Journal of General Management Vol. 28 No.

3 Spring 2003

Focusing on Value: Reconciling Corporate Social Responsibility, Sustainability and a Stakeholder Approach in a Network World
by David Wheeler, Barry Colbert and R. Edward Freeman
How does corporate social responsibility and sustainable development relate to the creation of business value? Two decades ago, Peter Drucker [1] famously asserted: the proper social responsibility of business is to tame the dragon, that is to turn a social problem into economic opportunity and economic benefit, into productive capacity, into human competence, into well paid jobs, and into wealth. In the intervening years there has developed a lively public debate over the role of business in society most acutely with respect to the supposed social and environmental impacts of economic globalization. This development has led to the concerns of anti-globalization protestors on issues like third world development, poverty, the environment and employment being echoed by large numbers of ordinary citizens worldwide [2]. More recently, a heightened sense of international insecurity has added further urgency to questions surrounding the role of business in society [3]. Academic debates on the purpose of business have tended to focus on the interplay between the rights of investors versus those of other stakeholders. In Anglophone jurisdictions, backed by the weight of company law and corporate governance practice, strategic management

David Wheeler is Erivan K. Haub Professor and Barry Colbert is Senior Research Fellow in the Business and Sustainability Programme in the Schulich School of Business, York University, Toronto, Canada. R. Edward Freeman is the Elis and Signe Olsson Professor of Business Administration and Director of the Olsson Centre for Applied Ethics in the Darden School of Business, University of Virginia, Charlottesville, USA.

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theorists tend to emphasise a simple agency theory of the firm predicated on essentially economic principles; whereas stakeholder theorists advance both normative and instrumental constructions of how and why business creates value for its various constituencies [4]. However, in the context of wider societal developments, i.e. globalization, international security issues, etc., both agency theorists and stakeholder theorists of the firm are now having to address three interwoven concepts: (i) corporate social responsibility (CSR); (ii) sustainable development; and (iii) a stakeholder approach to strategic management. These concepts are often assumed to be consonant but are variously advocated from political, sociological, ethical, ecological and business perspectives [5]. Their academic and civil society proponents frequently employ normative overtones and assumptions, but sometimes balance their arguments according to the commentator, the context or the audience with a more instrumental business case. Thus it is safe to assume that even proponents and sympathetic practitioners risk becoming confused. To address this problem, we wish to move the discussion to a place where it becomes grounded in the assumed central occupation of practitioners, i.e. the creation of business value. However, we acknowledge that even the concept of business value carries ambiguity, with academics, commentators and business practitioners all searching for more useful and compelling ways to describe value and the value creation process. In a world that is becoming ever richer in information and opinion, it is increasingly clear that intangible business assets in particular and business value in general cannot adequately be described in purely economic terms [6]. Similarly, it seems incomplete to describe other forms of intangible value created by business e.g. reputational value, brand value, etc., without some reference to how these relate to economic value over the long term. So, although we begin this paper by asserting that the creation of value is the central motive force of market economies, and by extension the primary purpose of private enterprise, we also acknowledge the paradox that value may be defined by different actors in different ways. Following these two premises our aim is to put forward a simple framework to reconcile the concepts of corporate social responsibility and sustainable development (or sustainability in business terms) with a stakeholder approach, through a focus on the creation of value as defined by different actors and networks as an integrating ground. We believe that a business model that places value creation at its core will allow concepts of CSR, sustainability and the stakeholder approach to find their natural homes, whether at a strategic or a managerial level. We will not attempt to redefine or refine the three terms; simply to demonstrate their practical consonance as they are presently understood. The structure of this paper is as follows. First we offer a range of contemporary business stories to ground our discussion, and to illustrate

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some emerging forms of discourse in what some commentators refer to as the new or network economy. We then present a simple navigational tool that we believe will assist managers in navigating the relationship between business and society in the context of value creation. By way of illustration we relate our stories to that tool. Finally, we discuss the theoretical and practical implications of our arguments. The New Economy and the Growing Recognition of Communities of Interest or Value-Based Networks Advocates of new economic and social paradigms believe that the world is changing fundamentally [7]. They assert that new technologies and economic globalization are changing the very nature of business, with increasing emphasis being placed on the centrality of knowledge and innovation generated increasingly through networks [8]. The advent of the so-called new or network economy has, in turn, given rise to new forms of discourse surrounding the nature and purpose of the firm, business strategy and the process of value creation [9]. And these raise new questions of corporate social responsibility and sustainability [10]. In Anglophone marketplaces such as the US, the UK, Canada and Australia, long-standing assumptions about how to maximize the effectiveness of the firm (as measured by traditional metrics such as profits or economic value added) have been tempered by the novel recognition at least in some quarters [11] that in certain circumstances the creation of communities and social networks united by a common sense of what is valuable is a pre-requisite to economic pay-off. This argument may be made for a range of business sectors: from information and communications technologies through life sciences, energy and natural resources. So, in this paper, we will present narratives from all of these sectors. But first we should say a little about the phenomenon which some call the new or network economy and how this phenomenon leads to the need to consider new communities with a common sense of how value is created and appreciated. We shall refer to these communities as value-based networks (VBNs). Echoing many of the concerns of Putnam [12] in The Future of Success, Robert Reich critiques the notion that communities should be discussed simply in commercial terms in the US whilst noting the specific nature of the value offered to individual joiners by new groups such as cyber-communities [13]. He notes the socially divisive impacts of new sorting mechanisms in residential, educational, social security and health domains whilst wistfully marvelling at the burgeoning array of deals and opportunities for individual customization of value added services offered as by-products of globalization. These products are avidly accessed by new groups of users and consumers keen to avoid missing great deals, whether they are customers, investors or potential employees.

