Stakeholders

• 1- Definition
• 2-Socialisation of the market
• 3-Stakeholder classification : characteristics for primary and
secondary stakeholders
• 4 Stakeholders Management
 1- Definition
• Stakeholders are those groups or individuals without whom the firm
would cease to exist.
• The demands of these actors (customers, employees, and
shareholders) impact the firm on a daily basis. In consequence, their
demands are perceived as urgent by management and are thus critical
for firm survival (Freeman, 1999).
There are many actors and associated issues involved in stakeholder
influences on the firm.
• Clarkson (1995) argues that a stakeholder has some form of capital
(either financial or human capital) at risk and therefore has something
to lose or gain depending on an organisation's behaviour. That
stakeholder has some form of ‘ownership' of material wealth, too,
that is also encompassed within the Clarkson Stakeholder Framework.
What these stakeholders actually ‘want' and ‘how are they going to
try to get it,' Frooman (1999) suggests, may be dictated by the
salience of these stakeholder relationships. These principles lie at the
heart of stakeholder management and engagement.
 2-Socialization of the market

• Due to socially responsive political systems like democracies

• Interaction of market , social and governmental factors
• There is changes in investors values, consumers values
• Civil society, media and gouvernements reshape the market
Green blood project
• https://www.youtube.com/watch?v=jsytPOPBvbs&t=16s
• https://www.youtube.com/watch?v=nSalms0vcI
• https://www.youtube.com/watch?v=nSal-ms0vcI

• https://www.iucn.org/about
FILE PHOTO: A woman uses a Monsanto's Roundup weedkiller spray
without glyphosate in a garden in Ercuis near Paris, France, May 6, 2018.
REUTERS/Benoit Tessier/File Photo
• French parents of malformed child take on Monsanto, 18 juin 2018,
Dorothée Moisan

• a French couple have launched a lawsuit against the firm over serious
malformations of their son’s digestive and respiratory systems which they
argue was caused by his mother’s exposure to glyphosate in the early
weeks of pregnancy. Crucially, they say that Monsanto knew of the
compound’s potential dangers but failed to warn of them in product
labelling.

• Doc: French parents of malformed child take on Monsanto

First trial alleging Monsanto's Roundup causes cancer goes to
jury - August 7, 2018 / Reuters
• - A trial in which a school groundskeeper alleged that his use of Monsanto’s Roundup weed killer caused his terminal cancer will go to a California
jury after lawyers for both sides delivered their closing arguments on Tuesday.
• Groundskeeper Dewayne Johnson is one of more than 5,000 plaintiffs across the United States who claim Monsanto’s glyphosate-containing
herbicides, including the widely-used Roundup, cause cancer. His case, the first to go to trial, began in San Francisco’s Superior Court of California
four weeks ago.
• Johnson’s lawyer Brent Wisner on Tuesday urged jurors to hold Monsanto liable and punish them with a verdict he said would “actually change the
world.” Wisner claimed Monsanto knew about glyphosate’s cancer risk, but decided to bury the information.
• Monsanto, a unit of Bayer AG following a $62.5 billion acquisition by the German conglomerate, denies the allegations and says expert testimony on
which Johnson and others rely does not satisfy any scientific or legal requirements.
• “The message of 40 years of scientific studies is clear: this cancer is not caused by glyphosate,” Monsanto’s lawyer George Lombardi said, according
to an online broadcast of the trial by Courtroom View Network.
• The U.S. Environmental Protection Agency in September 2017 concluded a decades-long assessment of glyphosate risks and found the chemical not
likely carcinogenic to humans. The World Health Organization’s cancer arm in 2015 classified glyphosate as “probably carcinogenic to humans.”
• If it finds Monsanto liable, the jury can decide to award punitive damages on top of the more than $39 million in compensatory damages Johnson
demanded. The jury is expected to start deliberating on Wednesday.
• Johnson’s case, filed in 2016, was fast-tracked for trial due to the severe state of his non-Hodgkin’s lymphoma, a cancer of the lymph system that he
alleges was caused by Roundup and Ranger Pro, another Monsanto glyphosate herbicide. Johnson’s doctors said he is unlikely to live past 2020.
• A former pest control manager for a California county school system, Johnson, 46, applied the weed killer up to 30 times per year.
• His case is not part of proceedings consolidated in Missouri, Delaware or California state court, where most of the Monsanto cases are pending. It is
also separate from consolidated federal multidistrict litigation pending before U.S. District Judge Vince Chhabria in San Francisco.
• Chhabria in July allowed hundreds of Roundup lawsuits to proceed to trial, finding there was sufficient evidence for a jury to hear the cases despite
calling plaintiff’s expert opinions “shaky.”
• Reporting by Tina Bellon; Editing by Bill Berkrot
US jury orders Monsanto to pay $289m in Roundup
cancer trial
Agribusiness giant ordered to pay damages to man who
says he got terminal illness after using popular weed
killer
Changes in consumers values

