Resistencia estudiantil: las luchas anti-Planes de Ajuste Estructural

After the stakeholder theory was explained and discussed, we need to get one step further. The question guiding this chapter is how the stakeholder theory is applied in practice and therefore also forms the basis for the perspective that the author will take for the empirical part of this study when analysing the cases of two organisations.

2.5.1 Stakeholder theory and strategic management

Before directly demonstrating how the stakeholder theory is applied in practice, it is beneficial to provide a short insight into how the stakeholder theory is connected to strategic management. In this study, strategic management is understood mainly following the definition provided by Nag, Hambrick & Chen

"The field of strategic management deals with the major intended and emergent initiatives taken by general managers on behalf of owners, involving utilization of resources, to enhance the performance of firms in their external environment." (Nag et al, 2007, p. 944), but does not emphasise the ownership aspect as this is seen as a weakness of the definition seen in connection with the stakeholder theory.⁹

It needs to be stated that (like often in business research), practice does not always follow theory. In fact, it is more likely that research follows practice. This means that the application of the stakeholder theory was not undertaken after this concept was published. Harrison and St. John comment on this, stating, “…we discovered that many of the best-run organizations have already integrated comprehensive stakeholder analysis and management processes into their organizational planning” (Harrison & St.

John, 1994, p. xiii). The same authors have divided the stakeholder environment into three different areas. The broader environment forms the level that the focal organisation has the least influence on (e.g. society economy, legal framework). The second area is referred to as the operational environment, which includes the external stakeholder of the organisation. The external stakeholders of the organisation influence the organisation or are directly influenced by it. Internal stakeholders form the third group (Harrison & St. John, 1994). In those authors’ strategic management process

9 For this see also Sachs and Rühli, 2011, p. 34.

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model, they use the resource-based view to find out how the internal stakeholders can be used to achieve a competitive advantage. In the 5-Forces model, Porter analyses the external environment in order to gain information for the focal organisations’ strategic management process (Freeman et al., 2010). Freeman et al. point out here, that the formerly named three areas defined by Harrison and St. John are congruent with the social political area, the industry structure and the organisational resource base as defined by Post et al. (2002). There are many further points that demonstrate the connection between the stakeholder theory and strategic management, but rolling out every single interlinkage, however, does not provide additional value to this study.¹⁰ Following that, it is obvious that when adopting a stakeholder perspective, management practice may be influenced. As the nature of the stakeholder approach is already quite a practical one, it is not a surprise that it has been welcomed and applied by many practitioners. Therefore, the stakeholder concept has recently gained popularity in the corporate world mainly because it is often connected with addressing issues related to corporate responsibility, but also because its application can indeed lead to a societal value creation. As a result of that, many organisations directly address the needs of their multiple stakeholders within or during their strategic management processes (Freeman et al., 2010). As a consequence of this, many consulting companies started to offer guidance and other consulting services to support their customers’ stakeholder strategies, dialogues and engagements (more on that in the next chapter).

The change that needs to be realised in organisations that want to take the stakeholder perspective should not be underestimated. As already stated, it may influence the organisation’s strategy process and therefore may also question many of the current practices. This change in the mindset of the organisations’ decision makers is crucial, but it needs to establish long-lasting relationships and to enjoy the competitive advantages that can result from that shift later on (Alexander, Miesing & Parsons, 2005;

Laszlo, Sherman, Whalen & Ellison, 2005). During the last few years, researchers have developed several approaches and concepts on how to get involved with stakeholders.

These approaches and concepts are introduced below.

10 For further information on that, please see Freeman et al., 2010, pp. 105–109.

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2.5.2 Stakeholder dialogue and engagements

Getting involved with stakeholders is an important step for the development of an organisation. However, organisations tend to focus on their own goals and bearing them in mind when starting to engage with their stakeholders. Here some authors use the term

‘enterprise logic’. Enterprise logic suggests that the organisation’s environment, influenced by their economic, social and political stakeholders, may result in different levels of attention which is granted to each stakeholder (Crilly & Sloan, 2012). Mostly, this is not only to create benefits for the own organisation, but also to prevent risks from endangering the own business (an example would be dialogues with NGOs for a project that may affect something the NGOs intend to protect) (Maurer & Sachs, 2005).

Although this approach is comprehensible, organisations should try to find a wider and more open approach and gain an according mindset. An open approach allows organisations to be much more flexible and therefore allows them to better navigate through diverse and challenging socio-political issues. It therefore also forms the basis for learning, innovation and even some fundamental corporate transformations. As a consequence, a very open approach better allows for the creation of mutual value in ways that organisations have not expected (Sloan, 2009; Schmitt, 2010).

It also needs to be mentioned that Bridoux & Stoelhorst (2014) have also analysed how the stakeholder management approach of an organisation impacts its value creation.

They suggest that not always such an open and fairness-oriented approach is advisable and therefore analysed so called arms-length approaches, where only minimal cooperation with stakeholders is maintained. They highlight that reciprocal stakeholders do indeed contribute more to the value creation with a fairness approach. However, the reverse is true for stakeholders which are self-regarded (Bridoux & Stoelhorst, 2014).

