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Mapping stakeholder perceptions for a third sector organization

Article  in  Journal of Intellectual Capital · December 2003

DOI: 10.1108/14691930310504536

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Mapping
Mapping stakeholder stakeholder
perceptions for a third sector perceptions

organization 505
Anne Fletcher, James Guthrie and Peter Steane
Macquarie Graduate School of Management, Macquarie University,
NSW, Australia, and
Göran Roos and Stephen Pike
Intellectual Capital Services Limited, London, UK
Keywords Intellectual capital, Stakeholders, Non-profit organizations, Intangible assets
Abstract Few authors have examined the intellectual capital of non-profit organizations or
discussed their strategic management in terms of intangibles. The Australian Red Cross Blood
Service (ARCBS), a third sector organization, is the subject of this study. The purpose of the study
is to better understand the value dimensions of the ARCBS from an external stakeholder
perspective. Outcomes include the creation of a value hierarchy, inclusive of the views of 11
stakeholder groups. The results show overall agreement amongst stakeholders about the four most
highly valued key performance areas (KPAs) of ARCBS (safe product, product sufficiency, donor
and volunteer management and public confidence). However, there were many differences between
different stakeholder groups in their perceptions of the relative importance of the nine KPAs and
their constituent attributes. As a result of the study ARCBS has a basis to manage strategy,
organizational performance and communication with stakeholders.

1. Introduction
An intellectual capital approach to management has been widely discussed and
adopted by many organizations. There is much interest in intellectual capital in
developing and managing innovation. There is an increased focus, generally,
on the knowledge resources of economies and, in particular, on the knowledge
resources of organizations wherein intangible assets are identified, measured
and reported (Guthrie, 2001; Bontis et al., 1999; Pike et al., 2002). Apart from
being used as a measure of the wealth of an organization in terms of its
intangible assets, intellectual capital concepts can also be used for strategic
analysis and to drive organizational strategy (Roos et al., 2001; Sveiby, 2001;
Chatzel, 2002).
Intellectual capital has been defined in a variety of terms and classified in
different ways. According to the Meritum guidelines, there is a general
acceptance that intellectual capital embraces all forms of intangibles and that it
is the combination of the human, structural and relational resources of an
organization (Sanchez et al., 2001). Journal of Intellectual Capital
Human capital is further defined by Meritum as the knowledge that Vol. 4 No. 4, 2003
pp. 505-527
employees take with them when they leave the firm (Sanchez et al., 2001). It q MCB UP Limited
1469-1930
includes the knowledge, skills, experience and abilities of people. Some of this DOI 10.1108/14691930310504536
JIC knowledge is unique to the individual, and some is generic. Examples are
4,4 innovation capacity, creativity, know-how and previous experience, teamwork
capacity, employee flexibility, tolerance for ambiguity, motivation, satisfaction,
learning capacity, loyalty, formal training and education.
Structural capital is defined as the pool of knowledge that stays with the
firm at the end of the working day (Sanchez et al., 2001). It comprises the
506 organizational routines, procedures, systems, cultures, databases, etc. Some of
them may be legally protected and become intellectual property rights, legally
owned by the firm under separate title. Examples are organizational flexibility,
a documentation service, the existence of a knowledge centre, the general use of
information technologies, organizational learning capacity, etc.
Relationship capital is defined as all the resources linked to the external
relationships of the firm such as customers, suppliers or R&D partners
(Sanchez et al., 2001). It comprises that part of human and structural capital
dealing with the company’s relations with stakeholders (investors, creditors,
customers, suppliers etc.) plus the perceptions that they hold about the
company. Examples of this category are image, customer loyalty, customer
satisfaction, links with suppliers, commercial power, negotiating capacity with
financial entities, environmental activities, etc.
Increasingly, as other factors of competitive advantage become equalized,
management of intellectual capital will become the differentiating factor
between organizations (Teece, 2002). To date, an intellectual capital approach
has mostly been applied to the for-profit or business sector (Guthrie, 2001).
Whilst it might be argued that non-profit organizations do not compete and
hence do not need to have a competitive advantage, non-profit organizations do
have to compete with each other in order to obtain community support, sustain
community confidence and to achieve government grants or contracts as in the
case of public-private partnerships. It can therefore be argued that competitive
advantage is important for the non-profit sector.
The adoption of an intellectual capital approach to the management of
non-profit or third sector organizations has not been well studied. A literature
search of the subject revealed very few investigations of intellectual capital in
the non-profit sector. One exception is that intellectual capital growth has been
used to evaluate outcomes of social projects by measuring human and
innovation capital (Joia, 2000). Technology transfer of intellectual property
from non-profit laboratories in university and government agencies to
commercial enterprises to commercialize research outcomes can be difficult to
achieve (Duke, 1995). Thus, there has been an interest in studying innovation in
universities and non-profit environments from an intellectual capital
perspective (Guthrie and Vagnoni, 2001). Because of the rapidly changing
external environment, it is argued that a framework for the management of
intellectual capital in the health care industry is required (Grantham et al.,
1997). However, there are few, if any, studies of the management of intellectual
capital in a major non-profit organization. Hence, it remains to be shown by Mapping
future research studies that the concepts of intellectual capital are just as stakeholder
relevant and important to the management and performance of third sector perceptions
organizations as they are in for-profit companies.
The Australian Red Cross Blood Service (ARCBS), a large, complex,
Australian third sector organization, is the subject of this case study. Although
it is recognized that strategy formation is different across sectors and that there
507
will be different drivers of strategy in non-profit organizations from the private
sector (Steane, 1997), it is postulated that the management of such a non-profit
organization can benefit from an analysis of its intellectual capital. A good
starting point for the analysis of intellectual capital in a non-profit is to focus on
determining its (intangible) value from a stakeholder perspective.
The aim of this paper is to better understand the value that the ARCBS holds
for its diverse stakeholder groups. This will be represented in a comprehensive
value hierarchy. The paper reports stakeholder perceptions of the relative
importance of the key performance areas (KPAs) of the value hierarchy and
their constituent attributes.
The paper is structured as follows. Section 2 discusses the context and
background of the study and of the ARCBS as an organization. Section 3
focuses on the case study, and Section 4 presents the “holistic value added
(HVA) methodology” that is used for this study. Section 5 discusses the results
of the study and in Section 6 there is an examination of the implications of our
findings for strategic development. Section 7 presents our conclusions.