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The critical factor here for Reich seems to be the speed with which these new groups form and, presumably, may also collapse facilitated by the advent of new communications technologies. Less critical observers of globalized deal-making, customization and other technology-enabled business activities than Robert Reich have coined a range of terms to describe the value creation phenomena they are witnessing. E-business commentators refer to business webs, communities of creation and relational or network capital [14] in almost exactly the same terms as management theorists would use references to inter-firm networks and intra-organizational linkages, stakeholder value and social capital [15]. In Digital Capital, Don Tapscott and co-workers cite James Moore [16] as having blazing insight when he wrote about business ecosystems of customers, suppliers, lead producers, competitors and other stakeholders who co-evolve their capabilities and roles. Tapscott et al describe digital industry b-webs as places where sets of contributors come together to create value for customers and wealth for their shareholders..inventing new value propositions, transforming the rules of competition, and mobilizing people and resources to unprecedented levels of performance. Similarly, in Tech-Venture, Mohan Sawhney and co-workers cite Frederick Reichheld, author of the Loyalty Effect, in making a case for relational capital claiming In a network world, where everyone and everything is connected, economic value behaves very differently than in the traditional world [17]. Sawhney et al go on to provide quite detailed examples of how to measure intangible assets i.e. intellectual capital defined as human capital, structural capital and relational capital. In Rosabeth Moss Kanters in-depth study of the e-business world described in Evolve!, a rich constellation of terms is coined to describe the processes of on-line community and network building many with evocative allusions to space travel. Rather more seriously, Kanter argues that community-building is as crucial to the value-creation propositions of well-established players such as IBM and Hewlett-Packard as for new entrant firms such as Abuzz, e-Bay and Razorfish [18]. Based on her direct interviews, surveys and observations, Kanter provides five lessons on how to build value-driving collaborative networks in e-business and proposes seven competencies required to maintain them. She notes: Many people have written about the rise of dynamic networks of partnerships...but not many have recognized the extraordinary shift of consciousness it takes to live in such a world. Two companies strongly associated with these phenomena (and, indeed, frequently cited both by Reich and Kanter) are Amazon.com and

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America Online (AOL). In Amazon.coms case the firm has had to work very hard at establishing a conventional model of profitability and economic value-added for investors, but few commentators would dismiss the companys success in rapidly creating interlocking value-based networks (VBNs) that have been the source of enormous levels of investment, trading and deal-making with diverse partners. By last quarter 2001, Amazon.com had still to reach profitability, but after a difficult year for many in the e-business world, the firm maintained a market capitalization of more than $4 billion and in 2001 a poor year for many stocks the companys share price dropped only 30 per cent, closing the year at just under $11. Having appreciated a little in the first quarter 2002, at midyear the stock was around $12. This more realistic price effectively returned Amazon.com to mid-1998 stock price levels having reached highs of more than $100 in 1999 and 2000 [19]. In their case, two core competencies have emerged: (i) rapid and effective joint venturing with multiple actors in widely differing business arenas; and (ii) maintenance and development of well understood VBNs seeking customized value for their dollars. AOLs record-breaking merger with Time Warner in January 2000 demonstrated a potentially astronomic level of economic and social valueadd through uniting complementary VBNs in communications and entertainment [20]. In a world of rapidly convergent media technologies, AOLs timing seemed impeccable effectively taking over Time Warners movie, music and entertainment businesses when AOLs stock could not have been stronger and grafting them on to a set of semi-captive audience subscribers to internet services (i.e. AOL, Compuserve, Netscape, etc.) now numbering more than 150 million people. AOLs 2001 was pretty good; the company ended the year with the release of the movie The Lord of the Rings and an annual loss of market value of just 4.9 per cent and a market capitalization of more than $135 billion [21]. US subscriber on-line sales increased to $33 billion in 2001 i.e. + 67 per cent on the previous year. 2002 has not treated AOL quite so kindly, with further share price declines leading to erosion of market capitalization to just under $43 billion by mid-year, although earnings remained relatively strong [22]. Perhaps on a significantly larger scale, AOLs core competencies are not dissimilar to those of Amazon.com and the company has an interesting way of describing its strategy: our business plan will be based on adding value to peoples lives [23]. Yahoo! and eBay may also be cited as firms for whom it may be argued that their entire market valuation is predicated on the quality of the VBNs they unite and serve on a global basis [24]. Again, it is the sheer speed and scale with which a variety of communities of interest have formed around these companies which makes the phenomenon noteworthy. Since inception in 1995 eBay grew to a community of 42.4 million and $1.1 billion sales in 2001/2002, with a staggering 1.5 billion web-site page views

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per month. The company is known for its relatively conservative forecasts and has enjoyed a relatively stable stock price ($50-$60 for most of 2002), real earnings, and a market capitalization in July 2002 of nearly $15 billion [25]. 6 In contrast to firms like Cisco and Nortel, whose businesses depend far more on the hardware side of the new communications technologies, Yahoo! and eBay made reasonable progress for all stakeholders during 2001. But even in the torrid recent experiences of Cisco and Nortel and their stakeholders, some instructive lessons may be drawn with respect to the importance of rapidly forming and re-forming VBNs and how those communities might interpret the question of value. During 2001, Cisco experienced a one year loss of value of 51.5 per cent and a significant reduction in head count; in late July 2002 stock was trading at $12.5, similar to prices in 1997/98, but somewhat short of the 1999 high of $80 [26]. Ciscos 2001 market value decline was similar to Ontario-based Nortels 49.5 per cent loss in shareholder value for the same period, a timeframe which included nearly halving the companys workforce and the posting of a record-breaking single quarter loss of $CAN 19.2 billion. By July 2002, Nortels stock price was trading at around 10 per cent of its 97/98 price of $10-15, but even more significantly awry of its 1999 high of around $80, but it was recommended as a buy by at least one analyst who believed the stock had good prospects of reaching $2 [27]. Cisco and Nortel were once renowned for their employee friendly practices, corporate philanthropy and their ability to forge trust-based, productive relationships with business partners and acquired/merged businesses. Indeed, Charles OReilly and Jeffrey Pfeffer in Hidden Value and Rosabeth Moss Kanter in Evolve!, both used Cisco as a model for describing the skills required to manage acquisitions, collaboration and competition with business partners in the new economy [28]. But there are lessons in adversity, and some of the most powerful in the cases of Nortel and Cisco relate to the question of transparency, where the interlocking VBNs included business partners, suppliers, employees and investors. In November 2000, Nortel CEO John Roth asserted, looking forward to 2001.we continue to expect to grow significantly faster than the market, with anticipated growth in earnings per share in the 30 to 35 per cent range [29]. This assertion proved somewhat misleading for all stakeholders when in mid-February 2001 the company announced a profit warning and promptly lost a third of its value [30]. Continuing the theme and drawing attention to the dangers of unaudited, proforma announcements from companies in volatile markets, in November 2001 the San Francisco Chronicle posed the question What do you get if you marry a creative