Therefore the nature of the stakeholders an organisation is engaging with is of greater importance and needs to be considered before an engagement is initiated.

There is no one and only way to start cooperating with organisations’ stakeholders.

Most organisations that adequately plan their stakeholder management start with mapping their stakeholders who will eventually end up in an outline of the perceived stakeholder network where the organisation is embedded. This forms the basis for contacting the different stakeholders and starting open communication with them. If the approached stakeholders are willing to start a dialogue with the focal organisation, this

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may start. For this study, we differentiate between a dialogue and the issue-related engagement. While the dialogue with stakeholders is characterised by an open exchange and collaboration, an engagement is often oriented on an issue that cannot be dealt with by the focal organisation or even by an industry itself. Those issues are mostly characterised by their complexity and are therefore often called ‘wicked issues’ in the according literature (see Sachs, Rühli & Meier, 2010; Schmitt, 2010). An example for wicked issues could be the fight against obesity in a society or dealing with a lack of skilled workforce in a national or regional labour market.

The Stakeholder Value Management System

As a basis, this study takes the latest framework that has been tested in practice by several research projects (Sachs, Schmitt, Streiff, Schneider & Sitte., 2012; Sachs &

Rühli, 2011). The so-called Stakeholder Value Management System (SHVMS) describes the typical sequences of a stakeholder engagement (Sachs, Groth & Schmitt, 2010). It does not suggest that a stakeholder engagement is a linear process, but it demonstrates the different steps the focal organisation and its stakeholders normally go through when engaging with each other. In the first step, the focal organisation identifies the strategically relevant issue (eventually a wicked issue) and also identifies the strategically relevant issues to deal with that issue. In the second step, the perception of the issues and the related risk and benefit potentials are investigated through the focal organisation and its stakeholders. Until that stage, all is still a preparation for the engagement itself. Following this is step three, where a dialogue with selected stakeholders is implemented. This step represents a phase that can take years to complete and it is also the most crucial one for success (Sachs et al., 2012). The results that may be created through step three then lead to strategic implications for the focal organisation and for its stakeholders during step four. In the final step, the results from the engagement may lead to a re-definition of success for the focal organisations and therefore become part of the governance structure.

As mentioned before, the SHVMS should not be understood as a linear or sequential process. There are many dynamics involved in a stakeholder engagement that requires a high flexibility from all involved stakeholders. It is important to note that time is something that is not reflected in the model. It can take years until an organisation has finished step one. Therefore there are no implications for the time that it may take to go

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through such a process as this is due to a wide variety of factors. What can also be observed, is that the focal organisation needs to take some loops from step two back to one and again to clarify the issue and the stakeholder setting as well as to adjust to eventual changes in strategy or focus. Through case studies in different research projects, this SHVMS was applied on multiple organisations by Sachs, Groth and Schmitt (2010) and Sachs, Schmitt, Streiff, Schneider and Sitte (2012), covering different industries. It was observed that all analysed organisations went through the mentioned phases. What has also been validated was the previously named non-linearity of the model and the loops which some organisations need to take during stakeholder engagements. Based on that it can be said that the SHVMS has proven to be a valid model to observe and mirror the engagements of organisations with their stakeholders.¹¹ 2.5.3 Summary

This short section intends to quickly summarise the main relevant issues of Chapter 2.5 for this study. The main question of this chapter is how the stakeholder theory is applied in practice. It has been demonstrated that empirical studies acknowledge and explain the benefits or advantages of a proactive stakeholder management for the focal organisation.

When applying the stakeholder theory, different authors have divided the stakeholder environment into three different areas. The broader environment or socio-political area forms the level on where the focal organisation has the least influence. The operational environment or industry structure includes the external stakeholder while the internal stakeholders form the third group (also referred to as organisational resource base) (Harrison & St. John, 1994; Post et al., 2002).

When organisations take a stakeholder perspective, the management practice may also be influenced. The stakeholder approach is already quite a practical approach, which is why it has been welcomed and applied by practitioners already. Those organisations directly address the needs of their multiple stakeholders within or during their strategic management processes (Freeman et al., 2010). This also results in a new field of consulting including guidance and other consulting services to support the stakeholder

11 The author has been involved in a major research project where three organisations have been accompanied by the research team over three years while they went through their engagements and therefore through the SHVMS – see Sachs et al. (2012).

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strategies, dialogues and engagements that are nowadays offered by different consulting companies.

Adopting the stakeholder perspective as an organisation should not be underestimated.

It may influence the organisation’s strategy process and therefore also question many of the current practices. This change of organisational mindset is crucial (Alexander et al., 2005; Laszlo et al., 2005).

Organisations engage with their stakeholders not only to serve their own goals and prevent risks, but also to consider the needs of their stakeholders. The Stakeholder Value Management System describes the typical sequences of such a stakeholder engagement. There are many dynamics involved in a stakeholder engagement that require a high flexibility from all involved stakeholders (Sachs et al., 2012).