MARCO CONCEPTUAL

Although the concept of stakeholder management was rooted in the field of strategic management, few studies have directly linked stakeholder management to competitive advantage. Nevertheless, some researchers have examined the association between these two subjects. For example, as discussed earlier, Jones (1995) has argued that stakeholder management may create competitive advantage by reducing transaction costs as a result of successful trust development. Rodriguez et al. (2002) posit that modern enterprises can achieve competitive advantages by acknowledging the concept of “scarcity of natural resources” (p. 139) and “co-responsibility between businesses and society for the development of social resources” (p. 140). They go on to argue that engaging stakeholder relationships will enhance two sources of competitive capabilities—innovation and reputation. Harrison, Bosse and Phillips (2010) suggest that firms, which share value with their stakeholders and involve them in their strategic decisions, could gain benefits such as “increased demand and efficiency, higher levels of innovation, and an increased capacity to deal with unexpected events” (p. 67), which would further become the source of competitive advantage. Thus, it can be argued from these studies that firms strengthen their

competitiveness by mobilising resources and developing capabilities as a result of successfully engaging stakeholder relationships (e.g., Ayuso et al., 2006; Svendsen, Boutilier, Abbott & Wheeler, 2001). Moreover, such relationships exhibit social complexity or causal ambiguity in nature, so it is difficult for competitors to imitate or substitute them, which could help sustain competitive advantage (Cennamo et al., 2009; Harrison et al., 2010; Rodriguez et al., 2002).

However, research on the linkage between competitive advantage and stakeholder management is at an early stage. It is not clear how to apply the concept of stakeholder management to the main research streams of competitive advantage such as the activity-position view or the resource-based view. While the stakeholder perspective is concerned with both internal and external attributes of the firm, a stakeholder approach examining competitive advantage is still missing. As discussed earlier, corresponding to the three aspects of the concept of competitive advantage—source, durability, and appropriation, common issues of competitive advantage include value creation, value preservation, and value capture. Besides, these issues are interconnected, rather than separate. A systematic approach should involve all the common issues. This review has shown that there is still a knowledge gap between stakeholder management and competitive advantage. In order to fill this gap, based on the common issues related to competitive advantage, three research questions are framed as below.

Value creation. Value creation is not only the key issue of competitive

advantage but also the main theme discussed in the stakeholder management literature. For example, Freeman and Liedtka (1997) suggest a new perspective of the firm as creating value for stakeholders, termed stakeholder capitalism, emphasising that value

creation, instead of value capture, must be the priority of the organisation. Freeman and McVea (2001) suggest that creating value for multiple stakeholders provides opportunities that inspire change and innovation. McVea and Freeman (2005) argue that a stakeholder approach offers a “unique and neglected contribution to decision-making processes, particularly in innovative and entrepreneurial fields” (p. 59). Moreover, the relationships between the firm and its stakeholders can be viewed as value-based networks, moving towards creating value for all stakeholders involved (Wheeler et al., 2003). In brief, stakeholder management is quite compatible with competitive advantage in relation to value creation. However, the relationship between stakeholder management and the source of competitive advantage still merit further exploration. The first research question is framed as follows:

How does stakeholder management influence the source of competitive advantage?

Value preservation. Value preservation is the key to durability or sustainability

of competitive advantage. Regarding durability of competitive advantage, scholars tend to argue that social complexity, or causal ambiguity embedded in engagement of stakeholder relationships, makes it difficult for competitors to imitate a firm (Cennamo et al., 2009; Rodriguez et al., 2002). However, if a stakeholder approach is compatible to one of the three perspectives of competitive advantage—the resource-based, the activity-position, and the relational views, it should offer some elaboration on how stakeholder management can help a firm to sustain the competitive advantage generated, based on the specific perspective applied or, for instance, how stakeholder management may help sustain an advantage generated from enhanced mobilisation of resources, increased switching costs, or improved

proprietary learning, etc. Thus, there is a need to examine how to sustain competitive advantage by stakeholder management. Hence, the second research question is framed:

How may stakeholder management help a firm sustain its competitive advantage?

Value capture. Value capture has frequently been addressed in the stakeholder

management literature. For example, Clarkson (1995) points out that it is crucial for managers to distribute the economic value generated by the firm among primary stakeholders appropriately. Similarly, Asher et al. (2005) emphasise both value creation and value capture are important and managers need to take all relevant stakeholders into consideration in their strategic decisions. Value capture is a main theme of stakeholder management, which is concerned with dealing with multiple stakeholder interests. In particular, the stakeholder perspective is a shift from organisational value to a broader society value (Lepak et al., 2007). Appropriation of competitive advantage is a typical type of value capture that involves dealing with the bargaining power of different stakeholders. It is challenging for managers to balance different stakeholder demands. As indicated by Jensen (2002), the stakeholder management literature dose not seem to give clear guidance for determining how to prioritise stakeholder interests or even how to reconcile the interests. Coff (2003) also indicates that the appropriation of competitive advantage is a relatively under-researched area. Thus, it requires exploring the managers’ role in developing and sustaining competitive advantage while they face the issue of value capture among stakeholders. Hence, the third research question is framed:

How do managers perform their roles in developing and maintaining competitive advantage by balancing different stakeholder demands?