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writer with an aggressive accountant? The answer: Ciscos third quarter earnings news release [31]. We are not arguing that these exemplars of firms riding the network economy demonstrate anything fundamentally new with respect to the way market economies work. But what these stories do illustrate is that value-based networks on the software and the hardware side of the economy comprise large numbers of customers, employees, investors and business partners whose interests converge in a rapid, visible and mutually dependent way. Any question of one group taking undue advantage or of non-transparency affects all. These companies stories demonstrate the interdependence (both long term and short term) of stakeholders and their interlocking VBNs within a broad community of interest [32]. The cases described so far suggest that there may be nothing inherently stakeholder-inclusive, socially responsible or sustainable in the normative sense about information and communications technology (ICT) firms in the network economy. But let us examine another high growth, high technology sector phenomenon, namely biotechnology, to test this observation further. Few would argue that the success of life sciences companies is very much predicated on the degree to which they can successfully win public support for the merits of their businesses and mobilize VBNs for their offerings, be they foods, drugs or other products [33]. Their networks include a broad array of consumers, users, health, agricultural and civil society organizations, research institutions, and governments. In this respect, the acute difficulties experienced by Monsanto a company which failed to address European consumer and other stakeholders concerns about genetic modification of foods can be contrasted with the more peaceful and successful strategies of avowedly stakeholder inclusive, socially responsible and sustainability-minded biotechnology firms such as Denmarks Novo Group. In 1995, Monsanto acquired a CEO in Bob Shapiro who was almost messianic in his desire to convert the 100 year old chemicals firm into a 21st century sustainable agribusiness using gene technology [34]. Unfortunately for Shapiro and Monsanto, small scale farmers were less than impressed by the new dependencies which might arise for them and a major backlash occurred in European consumer markets as a result of perceived imposition of unlabelled, genetically modified food, ingredients [35]. Despite several years and $8 billion of aggressive acquisitions, that saw Monsanto propelled to number two position in the agrichemicals business in 1998, confidence in the company, its products and its leadership began to wane. Following a failed merger with American Home Products in 1998, by late 1999 investor confidence in the future for genetically modified

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seeds and foods had slumped. The company was bought by Pharmacia in March 2000, largely to gain access to the GD Searle pharmaceutical division. And in November 2001, Pharmacia announced it would be selling its 85 per cent stake in the remainder of the under performing Monsanto agribusiness, much to the relief of its investors. With further problems of alleged patent infringements in 2002, Monsantos stock price continued its downward glide from an average of more than $30 through most of 2001 to under $15 by July 2002 [36]. Rather poignantly, both Shapiro and the new President and CEO Hendrik A. Verfaillie expressed mea culpa to stakeholders, in Shapiros case to a Greenpeace conference, and in Verfaillies to a November 2001 Farm Journal Conference in Washington D.C., where he stated that Monsanto was so blinded by its enthusiasm for (this) great new technology that it missed the concerns the technology raised for many people [37]. The company now has five pledge commitments to make good on the original commitment it made to sustainable agriculture in 1990 under the headings respect, transparency, dialogue, sharing and benefits [38]. In contrast to Monsantos misfortunes, Danish life sciences firm Novo Group (now trading as Novo Nordisk and Novozymes) is deeply involved in genetic modification and yet maintains highly interactive and constructive relationships with stakeholders and publishes a highly rated environmental and social report each year. These skills have helped the firm to maintain a strong reputation whilst de-merging its main businesses in late 1999 with a subsequent doubling of shareholder value [39]. Again, these two stories seem to show that biotechnology firms are not inherently responsible, inclusive or sustainable by nature, but we can perhaps detect a common pattern the convergence of the interests of the firm with those of stakeholders and societal interests represented within VBNs. Let us now examine some stories from more traditional sectors where there is a longer history of stakeholder approaches to strategy. Indeed, it is in energy production, mining, forestry and oil and gas industries that references to stakeholder approaches, sustainability and corporate social responsibility are found most frequently, and where phenomena such as corporate transparency and dialogue on environmental and social performance are often best developed [40]. The recent history of power deregulation and privatization of utilities in the UK and the US provides much evidence for VBN phenomena both positive and negative. But, with the possible recent exception of WorldCom, few stories can rival that of Enron for demonstrating the short and long term symbiosis of networks of investors, employees, business partners and customers. Seldom can a company have suffered such rapid and catastrophic failure and embroiled so many stakeholders and networks at one time. With echoes of the transparency

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and reporting problems alluded to above in another sector, Enron was condemned for overstating profits and keeping billions of dollars in liabilities off the balance sheet [41]. Early on in the debcle, Ken Johnson, spokesperson for Senator Billy Tauzin, Chair of the US Congress Energy and Commerce Committee noted that Enrons partnerships created a sort of accounting black hole. And, in the context of this paper, financial analyst Jon Kyle Cartright observed rather perceptively: The majority of the asset value at Enron was the trading operations. And the assets of that are really personnel and customer relationships none of which tend to survive bankruptcy [42]. Again, Enron was a firm well known for at least some employee-friendly practices and maintained a good reputation for corporate philanthropy. In oil and gas, a number of Anglophone companies have discovered that in the presence of supportive social networks, access to sources of natural capital (e.g. oil and gas reserves) may be enhanced and business opportunity and profitability increases. The difficulties experienced by Shell during the 1990s have been described explicitly in terms of catastrophic failures in stakeholder relationship [43]. But because of their reputational and potential economic consequences these failures were addressed in a highly instrumental fashion, with the result that the company regained much of its former license to operate with key stakeholder groups. Thus, with the possible exception of Nigeria, Shell no longer experiences severe political difficulties as a direct result of its track record on social or environmental performance. In contrast to Shell, two companies in the same sector, BP and Suncor (in Canada), have avoided such catastrophic mishaps, although BP has experienced criticism for its joint venture operations in Colombia and with PetroChina. As a result, BP and Suncor secured clear community support for important exploration and production opportunities in Alaska and Alberta respectively and consequent competitive and commercial advantage [44]. Many would assert that these industries are not inherently responsible, stakeholder inclusive or sustainable, but again in these stories we can detect some evidence for the convergence of stakeholder and societal interests and the pursuit of successful business outcomes. As already noted, in presenting these narratives, we are not seeking to draw attention to entirely new phenomena, still less to claim a causal relationship between responsible, stakeholder-inclusive behaviours by firms and subsequent commercial sustainability. We simply note that if it was ever possible to assert that investors might secure disproportionate value over the long term by ignoring or negating the claims and interests of other stakeholders (or vice versa), there are some powerful contemporary stories from a wide variety of sectors which suggest the contrary. At a minimum, we might describe these cases as demonstrating the value of stakeholder approaches to strategy in diverse sectors and begin, therefore, to make a case for pluralistic definitions of value.

