Challenges in the Era of Globalization - iaabd

Proceedings of the 12th Annual Conference © 2011 IAABD
introduced the term in 1963 to generalize and expand the notion of the stakeholders as the only group that
management needed to be sensitive towards (Jongbloed et al., 2008). Meanwhile, in accordance with
Friedman and Miles (2006), the term “stakeholder” has been deployed indiscriminately in the last two
decades (Wagner et al., 2011). Although each researcher defines the concept differently, they do as a rule
reflect the same principle to a larger or lesser extent: the company should take into consideration the
needs, interests and influences of peoples and groups who either impact on or may be impacted by its
policies and operations (Frederick et al., 1992). Extant literature defines stakeholder as any group or
individual who can affect or is affected by the achievements of the organization’s objectives (Freeman,
1984). Stakeholder theory is timely for PR (Woerkum and Aarts, 2008), as it concentrates on the longterm
social networks and relationships that organizations have (Wilson, 2001). Luoma-aho (2007),
observed, stakeholders’ assessment and expectations contribute highly to organizational reputation and
legitimacy. However, stakeholder theory has been criticized for assuming the environment is static
(Luoma-aho and Paloviita, 2010). The organizational environment of stakeholders in not static, but
marked by conflict of interest; societal developments are constantly changing the field of forces in which
organizations operate (Vos and Schoemaker, 2005). Foley and Kendrick (2006) speak of stakeholder
environment as a fragile ecosystem. So far, the dynamic nature of this ecosystem has not been fully
addressed (Wu, 2007).The stakeholder model is seen as suffering from vagueness in scope and ambiguity
due to the possible interpretations of the basic stakeholder concept in either narrow or broad senses
(Hansen et al., 2004).The different understandings are founded in the differences between managerial and
legal interpretations of the stakeholder concept (Fassin, 2008). The legal interpretation – reinforcing the
philosophical analysis- rests upon rights and contracts: stakeholders have claims, firms have obligations
and duties. Conversely, the managerial approach, originating from organization theory and sociology, is
more pragmatic and emphasises the relational aspects between stakeholders and the firm (Pesqueux et al.,
2005).
Following the confusion in identifying and determining the responsibility of firms to its various
stakeholders, Fassin (2008), identified three categories of stakeholders : stakeholder, stakewatcher and
stakekeeper. The three categories have substantially different profiles. For the real stakeholders, who
possess a legitimate claim, power and influence are reciprocal; the firm has responsibility for them.They
include shareholders, customers, employees, business partners, and communities. The firm has little
power on and no responsibility for indirect stakeholders, whose legitimacy is derivative (Philips, 2003).
The stakewatchers encompasses those stakeholders who look after a stake with care, attention and
scrutiny just as watchdogs do (Fassin, 2008). Examples include unions guarding the stake of employees
and workers; consumer associations defending the stake of consumers; investor associations protecting
the interest of shareholders; and activitists watching the stake of the community and the environment. The
stakekeepers is another group who are even further removed from the active real stakeholders: the
independent regulators, who have no stake in the firm but have influence and control. They impose
regulations and constraints, while the firm has little reciprocal direct impact on them. The term gatekeeper
or stakekeeper connotes some form of outside or independent monitor with some power to screen out or
at least to grade or rate the persons or entities he scrutinises. Examples in finance are auditors, security
analysts, Security and Exchange Commission. They are typically “repeat players who provide
certification or verification services to investors” and “act by pledging their reputational capital to the
corporation” to assure investors as to the quality of the information (Coffee, 2006). Governments tend to
be the major generic stakekeeper. Specific stakekeepers include court, regulatory agencies, certification
organizations, independent evaluation bodies and laboratories. The press and the media form another
grouping of stakekeepers. The actions of stakekeepers find their expressions in laws, norms, codes,
analyses etc. and in publications.
Following the above categories of stakeholders, the question is, to what extent must an organization’s
CSR engagements consider the divergent interests of each group? There is little doubt that CSR is now a
prominent feature of the international business agenda (2007), and that CSR meaning, orientations,
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