The stakeholder management approach is a response to the growth and complexity of contemporary corporations and the need to understand how they operate with their stakeholders and stockholders. Stakeholder theory argues that corporations should treat all their constituencies fairly and that doing so can enable the companies to perform better in the marketplace.21 “If organizations want to be effective, they will pay attention to all and only those relationships that can affect or be affected by the achievement of the organization’s purposes.”
The stakeholder management approach not only in its theoretical form, but also as a practical method to analyze how companies deal with their stakeholders. We therefore use the term “stakeholder analysis” (which is part of stakeholder management) to identify strategies, actions, and policy results of firms in their management of employees, competitors, the media, courts, and stockholders.
The process to work
Later in the chapter, we introduce “issues management” as another set of methods for identifying and managing stakeholders. We present issues management and stakeholder theory as complementary theories that use similar methods, as we show later. Starting with a major issue or opportunity that a company faces is a helpful way to begin a stakeholder analysis.
22 Although stakeholder theory includes a fiduciary dimension by nature of its intent, as Freeman was quoted as saying above, we apply this theory in ways that use ethical principles such as justice, utilitarianism, rights, and universalism to individual stakeholders and their interactions with each other and corporations.