2. Context and background

Non-profit organizations
There has been a trend over the past two decades in OECD member countries
to rely upon the out-sourcing of previously public work activity to private
sector organizations. This aligns with the more general growth in private
capital flows from the 1960s from 80 per cent public and 20 per cent private to
the reverse ratio in the late 1990s. What has emerged is greater
interdependency between the sectors illustrated in cross-subsidizations and
funding arrangements in aged care and other health areas, in education
services generally, and in a variety of welfare related activities. Public-private
partnerships (Carroll and Steane, 2000; Schwartz, 2001) are a facet of this
interdependency. Key factors for the success of public-private partnerships
include high levels of trust and confidence between the partners as well as the
addressing of cultural issues between them (Nelson et al., 1999). Feasible and
effective accountability mechanisms are required in order to maintain public
trust in third sector organizations involved in partnerships with government
(Schwarz, 2001). A prime example of a public-private partnership in Australia
is the ARCBS, which is managed as private, non-profit organization but
operates to provide a public service and as such is funded by governments.
JIC The level of managerial research focusing on non-profit organizations is
4,4 generally judged to be inadequate, with a better understanding of internal and
external influences on strategic planning required (Crittenden and Crittenden,
2000). This inadequacy must be understood in the context of the continued
growth of the sector, a dynamic external environment and increasing
challenges for management (Bush, 2002). The voluntary sector has recently
508 achieved an increased social, political and economic significance worldwide
(Myers and Sacks, 2001). In the UK, as well as in Australia, the trend to
modernize government and public services has led to a greater need for the
non-profit sector to establish and maintain relationships with clients, suppliers
and governments (Myers and Sacks, 2001).
The environment within Australia for non-profit organizations has changed
considerably in recent times and is predicted to remain in a dynamic state
(Lyons, 2001). Non-profit strategy in Australia and New Zealand is best
appreciated within the framework of the introduction of public choice in
services and the principal-agency structure of these services (Steane, 1999a).
Developments within Australia in recent years have emphasized the
importance of the non-profit sector to the economy and the changing nature of
the external environment Two major reports commissioned by the
Commonwealth Government have focused attention on the sector. In 1995,
the Productivity Commission released Charitiable Organisations in Australia
(Industry Commission, 1995), revealing the existence of some 34,000 non-profit
organizations employing over 600,000 people. This constitutes about 7 per cent
of the Australian workforce (Lyons, 2001). In 2001, the Report of the Inquiry
into the Definition of Charities and Related Organizations (Commonwealth of
Australia, 2001) recommended the establishment of an independent body or
advisory council to coordinate the interdependent relationship between
charitable bodies and government. This would encompass the stakeholder
relationships that organizations such as the ARCBS enjoy with different levels
of governments.