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We will now present our navigational tool and thereby hope to demonstrate the practical utility of value creation as an organizing principle for reconciling CSR, sustainability and a stakeholder approach. Reconciling a Stakeholder Approach, Corporate Social Responsibility and Sustainability with the Creation of Value: A Navigational Tool Carroll has reviewed a number of models for describing how concepts of ethics and corporate social responsibility may be embraced by business [45]. Two models in particular have undiminished relevance today. The US Committee for Economic Development, in 1971 [46], described corporate social responsibility as: (i) related to products, jobs and economic growth; (ii) related to societal expectations; and (iii) related to activities aimed at improving the social environment of the firm. Sethis 1975 [47] three level model included: (i) social obligation (a response to legal and market constraints); (ii) social responsibility (congruent with societal norms); and (iii) social responsiveness (adaptive, anticipatory and preventive). In both the CED and Sethi models, the first tier was about compliance, while the second tier required an ability to respond to and balance reasonable stakeholder requests and to internalize basic societal expectations perhaps with trade-offs. Consistent with this thinking, Roger Martin has recently referred to the discretionary strategic choices available to corporations in terms of social responsibility and contrasted them with less negotiable components of a civil foundation of norms and expectations, emphasising that the foundation has different characteristics in different cultures [48]. We would argue that it is in the discretionary domain that long term strategic advantage resides and where corporations require the capabilities to navigate complexity and engage and integrate external stakeholders, i.e. VBNs, in service of the maximization of value however the stakeholders and network members choose to define it [49]. If we take these three tier models as a starting point for our exploration of how firms may create value across the three dimensions of the aspirational notion of sustainability, i.e. economic, social and ecological, the picture depicted in Figure 1 emerges, where we may distinguish between three types of corporate culture [50] with respect to organizational attitudes to stakeholders and the creation of value:

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Level 1 a compliance culture, where the organizational unit is not especially engaged with its stakeholders but where basic societal norms are respected and thus the organization seeks to avoid the unacceptable destruction of value (either: economic, social or ecological);

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Level 2 a relationship management culture, where the organization recognizes the instrumental value of good relations with immediate stakeholders, e.g. customers, workers, communities and business partners, and seeks to provide what value is appropriate in each case, within the limits of what is possible and usually after the demands of investors are satisfied; we might also describe this as a value-neutral or trade-off perspective, typically associated with effective corporate philanthropy and stakeholder communications; and, Level 3 a sustainable organization culture, where the organization recognizes the interdependencies and synergies between the firm, its stakeholders, VBNs and society, and seeks to maximize the creation of value simultaneously in economic, social and ecological terms.

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Each of these levels might be representative of a stakeholder approach in the sense that each is cognizant of a wider set of obligations; and, indeed, each could be considered ethical as they exist in the continuum do no harm to do maximum good. Each level may be associated with one or more definitions of corporate social responsibility, from the highly normative: everything should be legislated (Level 1), to the more instrumental and voluntaristic business case (Level 2). What distinguishes the levels however is the depth of understanding of the nature of value for the firm and its stakeholders and our belief that economic, social and ecological sustainability resides in Level 3. Figure 1: Framework for Classifying Organizational Cultures

Do Maximum Good . i.e. Create Maximum value Sustainable Organization Culture Value maximised and integrated: economically, socially and ecologically. Organization takes a societal level focus and seeks synergistic outcomes between value dimensions.

Level 3

Level 2

Relationship Management Culture Value created but typically traded off.

Level 1 Do Minimum Harm . i.e. Avoid Destroying value

Compliance Culture Value preserved consistent with laws and norms.

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Culture is defined in Figure 1 as the values, beliefs and assumptions of the organization (after Schein, 1985). In proposing such an integrative framework, we are not suggesting that firms have static cultures or that they can, should or do operate only in one mode with respect to all stakeholders at all times [51]. Values, beliefs and assumptions change and it is important to understand that any such prescription would be antithetical to our basic premise. There are relationships with stakeholders and value-based networks associated with firms which will vary over time in terms of: (i) the orientation the firm brings; (ii) the orientation the stakeholder group or VBN may bring; and (iii) the economic, social and environmental context and constraints. The important thing from our perspective is for the organization and its stakeholders: be cognizant of economic, social and ecological context for strategic reasons; ii) to recognize and be able to describe what is happening within and around the firm over time for managerial reasons; and thus develop capabilities.. iii) to focus on value and the processes of creation of value in both the short term and the long term for reasons of competitiveness and performance. Relating our contemporary stories to the framework, we now have some new possibilities for narrative. For example, we can describe the Cisco and Nortel stories as examples of firms operating with high levels of ambition to create shortterm economic and social value, whilst presumably believing themselves relatively unaffected and unconstrained on issues of ecological value, possibly treating these as Level 1 requirements. But the result in the longer term was rather lower levels of economic and social delivery, with investors, workers and business partners all sharing the eventual pain of dislocation. Interestingly, depending on ones perspective, these two companies were either very unlucky or their corporate cultures allowed them to become grossly disconnected from their economic realities and negligent of their stakeholders long-term interests. Those taking the latter view would undoubtedly point to the lack of candour with which the seriousness of the developing business situation was related to stakeholders. Whatever their history and former ambitions to create Level 3 type outcomes, the story since 2001 has been one of rapid decline to fire fighting on or even below Level 1, in order to avoid the ignominy of complete organizational failure. Whilst continuing to trade, these two firms have struggled to preserve social and economic value and by the end of 2001 their sustainability was therefore in question. Certainly in terms of the investor perspective of value, Cisco was (by July 2002) only valued i)