• Ethical retailing:
• https://www.morganstanley.com/ideas/ethical-retailing-consumers-
survey
Fair trade

• Fairtrade is an alternative approach to conventional trade and is based

on a partnership between producers and consumers. When farmers
can sell on Fairtrade terms, it provides them with a better deal and
improved terms of trade. This allows them the opportunity to improve
their lives and plan for their future. Fairtrade offers consumers a
powerful way to reduce poverty through their every day shopping.
• When a product carries the FAIRTRADE Mark it means the producers
and traders have met Fairtrade Standards. The Fairtrade Standards are
designed to address the imbalance of power in trading relationships,
unstable markets and the injustices of conventional trade.
• Doc: R-Fair-trade-glossary_WFTO-FLO-FLOCERT
• https://www.fairtrade.net/about-fairtrade.html
 3-Stakeholder classification characteristics for
primary and secondary stakeholders
• Clarkson (1994) identifies stakeholders as “voluntary or involuntary risk-
bearers.” Participation for all stakeholders, no matter how small their stakes in
the decision-making processes of the corporation, widens this perspective.
• Today, the view of stakeholder relationships is broader . This recognises that
legitimate groups and individuals who are linked directly or indirectly with the
firm may be able to contribute towards its survival or downfall or even its
succes.
The multi-dimensional relationships that exist between a wide array of
stakeholders (e.g., shareholders, employees, suppliers, customers,
environmentalists, local community) broaden the stakeholder perspective.
Stakeholder Classification
Group A, the primary stakeholders, imaged through a managerial
“lens”
Group B, the secondary stakeholders, groups and individuals who
influence or affect, or are influenced or affected by, the corporation.
They are not engaged in transactions with the corporation and are not
essential for its survival.
Frooman J.(1999), Stakeholder Influence Strategies, The Academy of Management Review, Vol.
24, No. 2, pp. 191-205
Stakeholder Classification Characteristics (Frooman 1999)

Group A Primary Stakeholders Group B Secondary Stakeholders

• Range and number of individuals encompasses a

Narrow range of groups or individuals broad pool of groups and individuals. May be few
or many actors from this pool
Constant and influential on
). Constant and weak or sporadic and heavy/weak
management decision-making
influence on management decision-making process
process.
Influences legitimacy of firm and indirectly affects
Vital to firm survival
firm survival
Conventionally associated with
Strong association with corporate social
corporate governance codes of
responsibility literature
conduct
3-Stakeholder Management

• Organisations engage with those stakeholders that they perceive to

be most relevant to their needs.
• Shareholders are demonstrated to hold the highest level of salience,
with employee, supplier and customers' contractual responsibilities
contributing an important financial consideration for managers, too.
• (Kaplan and Norton, 1996)
• How the salience of some primary stakeholders is equated with
managerial economic responsibilities.
Diagrammatic representation of the relationship
between the firm and its stakeholders ( Ulhoi, 1997)
• Lighter shaded (inner) area that primary stakeholders assume a more
prominent and urgent priority for the firm.
• Darker shaded region identifies that special interest groups may
mobilise the public and significantly damage the corporation. This
mode of action is demonstrated through the arrows between the firm
and peripheral influences.
Diagrammatic representation of the relationship between the
firm and its stakeholders (source: Ulhoi, 1997).
The grid of Stakeholder’s values (Longo et al., 2005)
Stakeholder Expectations divided into value classes

Employees Health and safety at work

Development of workers’ skills
Wellbeing and satisfaction of worker
Quality of work
Social equity
Suppliers Partnership between ordering company and supplier
Selection and analysis systems of suppliers
Customers Product quality
Safety of customer during use of product
Consumer protection
Transparency of consumer product information
Community Creation of added value to the community
Environmental safety and production
Possible responsibilities to selected stakeholders (Kujala, 2001)