Importance of stakeholders
Building on the concept of organizational wealth as both tangible and
intangible (Sveiby, 1997), Preston and Donaldson (1999) argue that stakeholder
management can enhance organizational wealth and that economic benefits
can be generated by positive relationships between an organization and its
stakeholders. It necessarily includes the determination and assessment of
service value as perceived by stakeholders, including such elements as
knowledge sharing, complementary resources, capabilities and collaborations.
Stakeholder management enables managers to ensure that the strategic and
operational direction of an organization addresses stakeholder perceptions.
However, key stakeholders may also use various types of “influence strategies”
whereby they make known the priorities organizations should be attending to
in their decision-making (Frooman, 1999). Stakeholders are recognized as being Mapping
of particular importance in public and non-profit organizations, which stakeholder
commonly have a more diverse group of stakeholders than private for-profit perceptions
organizations making it more difficult to identify strategic issues (Bryson,
1995).
509
3. Case study – The Australian Red Cross Blood Service
The ARCBS is a complex non-profit organization providing specialized
services in the health industry. The ARCBS is an operating division of the
Australian Red Cross Society (ARCS) and is the national organization
responsible for the provision of quality blood products, tissues and related
services to the Australian community (ARCBS, 2002). ARCBS relies on the
voluntary, non-remunerated blood donations of almost half a million
Australians each year (ARCBS, 2002). It operates as a non-profit
organization, providing products and services generally free of charge to the
community and for which it receives substantial financial support in the form
of budget allocations from commonwealth, state and territory governments.
The ARCBS was created in 1996, assuming the responsibilities of the eight
pre-existing blood transfusion services that had previously been managed by
the state and territory divisions of the ARCS. The ARCS had by then almost
seventy years of experience in operating blood services at the state level.
However, the ARCBS was formed in recognition of the advantages that a
nationally co-ordinated service would have in effective management and
ensuring uniform policies and procedures.
The organization has a staff of approximately 2000 full-time equivalents and
a similar number of volunteers. The ARCBS is organized into five business
units and a national office. A national executive (the management team)
consists of the CEO, the directors of the five business units and senior
managers from the national office. The CEO reports to a board and the board
chairman to the ARCS national council. The vision and mission of the ARCBS
are: “to share life’s best gift by the provision of quality blood products, tissues
and related services for the benefit of the community” (ARCBS, 2002).
The world of blood transfusion service provision is a dynamic one subject to
rapid technological change and close public scrutiny both in Australia and
internationally (Starr, 1999; Cortiula, 2001). The Commonwealth Government
commissioned an enquiry and review of the blood and plasma sector and the
resulting report (Stephen, 2001) proposes some far-reaching changes. Whilst
the ARCBS will remain the pre-eminent collector of blood and the provider of
blood products, there will be governance reforms in the sector including
increased regulation and the establishment of a national blood authority whose
role will be to ensure quality and safety and improve service co-ordination
(Stephen, 2001).
JIC The ARCBS has a special relationship with its funders (the commonwealth,
4,4 state and territory governments), however, it also has a large number of other
key stakeholders including patients, health institutions, blood donors and
corporate entities. Responding to key stakeholders and developing
organizational strategy with stakeholder involvement is a major challenge
for non-profit organizations such as the ARCBS (Bryson, 1995).
510 The ARCBS decided to undertake this study because of the unprecedented
change the organization was undergoing internally and the perception that the
change process was altering and perturbing existing stakeholder relationships.
Added to this, the external environment was shifting markedly with changes to
regulation of the industry and developments in the management of
public-private partnerships in Australia. This case study provides a
stakeholder analysis undertaken to identify the important elements deemed
to add value and to contribute to the performance of the ARCBS. The
methodology chosen for the study is described in the following section.

4. Holistic value added (HVA) methodology

The present study was carried out under a collaborative research agreement
with the ARCBS. The collaborative research team comprised of ARCBS,
Macquarie Graduate School of Management (MGSM) Macquarie University
and intellectual capital services (ICS). Ethics approval for the study was
obtained from the Macquarie University Ethics Committee, ensuring that
sound and proper practice was employed in the study.
Understanding the “value” or “performance” of an organization such as the
ARCBS requires a methodology that enables accurate assessment of its major
value-creating asset – its intellectual capital. The “holistic value added” (HVA)
methodology of ICS combines a business navigator with measurement theory
and axiology to generate a non-dimensional view of organizational value as
seen from the viewpoint of any stakeholder (Pike et al., 2002; Chatzkel, 2002).
The HVA approach is not limited to the description of stocks of intellectual
capital but can also describe the flows between various intellectual capital
resources and between these and traditional capital resources (Pike et al., 2002).
HVA is a third generation intellectual capital index tool the outcome of which is
a totality measure that reflects the value perceived by any given observer
(Chatzel, 2002).
The HVA process combines a top-down and bottom-up approach internally,
together with an evaluation of the role the organization plays and the value it
delivers in relation to each of its stakeholders. A group of stakeholders,
comprising both internal stakeholders (managers and employees), and external
stakeholders (customers, regulators, funders, suppliers and others) can
together agree on a set of cardinal attributes of value even though their
perceptions of their relative importance may vary. From there the hierarchy of
value can be developed until it becomes a minimum set of attributes that can be Mapping
measured (Pike et al., 2002). stakeholder
Intangibles are measurable provided certain conditions are met (Frondizi, perceptions
1971). Assuming that a proper context is defined for the measurement of a
large-scale process (e.g. a business, organization, system), value measurement
will be a conjoint process that combines all the primary value contributions
from an underlying process into a final quantifier called “value” (M’Pherson
511
and Pike, 2001). Thus, value measurement is a particular form of
multidimensional measurement subject to the usual validity requirements
but with a particular accent on:
.
The completeness and distinctness of the primary contributions with
respect to the context: i.e. the primaries collectively provide the full
meaning of the “value” defined by the context, and they do not overlap in
meaning (no double-counting).
.
The value streams must be scale-independent (not just distinct) so that a
change in one value does not affect any other value reading.
.
Commensurability of the value-measuring space, i.e. the various primary
scales must be projected onto a value space that may have many
dimensions but only one common value scale on each dimension. This is
achieved by a “normalisation” process (M’Pherson and Pike, 2001).
In this case study, the well-defined context refers to the value that the ARCBS
delivers to its stakeholders. The KPAs for ARCBS were used as a starting point
for the value hierarchy. The original definition of the value context is crucial,
otherwise the ensuing system may be very skewed relative to the real value of
the process. The context statement lists the stakeholder groups involved (see
below), their agreed high level objectives, and the system of interest with its
environment.
The research process consisted of the steps illustrated in Table I. The initial
desk audit involved the collection and evaluation of government reports,
ARCBS documentation and other relevant material concerning both the
ARCBS and relevant international sectoral issues. A review was also