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similarly to its market capitalization of 1997 and Nortel much lower even than that. We can relate the story of Monsanto in terms of somewhat flawed Level 3 ambition matched by Level 1 performance. Here was a company with a culture which apparently espoused the synergistic creation of economic, social and ecological value but which courted controversy on stakeholder perspectives of ecological value and totally failed to deliver on social value for key stakeholders. We can also compare Monsanto with Novo Group a company that currently appears to maintain both the culture and the capabilities to operate at Level 3, to the general approval of most stakeholders. Novo has shown up as sustainable because of its approach to value creation; Monsanto has not. We can describe Shells story since 1995 as having moved from a Level 1 culture, in terms of values, beliefs and indeed behaviours, through to Level 2 in terms of the companys performance and its development of new capabilities for stakeholder responsiveness, growing social and economic value with some consistency. It may even be argued that Shell is aspiring to Level 3 in terms of espoused values and strategy for the longer term. In contrast, BP and Suncor seem to have maintained a longer and more credible track record at Level 2, and may thus appear more comfortable and credible when they espouse Level 3 type values and beliefs on economic and social value. However, where all these companies may yet be challenged is in their long-term ecological sustainability. Although all three have nascent renewable energy businesses, none would claim that their overwhelming reliance on fossil fuels is consistent with global sustainability. Thus, it may be argued that these firms are currently creating economic and social value but eroding ecological value (what some would call natural capital). Whatever their stated philosophies, they will require new technologies and matching organizational capabilities to achieve Level 3 performance. In each of these cases, it is possible to apply normative, ethical or moralistic judgements. With the gifts of hindsight and perfect knowledge, we can all express where we think it was right (or wrong) for a firm to be at any given point in time. In terms of stakeholder orientation and the creation of value, Shell should have been more like BP and Suncor in 1995, Monsanto should have been more like Novo between 1995 and 1998, Nortel and Cisco should have been generally more grounded and more honest with themselves and their stakeholders when faced with catastrophic changes in market conditions and, perhaps, more generally as conservative as e-Bay with respect to investor relations. But, we do not believe these judgements are especially helpful. And whilst the framework may be used retrospectively in a descriptive sense as we have done here we believe its real value lies in being

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used as a prompt for assessing organizational approaches to stakeholders and value creation in the present and future. For example, we can use the framework to pose some very simple questions that every manager and entrepreneur might ask of their existing business, product, or service, or indeed of a proposed new venture: 14 1) Is our value proposition feasible? Can it be done within the currently accepted societal framework of how we treat each other? Does it operate at Level 1 (do minimum harm) or at Level 3 (do maximum good)? 2) Is there support for the proposition from those groups that are affected? Is there a process for gaining stakeholder cooperation and support for the proposition? Is value created for each stakeholder group in a synergistic way, avoiding excessive trade-offs? 3) Can the value that is created be sustained over time economically, socially and environmentally? As we have noted this is both a short term and long term issue and a culture and capability issue. Value propositions which fail any of these questions risk failing to create lasting value and may not ultimately be practically feasible. It may be the case that some value propositions may take from one stakeholder group and give to another, but surely there are enough horror stories for us to see the error of our ways here. In this analysis we are not arguing that organizations seek to treat stakeholders equally, but that the voluntary agreements and norms which define value creation in a capitalist society must be respected. Fraud and lack of transparency do not respect these agreements and clearly fail the first question. Business developments which do not meet basic expectations of stakeholders fail the second. And, business ideas that do not create economic value and maximize social and environmental gain over the long term will not be sustainable. We will now turn to the theoretical implications of this approach. Reconciling Corporate Social Responsibility and Sustainability with a Stakeholder Approach to the Creation of Value: Theoretical Implications Our collection of stories and observations about the creation of value and convergent rather than divergent interests of stakeholders leads us to two conclusions. First, that value creation is the primary motivator for virtually all business activity, and that in certain industries the locus of value creation may rest outside the single firm. We have coined the term value-based networks or VBNs to acknowledge that stakeholders are sometimes grouped in key networks with a common sense of what is

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valuable. Second, a critical characteristic of successful, i.e. sustainable, business models is that they need to recognize explicitly the importance of acknowledging multiple perspectives in defining value. The process of defining and creating value is fundamentally pluralistic and iterative, i.e. socially constructed within networks associated with firms (the VBNs), and thus the business firm is a key player in the construction of what we may one day recognize as a viable, sustainable society. These observations have potentially profound implications for the nature of business. For decades, writers and scholars have raised the question In whose interests should corporations serve? from the perspective of law and corporate governance, with the attendant wrangling over the rights and duties of business firms in society [52]. With the rise of managerial capitalism, and the de facto separation of ownership from control, ideas concerning property rights began to shift in the early twentieth century, and there was a call for greater recognition of corporations as social institutions. That inquiry coalesced over time into the field known as corporate social responsibility (CSR) and, latterly, corporate citizenship [53], in which the primary aim was to draw attention to the social impact of business activity. The main tenor of work in the field of CSR is an ethical appeal to organizational leaders to minimize the harm done by corporations in the pursuit of profits and, in some cases, to make a case for linking conventional philanthropy to constructive community involvement [54]. Ideas in CSR have been extended into investigations of corporate social performance (CSP), wherein a normative ethical conception of the corporation is used as an independent variable to measure the dependent variable of firm performance, mainly on financial metrics [55]. Discussions of CSR and CSP have been readily accommodated within stakeholder frameworks [56]. Over the past fifteen years, stakeholder theory has emerged as a primary organizing framework undergirding all of business ethics [57], and is more recently gaining ground as a viable framework in the field of strategy [58]. Stakeholder theory is not so much a formal unified theory as a broad research tradition that encompasses philosophy, ethics, political theory, economics, law and organizational social science. In its applied form we therefore refer to a stakeholder approach. Philosophers and social scientists have converged on stakeholder theory from different points, and for different reasons [59]. The former see a stakeholder focus as a way to foreground the idea that business should be accountable to others; the latter have seized stakeholders as a useful unit of analysis to depict the social effects of business activity. In the mainstream of Anglophone business, however, a stakeholder approach has yet fullyto supersede the shareholder primacy model of corporate governance, though a narrower, but still responsive construction (which we have termed stakeholder relationship management) is now commonplace.

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Stakeholder theory is concerned with value creation on multiple fronts, with social justice, with stability, and with the role of business in society. Stakeholders are most often defined in relation to a focal organization or business firm and, so, stakeholder concepts are usually anchored at the organizational level. We saw in the illustrative stories that the locus of value creation increasingly resides beyond the boundaries of the single firm, in what we termed value-based networks. For that reason, it is strategically useful to add a third level to the mix, one that is centered outside the firm, at the societal level. Sustainable development or sustainability (in business terms) is a construct whose foundational ideas are consonant with those of stakeholder theory and which allows such a bridge to important global societal issues. There are many definitions of sustainable development, but few that are simultaneously authoritative and satisfying. Most cited is that of the World Commission on Environment and Development (WCED), the Brundtland Commission: development that meets the needs of the present without compromising the ability of future generations to meet their own needs [60]. From a business perspective, the World Business Council on Sustainable Development, which comprises 150 of the worlds largest companies and which operates at the CEO level, now explicitly and effortlessly describes the purpose of business in terms of three responsibilities: to create economic, social and environmental value [61]. This in part reflects the popularization of the concepts of sustainability and the triple bottom line rhetorical devices coined by Elkington [62], which have created a safe linguistic haven for business, government and civil society, allowing previously antagonistic players to share a common vision of the longer term, rather than simply fight over an unsatisfactory current reality [63]. Also employing the linguistic logic of the accountancy profession, the term social capital is now in vogue as a means of describing the value embedded in stakeholder relationships within and external to the firm [64]. Similarly, the concept of natural capital [65] is seen by environmental commentators as a useful construct, again harnessing the power of the term capital. We can postulate that all of these devices serve to create new meaning for the nature of capitalism far in advance of how it has been conceptualized and operated in English-speaking countries to date, and perhaps more relevant to the needs of a globalized and increasingly complex and insecure world. At a humanistic level, Ehrenfeld [66] refers to such definitions as variants of the current economic development paradigm, which in itself is unsustainable. Jennings and Zandbergen suggested that the definition of sustainability be more closely connected to the social system and the

