asserts that the dominant stakeholder group, shareholders, financially benefit when management meets the demands of multiple stakeholders. Specifically, change in CSP was positively associated with growth in sales for the current and subsequent year. This indicates that there are short-term benefits from improving CSP. Return on sales was significantly positively related to change in CSP for the third financial period, indicating that long-term financial benefits may exist when CSP is improved.     

The Effect of Stakeholder Preferences, Organizational Structure and Industry Type on Corporate Community Involvement

This paper analyses the relationships between corporate community involvement activities, the organizational structures within which they are managed, the firm's industry and evolving stakeholder attitudes and preferences in a sample of 148 U.K. based firms who have demonstrated a clear desire to be socially responsible. The research highlights significant associations between the allocation of responsibility for community involvement within the firm, its industry and the extent of its community involvement activities. Consistent with the view that managerial structures may play a significant role in the implementation of community initiatives, the results identify significant variations in community involvement policies across alternative organizational forms. However, important similarities in corporate community policies across alternative structures are also shown to exist suggesting that corporate community involvement activities may be influenced by the preferences of societal stakeholders.     

Stakeholder Theory and Managerial Decision-Making: Constraints and Implications of Balancing Stakeholder Interests

Stakeholder theory is widely recognized as a management theory, yet very little research has considered its implications for individual managerial decision-making. In the two studies reported here, we used stakeholder theory to examine managerial decisions about balancing stakeholder interests. Results of Study 1 suggest that indivisible resources and unequal levels of stakeholder saliency constrain managers’ efforts to balance stakeholder interests. Resource divisibility also influenced whether managers used a within-decision or an across-decision approach to balance stakeholder interests. In Study 2 we examined instrumental and normative implications of these two approaches. We conclude by considering the contributions of this research.     

Dynamic Entry and Exit Linkages in the Brazilian Manufacturing Industry: An Econometric Investigation

The paper investigates dynamic linkages between entry and exit rates in Brazilian manufacturing in the context of 231 (four-digit) industries during the 1996–2005 period. The empirical analysis focuses on the estimation of a dynamic panel data model for entry and exit rates, and controls for the business cycle and structural characteristics, such as industrial concentration and suboptimal scale. The empirical evidence is partially consistent with a multiplier effect where synergetic factors prevail by exit inducing exit. Evidence partially supports a competition effect that could be related to a selection process favoring efficiency, as exit induces entry. The business cycle control variable and the aforementioned structural variables appear to play no role in delineating entry and exit linkages. The results are similar, although not identical, to previous evidence for developed countries.     

The Stakeholder Model: The Influence of the Ownership and Governance Structures

This paper addresses the possibilities to introduce the stakeholder model in the firm, especially the possibility to give property or decision rights to stakeholders. This paper argues that it is not practical to give full property rights to more than one group of stakeholders. Decision rights to employees and creditors are already in place in some countries, but the possibility to introduce them more generally to other stakeholder groups depends very much on the governance and ownership structure of the firm and the legal environment. The future of the stakeholder model in a globalised economy is also analysed.Eva Jansson is currently associate professor of managerial economics at the Universitat Autònoma of Barcelona. She holds a BA in statistics from the University of Stockholm and graduated in economics from Universitat of Barcelona. She holds a Ph.D. from Universitat Autònoma of Barcelona. Her research interests have been in fiscal policy, regulations of service sectors and recently topics in corporate governance. Special interest has been given to international comparison of ownership structures, changes in ownership structure of Spanish firms and to the evolution of ownership structures of privatized Spanish firms. Recent works include topics on the stakeholder model.     

产业链治理:技术董事协同能力的影响因素

除职能外,态度、协同范围、激励和协同效应四个因素对技术董事协同能力产生显著影响.在技术主导型产业链治理过程中,首先,应建立良好的董事会专家效应机制特别是对技术董事的授权机制;其次,应着眼于产业链董事会架构,以核心企业为主,节点企业为辅,形成以技术董事为核心、次技术董事为群体的技术专家团队;再次,应建立技术董事选拔、培养机制,采用“技术专家+董事+授权”的方式,营造技术董事发挥协同效应的良好环境,最大限度地发挥技术董事在产业链技术研发和技术战略布局中的协同能力,产生正向协同效应.     

The Collapse of a European Bank in the Financial Crisis: An Analysis from Stakeholder and Ethical Perspectives

Fortis, the leading Benelux financial group, had been a success story of successive mergers of bank and insurance companies, with leadership in corporate social responsibility (CSR). One year after the acquisition of the major Dutch financial conglomerate ABN AMRO, the global financial crisis caused the collapse of the Fortis group. The purpose of this article is to use the case study of Fortis’s recent fall as a basis for reflective considerations on the financial crisis, from stakeholder and ethical perspectives. A selected number of key events of the history of the dramatic crisis at Fortis will be analysed from different ethical frameworks. Special consideration will be given to fairness of communication, shareholder activism and conflicts of interests of CEO’s mergers opportunities. A confrontation between the CSR policy and the reality raises the fundamental questions why the powerful CSR guidelines and ethical principles did not help in the assessment of the risks.     