Step Process

1 Desk audit of the literature

2 Workshops with ARCBS management to determine context and discuss KPAs
3 Stakeholder groups and members determined
4 Draft HVA (hierarchy) determined
5 Interviews with stakeholders to refine hierarchy (face-to-face and telephone)
6 Revision of hierarchy after feedback from stakeholders
7 Final hierarchy (version 9) Table I.
8 Survey to all stakeholders (by mail) Steps in the research
9 Analysis of data and results process
JIC undertaken of other international blood services to establish whether a similar
4,4 stakeholder analysis had been undertaken elsewhere. It was found that many
of the international organizations had carried out blood donor surveys and
some customer satisfaction surveys, but none of the organizations had looked
at all their stakeholders from a wider perspective.
This phase was followed by workshops in which the research team and
512 senior ARCBS management including operational staff met for the purpose of
establishing potential stakeholder groups, identifying representative members
of those groups and considering potential KPAs from which a hierarchy might
be built. Once a draft hierarchy had been constructed, individual stakeholders
were invited to provide input to the process. The stakeholders were selected
from a list provided by ARCBS of approximately 100 names from over 80
different organizations. The individuals were generally at senior management
level although there was a vertical cross section taken through larger
organizations with multiple contributors. All the stakeholders were considered
to have sufficient knowledge and understanding of the role of ARCBS to be
able to make a contribution. Once the interview process commenced, additional
names were added to the list, following suggestions by stakeholders.
An extensive range of face to face and some telephone interviews with
individuals from all stakeholder groups was held to determine whether the
hierarchy, its structure and its constituent attributes accurately and fully
reflected all the attributes that the stakeholders perceived to be important. As a
result of these qualitative interviews, changes were made to the hierarchy to
reflect the views of the stakeholders. Each new version was tested with
subsequent stakeholder interviews. And so the hierarchy was refined over
several months. Follow-up interviews were held with some key stakeholders to
ensure that the feedback had been correctly interpreted.
The quantitative research process concerned a detailed questionnaire based
on the hierarchy. This step involved the mailing of a survey instrument to 90
individuals chosen from the different stakeholder groups. The survey
questioned the stakeholder on the relative value they attributed to the nine
KPAs, and secondly on the relative value they attributed to the constituent 65
attributes within each KPA as well as opinions on characteristics of the
attributes, such as whether they were indispensable. The survey also asked
about the behaviour of the attributes as they affected overall organizational
performance. To enhance validity, the individuals in the survey instrument
were required to identify to which stakeholder group they belonged. An
opportunity was also provided for the respondents to make qualitative
comments both about the process and about ARCBS.
The next step involved follow-up telephone calls offering explanation and
assistance with the process to maximise the response rate. The final step was
analysis of the completed questionnaires by the HVA methodology. This
involved an analysis of the weighting of all the attributes by each stakeholder
group and their combination using the axiomatic approach of measurement Mapping
theory. From this a value hierarchy of ARCBS for each stakeholder group was stakeholder
produced. perceptions
5. Results and discussion
The major outcomes of the case study were that key stakeholder groups of
ARCBS were identified, a reference value index or hierarchy for ARCBS was
513
created and the perceptions of value (present and future) in the ARCBS held by
the different stakeholders groups were defined and could be compared. Thus,
as a result of the study, the organization is better able to visualize the value
creation path and may better align performance measures and strategy to
achieve greater value creation.

5.1 Stakeholder groups

Twelve key stakeholder groups were identified by ARCBS (Table II).
The study proceeded with 11 stakeholder groups rather than 12, because
stakeholders from the media chose not to participate in either the interview
process or the questionnaire. A high degree of co-operation was received from
all the remaining groups in both the interview process and survey completion.
Whilst it might have been anticipated that some of the stakeholder groups
shared overlapping interests and that they thus could have been added
together, the results of the analysis demonstrated that each group had a
different perspective and consequently no two groups could be combined.