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natural ecology, and offered this: sustainability is a concept embedded in a larger theory about how the ecological system and the social system must relate to each other in order to remain intact over long periods of time [67]. We believe (like the WBCSD) that there is merit in defining sustainability in simple, pragmatic terms as value creation on three dimensions: economic, social and environmental. As noted, this is consistent with the thinking of Elkington and the business case arguments advocated by leading academic commentators in the field such as Stuart Hart [68]. However, so that we have some aspirational point of focus for anchoring the notion of value we will also cite the more expansive definition of sustainability offered by Ehrenfeld [69]: I define sustainability as the possibility that humans and other life forms will flourish on the earth forever. Flourishing means not only survival, but also the realization of whatever we as humans declare makes life good and meaningful, including notions like justice, freedom, and dignity. And as a possibility, sustainability is a guide to actions that will or can achieve its central vision of flourishing for time immemorialIt is a future vision from which we can construct our present way of being. If sustainability is an ideal toward which society and business can continually strive, the way we strive is by creating value, i.e. creating outcomes that are consistent with the ideal of sustainability along social, environmental and economic dimensions. Questions of sustainable development are intimately concerned with the nature of society, of justice, of liberty, of the value of each individual as an end in itself; in that sense sustainability in business is stakeholder theory writ large. If stakeholder theory is concerned with the essential character of a firm, sustainability in business helps bridge to the concerns of a global society. Stakeholder theory exists as a set of narratives, as a genre of stories about how organizations create value. Thus, stakeholder concepts are highly relevant and useful to thinking about sustainability and sustainable development, although from a humanistic perspective it might be argued that the former do not necessarily fully stand as a proxy for the latter; that is, embracing stakeholder notions of value and striving for sustainability are consistent but not synonymous. Some measure of conflict (or creative tension) is inherent and unavoidable in the intermingling of stakeholder perspectives and attendant value systems. Resolving or leveraging the trade-offs and potential synergies in such tension is abetted by guidance from a higher-order set 17

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of end values, a common aspirational agenda. The concept of sustainability, defined as an ideal, offers such a value framework. Sustainability is not equated per se with environmentalism, social justice, economic prosperity or spiritual development, though all of those ideals are consistent with a sustainability mindset. Nor is it concerned only with long term consequences. It is aspirational in nature, a meta-ideal, one inherently infused with societal values of justice, integrity, reverence, respect, community and mutual prosperity. A business model consonant with societal aspirations to sustainable development might encompass, accommodate and evince a similar value set. Therefore it can be argued that a stakeholder approach, with its inherent values of freedom, responsibility, justice, inclusion, participation, and mutual dependence in service of creating value for different actors, offers the best hope in effecting the pursuit of global as well as organizational sustainability. Conclusions and Practical Implications According to F. Scott Fitzgerald, the test of a first class mind is the ability to hold two opposing ideas in the head at the same time and still retain the ability to function. We may apply this epigram to the idea that there is some sort of choice to be made between the interests of the firm, its stakeholders and society an academic debate to which we alluded in our introduction. Our view, as stated by Freeman (2000), is that the choice is spurious and that in simple terms stakeholder capitalism sets a high standard, recognizes the commonsense practical world of business today, and asks managers to get on with the task of creating value for all stakeholders. Some would argue that the best firms have always sought to leverage their communities of interest for the instrumental purpose of creating value. In many cases they have done this by balancing (or ideally integrating) stakeholder interests and combining them with a clear vision of what is achievable for customers, employees, investors and other stakeholders whatever their corporate officers may have said to the analysts or investors at annual general meetings [70]. Happily, the evidence is now mounting that what is said to one stakeholder group, i.e. the investors, need no longer be in conflict with what is said to employees, customers, supply chain partners and local communities. A wide range of empirical studies [71], together with growing evidence of correlation of environmental, social and economic performance from special stock market indices, e.g. the Dow Jones Group Sustainability Index and others [72], demonstrate that stakeholders and value-based networks may be celebrated without apology or convoluted ethical reasoning [73]. This may soon help to eliminate a potent historical

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source of double-speak by corporate Board members and executive officers as well as the limitless potential for cognitive dissonance caused by the disconnect between the rhetoric of corporate leaders and stakeholders actual experience. Again, the practical evidence is compelling. Whether it is a recognition of the strategic value of reputation [74], or brand value [75], few business leaders today ignore the tangible business benefits of loyal, trust-based relationships with networks of customers, suppliers and distributors [76]. The same point is made in the sociology, human resources and organizational behaviour literatures with respect to relationships with employees [77], and in the strategy and general management literature with respect to relationships with a broad range of stakeholders who may bring resources of innovation and loyalty in an increasingly competitive world [78]. And this explains, at least in part, the success in strategic management terms of techniques such as the balanced scorecard or the business excellence model of the European Foundation for Quality Management [79], both of which give at least equal weight to customer and employee relationship factors as to financial factors. All these systems do is to turn a strategic stakeholder approach into an implementable management framework with appropriate metrics attached. In the non-Anglophone world, where corporate governance and corporate law provisions have not been predicated on the primacy of investors interests, e.g. in Continental Europe and Asia, it may be argued that this approach is somewhat less than novel. Notwithstanding recent setbacks in some economies, e.g. Japan, relatively sophisticated approaches to balancing and integrating the interests of different stakeholders and maximizing the economic and social value of the firm have long been a hallmark of the most successful mainstream continental European and Asian businesses [80]. The navigational framework offered here, building from the business stories described at the outset and our observations of the way the world now works, captures the idea that firms with the necessary capabilities to understand where they can (i) avoid destroying value (doing harm as defined by different actors), and (ii) maximize opportunities for creating value (doing good as defined by those same actors), are those that will prosper in the long term. Moving from compliance, to attention to stakeholder needs, to pursuit of value simultaneously in all three dimensions of sustainability requires that organizations develop the necessary culture and internal capabilities to do so. Value creation at the highest level requires an ability to build value-based networks where all stakeholders see merit in their association with and support for a business. As noted, there is much theoretical controversy in the literature between normative and instrumental stakeholder approaches, but we 19