The Influence of Nationality and Gender on Ethical Sensitivity: An Application of the Issue-Contingent Model

When a member of an organization has to make a decision or act in a way that may benefit some stakeholders at the expense of others, ethical dilemmas may arise. This paper examines ethical sensitivity regarding the duties to clients and owners (principals), employees (agents), and responsibilities to society (third parties). Within this framework, ethical perceptions of male and female managers are compared between the U.S. and Turkey – two countries that differ on power distance as well as the individualism/collectivism dimensions. Our results show that ethical sensitivity varies depending upon whether the interests of principals, agents, or third parties are affected by a given ethical dilemma. We also find that, contingent upon the principal-agent–society relationships, the nationality and gender of the decision-maker influences ethical sensitivity. Can Simga-Mugan is a Professor of Accountancy at Department of Business Administration of Middle East Technical University, Ankara, Turkey. She received her Ph.D. in accountancy from University of Illinois-Urbana-Champaign. Her current research interests are ethics, international financial reporting issues, manipulation in the stock market and effect of news on the stock market. Bonita A. Daly, Ph.D., is an Assistant Professor of Accounting in the School of Business, University of Southern Maine in Portland, Maine. She teaches auditing and financial accounting to both undergraduate and graduate students. Dr. Daly also teaches business ethics in continuing education programs for practicing accountants. Her research on the accounting profession has appeared in Critical Prespectives on Accounting, Accounting, Organizations, and Society, and the St. Johns Law Review, among others. Dilek Onkal is a Professor of Decision Sciences and is currently the Acting Dean of the Faculty of Business Administration at Bilkent University, Turkey. She received a Ph.D. in Decision Sciences from the University of Minnesota, and is doing research on ethics judgements, risk perception, risk communication, and judgmental forecasting. Lerzan Kavut is an Associate Professor at Faculty of Business Administration of Istanbul University. She has received her B.A. and Ph.D. from Istanbul University. Her current research interest is in the area of behavioral auditing.     

Organizational Virtue and Stakeholder Interdependence: An Empirical Examination of Financial Intermediaries and IPO Firms

Organizational virtue orientation (OVO), an organizational-level construct, refers to the integrated set of beliefs and values that support ethical character traits and virtuous behaviors. To advance the study of organizational virtue, we examine OVO in firms making their initial public offerings (IPOs), with respect to key external stakeholders that serve as financial intermediaries (i.e., venture capital firms and underwriting banks). Drawing on stakeholder and resource dependence theories, we argue that mutual interdependencies occur between financial intermediaries and IPO firms such that venture capital firms’ ownership levels and underwriter reputation are positively associated with the selection of more virtuous IPO firms. We also argue for the moderating relationship of IPO firm age on these main relationships; since IPO firms have more history and information availability, less importance will be placed on OVO in the selection process. In support of our hypotheses, the results of this study suggest the organizational virtue of IPO firms influences the selection decisions of financial intermediaries by reflecting positively on these key stakeholders to improve legitimacy and reputation.     

Salience and choice: Neural correlates of shopping decisions

Noninvasive brain imaging was used to observe 18 subjects, each making 90 choices of three brands on a virtual (video) supermarket visit. Package height provided a control for the main experiment. Brain activations in brand choice differed from those for height discrimination, and choice times were faster when one brand was more familiar. Brand choice appeared to involve silent vocalization. Decision processes took approximately 1 s and can be seen as two halves. The first period seems to involve problem recognition and here male brain patterns differed from female. The second half concerned the choice itself. No male/female differences were observed but a different pattern was evoked where one brand was familiar and the other two were not. The right parietal cortex was strongly activated in this case. This research pioneers new techniques using relatively few subjects and against a limited theoretical background. As such it must be classified as exploratory. © 2004 Wiley Periodicals, Inc.     

Digital innovation: An essence for Industry 4.0

The goal of this paper is to explain why digital innovation is so important in business organizations in order to survive in Industry 4.0. The study helps to understand the new era of Industry 4.0 and the importance of introducing digital innovation into organizations. A systematic review of the literature and studies on Industry 4.0 and digital innovation were synthesized to find answers to the research questions. To improve their manufacturing industry, organizations have implemented digital technologies such as augmented reality, robotic sensing, artificial intelligence, cloud computing, cyber physical systems, and remote sensing technologies. These technologies focused on automating logistics and supply chain systems, improving manufacturing system performance, and simplifying automated production systems. Because digital innovations save time and energy, employees can devote more time and energy to creative and innovative activities. Organizations should plan to implement digital technology in order to keep the environment healthy and sustainable while meeting the demands of customers, consumers, and the Industry 4.0 dimension.