5.2 ARCBS value hierarchy

The initial workshop with the ARCBS and subsequent personal or telephone
interviews with twenty-two key stakeholders (representing all 11 stakeholder
groups) was used to create a values hierarchy. The value hierarchy consisted of
nine KPAs and constituent attributes within each of the KPAs. This analytical
tool captured “value perception” measures and combined them as represented
graphically in Figure 1.

Group Stakeholder

1 The Commonwealth Government of Australia

2 The parent non-profit organisation
3 State and territory governments
4 Union representatives (including some ARCBS employees)
5 The health sector (including end users in hospitals)
6 Regulators
7 Suppliers
8 Major commercial stakeholder
9 Blood donors
10 R&D institutions Table II.
11 The media Stakeholder groups
JIC
4,4

514

Figure 1.
The ARCBS hierarchy

Below the top box in Figure 1, which represents overall value, are nine KPAs
for the ARCBS. Below these, the hierarchy cascades down through the
intermediate elements into 65 attributes of value. After the round of interviews
nine KPAs were confirmed (Table III).
The final hierarchy (Figure 2), consisting of nine KPAs, 22 intermediate
elements and 65 attributes, was developed in an iterative procedure by
discussion and interview with stakeholders. The process involved working
through eight versions before the final hierarchy was defined. The modified
hierarchy, which resulted from the interview process, could then be seen to be

KPA
number KPA
1 Safe product
2 Product sufficiency
3 R&D and other services
4 External management
5 Internal management
6 People management
7 Working with stakeholders
Table III. 8 Donor and volunteer management Management of donors and volunteers
ARCBS key 9 Public confidence
performance areas
Definition
All matters relating to the safety of products
Availability of products as and where required
Provision of specialist services and R&D
initiatives
All aspects of governance and compliance
All aspects of infrastructure, operational
management and organizational performance
Management and development of ARCBS staff
Management and development of stakeholder
relationships
Building and maintaining public awareness and
confidence in ARCBS
 Mapping
stakeholder
perceptions

515

Figure 2.
The ARCBS value
hierarchy showing
attributes

inclusive of all stakeholder views. The accuracy of this picture of ARCBS (the
hierarchy) was further tested in the next part of the study.
The written survey requested 90 stakeholder participants to rank the nine
KPAs in order of importance and to attribute a numerical weighting to each. In
turn, they then ranked the attributes within each KPA and designated each a
numerical weighting and made decisions about indispensability and attribute
characteristics. To further aid understanding a list of definitions of the
attributes was provided (Table IV).
JIC
KPA Attribute Definition of the attribute and its limits
4,4
Safe product Management of Feedback from clinical user, prompt action to
adverse event investigate recall of product, follow-up of donors
reporting and reporting
Process control Integrity of blood collection and manufacturing
516 process (e.g. complete, correct, intact)
Product improvement Improved yield, quality and safety of existing
products
Donor screening Identity and defer at risk donors, specific testing,
safeguard donor health
Non-infectiousness Free of infectious agents such as viruses and
bacteria
All other product Other than infectiousness, e.g. blood volume, age of
attributes blood, quality of product, specific product for
specific needs

Product Sufficient collections Collections strategies and management to ensure

sufficiency enough blood collections
Inventory Efficient, effective, suited to product requirements,
management waste reduction, long shelf life on issue
Sufficient fresh Meet critical demand across blood groups, right
product product at the right time and place
Sufficient plasma Meet critical demand of clinical user
product
Customer service Understanding and meeting the customer needs in
the provision of product. The ordering
experience including systems, people and
processes
Equity across All types of product available to all parts of
Australia Australia
Effective distribution Timeliness, correct temperature and transport
conditions, reliability of service – includes
distribution of recombinant product where
relevant
Distribution hub Where store of blood products is kept, how
location many hubs and how dispersed across
Australia

