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V. Methodological Definitions Stakeholder analysis, stakeholder management, and stakeholder theory, are concepts which, for our purposes, have emerged from a body of literature which has had profound impacts upon the business and society literature (Rowley, 1997). Since the publication of Freeman’s influential piece, Strategic Management: A Stakeholder Approach (1984), research in the area of stakeholder theory has exploded, proceeding to redefine traditional modes of thought in the business management literature. To date, however, scholars in public administration have failed to take advantage of the work these scholars have to offer. In part, this is a result of the ontological/epistemological biases upon which public administration research is founded. We contend however, that the stakeholder management literature is easily adaptable into a format which readily meets the needs of administrators in the public sector. Bowditch and Buono (1994) argue that the development of stakeholder theory is part and parcel of an epistemological shift in the business literature which is akin to the shift currently occurring in public administration towards network approaches to governance (see also Freeman and Evan, 1990). Contrasting the traditional stockholder model with a stakeholder perspective (see Figure 2), the authors contend that “the stakeholder model suggests that corporations are servants of the larger society” (252). The stockholder model holds the organization as a central entity, impacted by or impacting only entities directly associated with it, such as employees, shareholders and suppliers. In contrast, the stakeholder model “includes a wider variety of groups” in the network of organizational activity. The allusion to networks is not accidental. As organizations across all sectors become increasingly interdependent, the need to recognize and understand the broad dynamics of the various relationships organizations confront in daily life will be critical to effective management (Wamsley and Schroeder, 1996; Schroeder, Wamsley, and Lane, 1996). This trend is identical to the shift in public administration and political science away from black box approaches to policy-making and governance (i.e., Easton, 1953) towards more inclusive and descriptive approaches 12
which aim to capture the richness of organizational life. And as noted above, these approaches increasingly rely upon qualitative methodologies in order to be applicable. What is a stakeholder? Freeman defines a stakeholder as “any group or individual who can affect or is affected by the achievement of an organization’s objectives” (Freeman, 1984: 46). While this definition may seem rather broad, it highlights one important fact; just about anybody can be a stakeholder. Table 1 gives a more exhaustive list definitions of stakeholders in the stakeholder theory literature. Within this literature, the definition that provides the most operational guidance for our purposes is provided by Mitchell, Agle, and Wood (1997), where classes of stakeholders are identified by their possession or attribution of one, two, or all three of the following attributes: (1) the stakeholder’s power to influence the firm or organization, (2) the legitimacy of the stakeholder’s relationship with the firm or organization, and (3) the urgency of the stakeholder’s claim on the firm or organization (854). VI. Stakeholder Analysis – The Method Mitchell, Agle, and Wood’s (1997) formulations of power, legitimacy, and urgency can be visualized in figure 3. In general, power can be defined simply as “the probability that one actor within a social relationship would be in a position to carry out his own will despite resistance,” or the ability of some actor A, to get another actor B to do something that B would otherwise not do” (p. 865). They further distinguish power by dividing the various types of resources one uses to exercise that power: coercive power is based on physical restraint, violence or force; utilitarian power is based on the premise that material or financial resources can be used as a resource for power; and finally, normative power, which relies on some aspect of moral or symbolic resources to induce a particular outcome. 13
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