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have argued that a more careful and pragmatic look finds very little that is of substance. We have not proposed a way to integrate a stakeholder approach, CSR and sustainability, but we have suggested how we can begin to talk about them in the context of creating value to avoid the seeming points of linguistic or conceptual conflict. Despite the undoubted enormity of the problems faced by the world insecurity, development, ecological and social stress we hope this may avoid unhelpful versions of the CSR and sustainability stories dragging everyone down. In our experience this only serves to alienate practitioners and kill the creativity of managers and policy-makers. Perhaps the problem has been that traditionally we have tended to take too narrow a view of each of these ideas. Stakeholder theory has never been just about social issues. It is about real customers, suppliers, investors, employees and communities, and integrating and sustaining these relationships as part of a community with a common sense of what is valuable. Likewise, sustainability is not just about environmental issues. There is no real distinction between nature and culture. And there is no necessary dichotomy between sustainability and profitability. The abiding challenge, of course, is the temporal one. Perhaps, particularly in view of the speed and scale with which value-based networks now form and reform, real value must be created for all community members including investors in the short term if it is to be worth sustaining. The practices associated with a stakeholder approach, including CSR, relationship management and sustainability cannot be separated from the very basics of what makes a business tick, both in terms of vision and aspiration and as immediate day-to-day priorities: good HR management, excellent customer service, effective delivery of returns, maintenance of license to operate with community groups and so on. In presenting these ideas we hope we have provided some clues as to how this challenge may be addressed. But we recognize that many more narratives, with underpinning qualitative and quantitative evidence, will need to be assembled in order that managers, stakeholders and their networks can learn and act together more effectively in the creation and appreciation of value. Druckers 1982 assertion and F Scott Fitzgeralds maxim imply nothing less. Perhaps, then, it will not be too long before we can begin to assert that the business of business is the creation of sustainable value economic, social and ecological.

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[29] Quoted in Smith, op. cit. [30] Ebner, D., Investors Optimism Failed Them in 2001, The Globe and Mail, January 2, 2002, B2. [31] Quoted in Milner, B., Firms Must Sort Fact from Fiction, The Globe and Mail, December 19, 2001, B10. [32] Clearly it is insufficient even to say that multiple interests are only interdependent in the long term, as some have argued; for as the dot.com bubble showed, without real short-term interdependence economic as well as social the long-term never arrives. [33] Rifkin, J., The Biotech Century: Harnessing the Gene and Remaking the World, New York: Penguin/Putnam, 1998. [34] Magretta, J. Growth Through Global Sustainability, in Harvard Business Review on Business and the Environment, pp. 59-84, Boston, MA: Harvard Business Review, 2000. [35] Simanis, E. and Hart, S.L., The Monsanto Company: Quest for Sustainability (A) - Case Study, wri.com: World Resources Institute, Washington, 2001. [36] Pierson, R. and J. Seltzer, Pharmacia Plans to Spin off Monsanto, The Globe and Mail, November 29, 2001, B11. Bloomberg, http:/ /quote.bloomberg.com 2002 (cited July 28, 2002). [37] Verfaillie, H.A., Securing our Commitments to Agriculture, paper presented at the Address to the Farm Journal Conference, Washington D.C., November 27th, 2001. [38] Monsanto, Corporate web-site, (http://www.monsanto.com/ monsanto/about-us) 2002 (cited January 2, 2002) . [39] Novo, Corporate web-sites (http://www.novo.dk and http:// www.novonordisk.com) 2002 (cited January 2, 2002). [40] Wheeler, D. and J. Elkington, The End of the Corporate Environmental Report? Or, The Advent of Cybernetic Sustainability Reporting, Business Strategy and the Environment, 10, 2001, pp. 1-14. [41] Hays, K., New Enron Could Rise from the Ashes of the Old, The Globe and Mail, December 5, 2001, B12. [42] Hays, 2001, op cit. [43] Wheeler, D., H. Fabig and R. Boele, Paradoxes and Dilemmas For Aspiring Stakeholder Responsive Firms In The Extractive Sector - Lessons From The Case Of Shell And The Ogoni, Journal of Business Ethics, 39, No. 3, pp. 297-318.; Wheeler, D., R. Rechtman, H. Fabig, and R. Boele, Shell, Nigeria and the Ogoni: A Study in Unsustainable Development. III - Analysis and Implications of Royal Dutch/Shell Group Strategy, Sustainable Development, 9, No. 4, pp. 177-196. [44] McKague, K., D. van der Veldt and D. Wheeler, Growing a Sustainable Energy Company: Suncor's Venture into Alternative and Renewable Energy, Schulich School of Business Case, Toronto: York University, 2001.

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[45] Carroll, A.B., Corporate Social Responsibility: Evolution of a deFinitional Construct, Business and Society, 38, No. 3, 1999, pp. 268-295. [46] Committee for Economic Development, Social Responsibilities of Business Corporations, New York: CED, 1971, cited in Carroll 1999, op. cit. [47] S.P. Sethi, Dimensions of Corporate Social Performance: An Analytic Framework, California Management Review, 17, 1975, pp. 58-64. [48] See Martin, R.L., The Virtue Matrix: Calculating the Return on Corporate Responsibility, Harvard Business Review, March 2002. [49] Wheeler has further developed issues of sustainability and organizational capability in a manuscript for the forthcoming Blackwell title, Leading in Turbulent Times, to be edited by Burke, R. and C. Cooper. [50] Here we use the definition of Schein, E., Organization, Culture and Leadership, San Francisco: Jossey-Bass, 1985, i.e. that corporate culture comprises an amalgam of the values, beliefs and assumptions of the organization. [51] A similar point has been made recently by I.M. Jawahar and G.L. McLaughlin in relating the dynamic nature of stakeholder relationships to the life cycle of the firm in their article, Toward a Descriptive Stakeholder Theory: An Organizational Life Cycle Approach, Academy of Management Review, 26, No. 3, pp. 397414. [52] A. A. Berle and G. Means, Private Property and the Modern Corporation, New York: MacMillan, 1932; A. A. Berle, Power Without Property: A New Development in American Political Economy, New York: Harcourt Brace, 1959; Clark, J. M., The Changing Basis of Economic Responsibility, The Journal of Political Economy, 24, No. 3, 1916, pp. 209-229; Dodd Jr., E. M., For Whom are Corporate Managers Trustees? Harvard Law Review, 45, 1932, pp. 1145-1163; Margaret M. Blair, In Whose Interests Should Corporations Serve?, in, Ownership and Control: Rethinking Corporate Governance for the Twenty-First Century, pp. 202-234, Washington, D. C.: Brookings Institution, 1995. [53] McIntosh, M., D. Leipziger, K. Jones and J. Coleman, Corporate Citizenship: Successful Strategies for Responsible Companies, London: Pitman, 1998. [54] For example a recent article in California Management Review made a strong case for linking corporate social initiatives to key drivers and core competencies of the firm but made little or no reference to the potential economic, social or environmental value add of the products and services of the firm; see Hess, D., N. Rogovsky and T.W. Dunfee, The Next Wave of Corporate