R&D and Tissue typing Scope and quality of service, timeliness of

professional tissue-typing services
services
Donor recipient Timeliness and quality of service, includes solid
matching organ, marrow and stem cell/cord blood
Register management Size, management and international links
(Australian Bone Marrow Donor Registry),
includes solid organ/patient register
Clinical advisory Availability, timeliness, competency, size and
services scope
Table IV.
Definitions of attributes (continued)
KPA Attribute Definition of the attribute and its limits
Mapping
stakeholder
Laboratory reference Availability, size, competency and scope (includes perceptions
services red cell, platelet, neutrophil and virology)
Autologous/ Availability, location, size and scope
therapeutic
collections 517
Non-HLA genetic Haemochromatosis, antenatal
testing
Contribution to new Making publicly available the fruits of research in
knowledge the form of publications, presentations and reports
Collaborations Communication, productivity, networking and
scope of research partnerships, building
relationships and sharing of expertise
Public health Community benefits which improve quality of life,
developments resulting from research undertaken or supported
by ARCBS
New ARCBS products, Additional to or replacing current products,
services and devices services and devices
IP management and IP protection and management. Technology
commercialisation transfer to ensure new developments are made
available to the community
External Liability management Litigation management, liability reduction,
management insurance management
Disaster recovery Development of plans, management, scenario
testing and communication strategies
Risk management Identification and awareness, management plans
for general and operational risks
Accountability and Accountability to funders and Australian Red
financial Cross Society. Responsibility in creating,
responsibility managing and reporting of budgets vs expenditure
Occupational health Maintaining a safe environment for donors, other
and safety visitors, staff
Code of good Complying with the therapeutic goods
manufacturing administration code of GMP
practice
Other regulatory Legal, financial, ethical, NATA, good laboratory
requirements practice, equal opportunity, industrial
agreements and privacy
Internal Information IT infrastructure-efficient, timely, comprehensive,
management technology supporting business needs and customer
requirements. Integrated with work processes
Plant and equipment Modern, safe, well-maintained, well-managed,
planned replacement program, back-up capacity
Facilities Facilities of appropriate standard, location and
capacity, for collection, production, testing,
distribution and support services (static sites vs
mobiles)
(continued) Table IV.
JIC KPA Attribute Definition of the attribute and its limits
4,4
Planning and project Effective strategic and operational planning
management
Quality management Quality system, continuous improvement, error
handling, auditing, standards, document control,
518 record keeping, archiving, validations, change
management, training, QA
Pricing of products Accuracy, accountability, transparency,
and services comprehensiveness, consistency
Demand management Balancing production to meet seasonal variances in
supply with fluctuating clinical demand
Performance Identification of suitable targets and measurement
management of performance against targets
People Recruit and retain Effective recruitment processes, positive
management skilled staff organizational culture, appropriate induction of
staff, support of new employees, individual fit
into organization, staff turnover levels
Learning and Opportunities provided to staff to develop further
development capabilities – formally and informally
Performance Good staff management, staff satisfaction,
development, accountability, conditions of employment,
recognition and performance-based management/aligning
reward individual staff goals with that of the
organization
Improving leadership Staff leadership development program, mentoring,
skills promotional opportunities
Interpersonal/customer Developing improvement in staff customer and
relationship skills interpersonal skills
Working with Synergy with the Part of the one organization working together
stakeholders Australian Red
Cross Society
Uniform processes, Consistency and integrated across Australia
practices, services
and information
Attentiveness to Investigating, evaluating, listening and responding
stakeholders’ views prior to decision making
in decision making
Quality of Written, oral communication – including
communication relevance, quantity, clarity and quality
Stakeholders’ Regular survey and measurement of improvement
satisfaction
Connectiveness to Identification of and improved interaction and
health sector connection with health sector stakeholders
Donor and Donor recruitment Eligible new donors enrolled (attracting the right
volunteer type of new donor)
management
(continued)
Table IV.
 Mapping
KPA Attribute Definition of the attribute and its limits
stakeholder
Donor retention The notion of repeat custom by donors, donation perceptions
rate per annum increased
Donor/market research Target research on Australian donors (e.g.
motivation, rewards, donation attributes) to
maximize collections and market research 519
Convenience of the Hours of operation, location and number of
donation center facilities, parking, public transport etc.
Experience of donating Through-put, waiting time, environment, staff
attitude, courtesy and competency, experience
with venipuncture, comfort and perception of
safety, privacy/confidentiality
Donor counselling Professional communication, handling and support
of donors with positive test results
Donor recognition Appreciation and appropriate rewarding of repeat
and long-term donors
Volunteer recognition Apreciation and rewards for volunteer staff

Public confidence Issue management Reducing the impact of potentially damaging

issues taken up by the media
Proactive media Establishing good relationship with media, public
management profile management, good stories into the press
Donor Donation process, donor health issues, what
happens to the blood, why it is needed so often,
what tests are done, consequences of donating,
assurance of staff etc.
Clinician Management of products and appropriate use,
critical supply issues, safety and risks
General public Information relativeness, timeliness and
authoritativeness Table IV.