Stakeholders Economic relationship Social relationship and responsibilities CSR

Fiduciary obligation is to use judgements to interpret and
Shareholders Fiduciary – to maximise profit achieve shareholders' interests. Obligation to be faithful to
stated objectives, whether profit-maximising or not.
Contractual relationship supplemented by relationships of
Contractual – to pay wages and teamwork.
Employees treat in accordance with Collegiality, trust and loyalty, with significant imbalances of
relevant legislation power. Obligations of fairness, loyalty and care, and perhaps
of participation.
Contractual relationship supplemented by relationship
Contractual – to pay for
Suppliers based on non-contractual expectations, exclusivity and/or
purchases
power imbalances. May be specified obligations.
Relationship of interdependence, may lead to obligations of
Communities None
care, respect and participation.
• The possible responsibilities that managers have to their stakeholders, salience
is dependent on how managers perceive:
• (a) the stakeholders' power to influence the firm,
• (b) the legitimacy of the stakeholders' relationship with the firm
• (c) the urgency of the stakeholders’ claim on the firm
 Reactive-Defensive-Accommodative-Proactive
(RDAP) scale
Management’s strategy or posture towards a particular stakeholder group :
• qualitative terms ‘reactive’ or ‘proactive’ have become commonplace within the
management literature.
• Clarkson (1995) makes reference to Carroll (1979), Wartick and Cochran (1985), and
Starik et al. (1989), and summarises the Reactive-Defensive-Accommodative-Proactive
(RDAP) scale.
• Theoretically an organisation's most risk-averse approach for dealing with
stakeholders would be to address all stakeholder groups and their issues in a proactive
or accommodative manner.
• Pro-action and accommodation are the most risk-averse management strategies
because such strategies are more likely to satisfy stakeholders (Jawahar and
McClaughlin, 2001).
The Reactive-Defensive-Accommodative-Proactive
(RDAP) Scale (Clarkson, 1995).
Rating Posture or Strategy Performance

Fight all the way

1. Reactive Doing less than is required
Deny Responsibility

Admit responsibility Doing the least that is required

2. Defensive
But fight it Doing only what is required

3. Be progressive
Doing all that is required
Accommodative Accept responsibility

Anticipate responsibility
4. Proactive Doing more than is required
Lead the industry
• For a small vietnamese firm, in a a sector you choose, is it better to be
1, 2, 3 or 4?
Actions vis-a-vis key stakeholders(Papasolomou et al.,
2005)
• Employees
• Provides a family friendly work environment
• Engages in responsible human resource management
• Provides an equitable reward and wage system for employees
• Engages in open and flexible communication with employees
• Invests in employee development
• Encourages freedom of speech and promotes employee rights to speak up
and report their concerns at work
• Provides child care support/paternity/maternity leave in addition to what
is expected by law
• Engages in employment diversity in hiring and promoting women, ethnic
minorities and the physically
• handicapped
• Promotes a dignified and fair treatment of all employees
Responsability in the work place
• https://www.novonordisk.com/sustainable-business/performance-
on-tbl/responsibility-in-the-workplace.html

• https://www.commerce.wa.gov.au/worksafe/employees-your-rights-
and-responsibilities

• https://www.pfizer.com/responsibility/workplace-responsibility

• https://www.lilly.co.uk/en/responsibility/workplace-
responsibility.aspx
• Consumers
• Respects the rights of consumers
• Offers quality products and services
• Provides information that is truthful, honest and useful
• Products and services provided are safe and fit with their intended
use
• Avoids false and misleading advertising
• Discloses all substantial risks associated with product or service
• Avoids sales promotions that are deceptive/manipulative
• Avoids manipulating the availability of a product for purpose of
exploitation
• Avoids engagement in price fixing
Actions vis-a-vis key stakeholders
• Community
• Fosters reciprocal relationships between the corporation and community
• Invests in communities in which corporation operates
• Launches community development activities
• Encourages employee participation in community projects
• Investors
• Strives for a competitive return on investment
• Engages in fair and honest business practices in relationships with
shareholders
• Suppliers
• Engages in fair trading transactions with suppliers
• Environment
• Demonstrates a commitment to sustainable development
• Demonstrates a commitment to the environment
Activity

• From the CSR report of the company studied previously and the
knowledge you have of this company, present the relationship it has
with its stakeholders, using the classification seen in class.