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[65] Hawken, P., A. Lovins and L.H. Lovins, Natural Capitalism. Creating the Next Industrial Revolution, Boston, MA: Little Brown and Company, 1999; Lovins, A.B., L.H. Lovins and P. Hawken, A Road Map for Natural Capitalism, Harvard Business Review, May-June 1999, pp. 145-158. [66] Ehrenfeld, J., Being and Havingness, Forum for Applied Research and Public Policy, Winter 2000, pp. 35-39. [67] Jennings, P. Devereaux, and Paul A. Zandbergen, Ecologically Sustainable Organizations: An Institutional Approach, The Academy of Management Review, 20, No. 4, 1995, p. 1015. [68] Hart, S., A Natural-Resource-Based View of the Firm, Academy of Management Journal 20, No. 4, 1995, pp. 986-1014; Hart, S.L., Beyond Greening: Strategies for a Sustainable World, Harvard Business Review, 75, No. 1, 1997, pp. 66-76; Hart, S.L. and M.B. Milstein, Global Sustainability and the Creative Destruction of Industries, Sloan Management Review, 41, No. 1, 1999, pp. 2333. [69] Ehrenfeld, op. cit., p. 36-7. [70] Kotter, J. and J. Heskett, Corporate Culture and Performance, New York: Free Press, 1992; Collins, J. and J. Porras, Built to Last, New York: Harper Collins, 1994. [71] Waddock, S.A. and S.B. Graves, The Corporate Social Performance - Financial Link, Strategic Management Journal, 18, 1997, pp. 303-319; Roman, R.S., S. Hayibor and B. Agle, The Relationship between Social and Financial Performance, Business and Society, 38, No. 1, 1999, pp. 109-125. [72] Feltmate, B.W., B.A. Schofield and R.W. Yachnin, Sustainable Development, Value Creation and the Capital Markets, Ottawa: Conference Board of Canada, 2001. [73] Hillman, Amy J. and Gerald D. Keim, Shareholder Value, Stakeholder Management, and Social Issues: What's the Bottom Line?, Strategic Management Journal, 22, 2001, pp. 125-139. [74] Fombrun, C., Reputation: Realizing Value from the Corporate Image, Boston, MA: Harvard Business School Press, 1996; Fombrun, C.J., Corporate Reputations as Strategic Assets, in Handbook of Strategic Management, edited by M.A. Hitt, R.E. Freeman and J.S. Harrison, pp. 289-312, Oxford: Blackwell Business, 2001; Rindova, V. and Fombrun, C., The Eye of the Beholder: The Role of Corporate Reputation in Defining Organizational Identity, in Identity in Organizations: Building Theory Through Conversations, edited by D.A. Whetten and P.A. Godfrey, pp. 62-66, Thousand Oaks, CA: Sage, 1998. [75] Kochan, N. (ed.), The World's Greatest Brands, New York: New York University Press, 1997; Aaker, D.A. and Joachimsthaler, E., Brand Leadership, New York: The Free Press, 2000; Tomkins, R., Coca Cola Loses its Fizz, Financial Times, July 18, 2000; Pringle, H., and W. Gordon., Brand Manners. How to Create the

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Self Confident Organization to Live the Brand, Chichester, UK: John Wiley, 2001; Pringle, H. and M. Thompson, Brand Spirit, How Cause-Related Marketing Builds Brands, Chichester, UK: John Wiley, 2001; see also The Best Global Brands, Business Week, August 6th, 2001, pp. 50-64. Reichheld, op. cit. Coleman, J., Social Capital in the Creation of Human Capital, American Journal of Sociology, 94, 1988, S95-S121; Barney, Jay B., Firm Resources and Sustained Competitive Advantage, Journal of Management, 17, No. 1, 1991, pp. 99-120; Barney, Jay B. and Patrick M. Wright, On Becoming a Strategic Partner: The Role of Human Resources in Gaining Competitive Advantage, Human Resource Management, 37, No. 1, 1998, pp. 31-46; OReilly and Pfeffer, op. cit.; Snell, S.A., M.A. Shadur and P.M. Wright., Human Resources Strategy: The Era of Our Ways, in Handbook of Strategic Management, edited by M.A. Hitt, R.E. Freeman and J.S. Harrison, pp. 627-649, Oxford: Blackwell Business, 2001. Freeman, 1984, op. cit., Freeman 2001, op. cit.; G. Hamel and C.K. Prahalad, Strategy as Stretch and Leverage, Harvard Business Review, March/April 1993, pp. 75-84; Hamel, G. and C.K. Prahalad, Competing for the Future, Boston, MA: Harvard Business School Press, 1994; Harrison, J. S. and C. H. St. John, Managing and Partnering with External Stakeholders, Academy of Management Executive, 10, No. 2, 1996, pp. 46-55; Wheeler and Sillanp, 1998, op. cit.; A. Svendsen, The Stakeholder Strategy: Profiting from Collaborative Business Relationships, San Francisco: Berrett-Koehler, 1998. For a discussion on the balanced scorecard, see Kaplan, R.S. and D.P. Norton, The Balanced Scorecard: Translating Strategy into Action, Boston, MA: Harvard Business School Press, 1996; Kaplan, R.S. and D.P. Norton, The Strategy-Focused Organization: How Balanced Scorecard Companies Thrive in the New Business Environment, Boston, MA: Harvard Business School Press, 2001. The EFQM business excellence model is described in Wheeler and Sillanp, 1997, op. cit. Wheeler and Sillanp, 1998, op. cit.