Overall a response rate of almost 50 per cent was achieved from 90 surveys
mailed which was considered to be a satisfactory outcome, given the fact that
some respondents considered they had already contributed at the interview
stage and that the survey was conducted over the Christmas holiday period.
Thirty-seven fully usable responses from 44 returned surveys were further
analysed. From one stakeholder group there was only one representative
member who responded and hence the results for this group (regulators) need
to be interpreted with caution. All other stakeholder groups had several
members.
Given the iterations with the stakeholder groups, the resulting hierarchy and
their KPAs and attributes can be trusted to be “inclusive” of stakeholder views,
that is, every stakeholder who provided data would find that the hierarchy
included all the aspects they would consider relevant. It was confirmed in the
analysis of the data that all the stakeholder groups perceived there to be some
value in each of the different KPAs.
JIC 5.3 Relative importance of different KPAs
4,4 The survey asked each stakeholder group to state the relative importance they
attached to each of the nine KPAs with respect to the others and, within each
KPA, they were asked to state the relative importance of each attribute that
contributed to that KPA. The responses from each stakeholder group were
analysed and used to create a value index for each stakeholder group. The
520 overall perceptions of the stakeholder groups towards each KPA are shown in
Figure 3.
KPA 1 (safe product) and KPA 2 (product sufficiency). As illustrated in
Figure 3, the overall most important KPA identified by all participants was
KPA 1, “safe product”, which was described as all matters pertaining to the
safety of ARCBS products. The second most important KPA overall was KPA
2, “product sufficiency”, which deals with matters pertaining to the availability
of blood products when and where required. The third most highly valued
overall was KPA 8, “donor and volunteer management”, and the fourth KPA 9,
“public confidence”. The other five KPAs (3-7) – dealing with R&D and other
services, internal and external management, people management and working
with stakeholders – indicate a clustered ranking of importance not as high as
KPAs 1, 2, 8 and 9.
Figure 3 highlights the rankings of the relative importance of the KPAs. The
mean ranking of all stakeholder groups for KPA 1 “safe product” is about 22
and the standard deviation is about 4. This is a good, tight distribution. KPA 1
and KPA 2 belong to a group with means based around 20. KPA 8 and KPA 9,
dealing with donor appreciation and public confidence, have means around 11
and form a second group, while the rest have means of about 8 and form a third
cluster.
From this analysis it is evident that the stakeholders generally position
issues of safety and sufficiency of the product as the fundamental concern of
what value they derive from the ARCBS. Such a priority is reinforced not only
from the statistical data, but also from the qualitative data that the research
team accessed both in interviews for the construction of the hierarchy and in
qualitative comments at the back of each survey.
Furthermore, the prominence of safety and sufficiency reinforces the
strategic importance of these performance areas for the reforms that are being
implemented in public, private and non-profit health organizations, in terms of
the substantive content of the services delivered but also in terms of the quality
of the delivery process. This is seen in the blood industry in terms of reforms
and changes that have been proposed pertaining to quality, regulation, product
availability, and access to products (Stephen, 2001).
KPA 8 (donor and volunteer management) and KPA 9 (public confidence).
The next most valued KPAs include “donor and volunteer management” and
“public confidence”. Theses two KPAs deal mainly with the essential
relationships upon which ARCBS relies, relating to the collection of donations,
 Mapping
stakeholder
perceptions

521

Figure 3.
ARCBS KPAs by overall
relative importance
JIC the use of volunteer labour, the clinical use of blood and public trust. They also
4,4 depend in part on the effective use of human and structural resources. These
two KPAs, clustered together as second most valued, reflect the perception
amongst stakeholders of the relative weighting and importance they derive
from the ARCBS in a number of ways, including support, communication,
affirmation, counselling and clinical education.
522 The prominence of these two KPAs indicates the relative importance
stakeholders perceive in ARCBS management of different stakeholder
relationships. The stakeholders represented within these two KPAs are so
diverse – ranging from donors and volunteers to blood recipients and the
community at large – that while an individual stakeholder group cannot be
isolated, the weighted average indicates a strong expectation of superior
relationship management by the ARCBS.
KPA 3 (R&D and other services), KPA 4 (external management), KPA 5
(internal management), KPA 6 (people management), KPA 7 (working with
stakeholders). The third most important value-ranking group of KPAs
consisted of KPAs 3-7. In this group, the KPAs cover a range of dissimilar
areas, ranging from R&D and other services, internal and people management
and working with stakeholders. The analysis of this third clustered group
indicates that, as a whole, these KPAs are perceived to be of less value than the
two previous groupings above. The lower ranking of these areas indicates
relative stakeholder disinterest in matters of internal and external ARCBS
management, apart from areas where as a group they interface with the
ARCBS, that is, in product delivery and sufficiency or in donor provision or
clinical usage.
Analysing these results from an intellectual capital perspective, this study
reveals that many “less visible” attributes within KPAs 3, 4, 5 and 6 are
associated with the deployment of structural and human resources. Many of
the attributes within these KPAs (R&D and other services, external and
internal management and people management) are perceived to contribute to
organizational competence. Although most of these less visible attributes were
valued relatively less highly by stakeholders generally than attributes
associated with the dominant KPAs (1, 2, 8 and 9), the attributes of KPAs 3 to 6
are in fact crucial to sustaining the systems that create value in the dominant
KPAs of safe product, sufficient products and contribute to public confidence in
the service.
Interestingly, KPA 7, working with stakeholders – consisting of
relationship capital was also seen as relatively of less value than the
dominant KPAs 1, 2 and 9, or indeed of managing relationships with donors
and volunteers (KPA 8).
Whilst there was a considerable consensus in the overall appreciation of
KPAs, analysis of the individual responses of different stakeholder groups
reveals that the different groups often had different priorities. The three most
highly valued KPAs for each stakeholder group are compared in Table V. Mapping
While “safe product” and “product sufficiency” are KPAs that are seen to be stakeholder
predominant together with “public confidence” and “donor and volunteer perceptions
management”, some stakeholders order their priorities differently. A few
stakeholder groups rate other KPAs more highly than these predominant
KPAs (1, 2, 8 and 9). For example, “people management” was perceived as
relatively more important by unions. Both donors and the parent non-profit 523
organization rated “internal management” as the KPA of the second highest
value. This illustrates some of the diversity of views among stakeholders.
Another study of a complex stakeholder public sector organization, using a
somewhat similar methodology, also revealed different value dimensions for
each stakeholder (Roos and Jacobsen, 1999). The process of generating value is
more complex in a stakeholder organization than in a profit-generating firm. A
profit driven firm may deliver value by maximising shareholder wealth. In a
stakeholder organization such as a non-profit organization the delivery of
services under budgetary or other government constraints may result in a
necessity for tradeoffs between different stakeholders. The diversity between
stakeholder groups of ARCBS is more apparent once the data is further
analysed, particularly in terms of those attributes thought to be indispensable
and those attributes that are seen to be highly sensitive to poor performance.

6. Implications of findings for strategic development

There are implications from this study as to what an intellectual capital
approach can contribute to organizational strategy. One view is that knowledge
management and established strategy tools need to be more closely linked in

Stakeholder group Most sensitive KPA Second most sensitive Third most sensitive

Federal government Product sufficiency Safe product Public confidence

Parent non-profit Safe product Internal management Donor and volunteer
organization management
Patient support Safe product Product sufficiency Public confidence
groups
State and territory Safe product Public confidence Product sufficiency
governments
Unions Product sufficiency People management Donor and volunteer
management
Health sector Product sufficiency Safe product Donor and volunteer
management
Regulators Safe product Product sufficiency Donor and volunteer
management
Suppliers Safe product Product sufficiency Public confidence
Major commercial Product sufficiency Safe product Donor and volunteer
stakeholder management Table V.
Donors Product sufficiency Internal management Public confidence Most sensitive KPAs for
R&D institutes Safe product Product sufficiency Public confidence each stakeholder group
JIC order to develop a sustainable knowledge-driven competitive advantage (Drew,
4,4 1999). Non-profit and public sector organizations may be especially well placed
to combine these concepts. A recent study has shown that knowledge
management may be better understood by public sector organizations than by
private sector organizations, as a survey of both types of organizations showed
that public sector organizations had a more coherent strategy for knowledge
524 management and its embodiment and also perceived the benefits of such a
strategy more clearly (McAdam and Reid, 2000). Roos et al. (2001) argues that a
successful strategy requires a fusion of internally and externally generated
perceptions of an organization. This fusion has been achieved in this case study
through the value hierarchy created, which commenced with input gained from
inside the organization and was then substantially refined by external
stakeholder views. The value creation path has been made explicit to the
ARCBS, which may now align its strategy with value creation.
While there is great interdependency between public, private and non-profit
organizations, there is a lively debate on the place of strategy in guiding
organizational direction and effectiveness (Steane, 1999b). Traditionally,
non-profit organizations, unlike for-profit organizations, do not focus on profit
generation and wealth distribution to shareholders but rather on more
intangible results such as satisfactory delivery of essential services to the
community and maintaining social and community values. In a climate of
interaction between sectoral partners, which in the case of the ARCBS entails
balancing stakeholders with divergent interests, this study reveals dimensions
of value creation that may inform strategic planning.
The 65 individual attributes combined with the sensitivities also form a
good foundation for developing measurement and reporting systems. The
ARCBS may now focus on identifying indicators and measures for the
attributes that stakeholders have identified as important. By knowing what the
different stakeholders value and how sensitive they are to changes in
performance, systems and reporting can be put in place and tailored to different
stakeholders’ needs.

7. Conclusion
This paper reports the perception of value in KPAs from an external
stakeholder perspective. Our case study of the Australian Red Cross Blood
Service has shown that there was a high degree of agreement overall amongst
stakeholders concerning both the structure of the value hierarchy and the
critical nature of the four most highly valued KPAs. There were however many
differences between different stakeholder groups in their perceptions of the
relative importance of KPAs and attributes. This study has revealed the
importance of managing the intangible resources of ARCBS – its human,
structural and relationship resources. The achievement of success in some of
the KPAs – those associated with safe and sufficient products, for example
depends mainly on the effective deployment of human and structural capital. Mapping
The maintenance of “public confidence” on the other hand depends on utilizing stakeholder
and managing all three intellectual capital components (human, structural and perceptions
relationship capital) and their effective interconnection.
The differentiation between the stakeholder groups over the relative
importance of KPAs, and the sensitivity of individual attributes, provides a
basis upon which the ARCBS can understand and manage its numerous and 525
diverse group of stakeholders and thus achieve more efficient value creation for
all its stakeholders.
The dimensions of value revealed in the study provide a basis for the
ARCBS to proactively manage the formulation of strategy, performance
management processes, and communication with stakeholders. The
methodology used has provided a means of understanding stakeholder
perspectives that has not been found in published case studies, research
literature, or within similar blood services. Further research is needed to
determine how effectively the ARCBS is now able to incorporate this increased
understanding of its value for stakeholders into management philosophy and
to measure future value creation.

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