Stakeholders Matter: A New Paradigm for Strategy in Society

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ISBN: 9780521196390 | 0521196396
Cover: Hardcover
Copyright: 10/31/2011

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The dominant shareholder-value model has led to mismanagement, market failure and a boost to regulation, as spectacularly demonstrated by the events surrounding the recent financial crisis. Stakeholders Matter challenges the basic assumptions of this model, in particular traditional economic views on the theory of the firm and dominant theories of strategic management, and develops a new understanding of value creation away from pure self-interest toward mutuality. This new 'stakeholder paradigm' is based on a network view, whereby mutuality enhances benefits and reduces risks for the firm and its stakeholders. The understanding of mutual value creation is operationalized according to the license to operate, to innovate and to compete. The book develops a vision for a strategy in society in which, rather than the invisible hand of the market, it the visible hands of the firm and the stakeholders that lead to an overall increase in the welfare of society.

List of figures	p. xii
List of tables	p. xiv
foreword	p. xv
Acknowledgments	p. xvii
Challenges for a new paradigm in strategic management	p. 1
The future of business in society: social and economic changes	p. 1
Requirements for a new paradigm in strategic management	p. 3
Historic nature of paradigms	p. 3
Origin of the economic paradigm	p. 4
Post-Enlightenment Capitalism	p. 4
Multi-paradigm concepts to reflect reality	p. 6
Our contribution to the stakeholder paradigm	p. 6
Path toward a new stakeholder paradigm	p. 8
Development of the basic assumptions of a new stakeholder paradigm	p. 11
The economic paradigm and its basic assumptions	p. 13
The economic paradigm of the theory of the firm	p. 13
What is the purpose of the firm and its underlying principle of value creation?	p. 14
Who are the actors and who are the owners?	p. 15
What are the main attributes of actors and their behavior?	p. 15
What are the conditions of the environment?	p. 16
Final remarks	p. 16
The strategy theory: general remarks	p. 18
The strategy theory: the "Industry Structure View of Strategy" (ISV)	p. 19
What is the purpose of the firm and its underlying principle of value creation?	p. 20
Who are the actors and who are the owners?	p. 21
What are the main attributes of actors and their behavior?	p. 22
What are the conditions of the environment?	p. 23
Final remarks on the ISV	p. 24
The strategy theory: the "Resource-based View of Strategy" (RbV)	p. 26
What is the purpose of the firm and its underlying
principle of value creation?	p. 27
Who are the actors and who are the owners?	p. 29
What are the main attributes of actors and their behavior?	p. 29
What are the conditions of the environment?	p. 30
Final remarks on the RbV	p. 30
The economic paradigm revisited	p. 32
Contribution of stakeholder theory to our understanding of the stakeholder paradigm	p. 35
Descriptive dimension	p. 35
Who are the stakeholders?	p. 35
What is the interaction between the firm and its stakeholders?	p. 38
Our understanding from a descriptive perspective	p. 40
Instrumental dimension	p. 41
Stakeholders impact value creation	p. 42
Stakeholders create competitive advantage	p. 42
Stakeholder relations pay off	p. 42
Our understanding from an instrumental perspective	p. 43
Normative stakeholder dimension	p. 43
Economic normative foundation	p. 44
Social/philosophical, normative foundation	p. 45
Our understanding from a normative perspective	p. 45
Final remarks	p. 46
The stakeholder paradigm	p. 48
The stakeholder theory of the firm	p. 48
What is the purpose of the firm and its underlying principles of value creation?	p. 48
Who are the actors and who are the owners?	p. 50
What are the main attributes of actors and their behavior?	p. 51
What are the conditions of the environment?	p. 52
Final remarks	p. 53
Stakeholder Capitalism	p. 53
What is the purpose of the firm and its underlying principles of value creation?	p. 54
Who are the actors and who are the owners?	p. 54
What are the main attributes of actors and their behavior?	p. 55
What are the conditions of the environment?'	p. 56
Final remarks	p. 56
The basic assumptions for our understanding of the stakeholder paradigm	p. 57
What is the purpose of the firm and its underlying
principles of value creation?	p. 57
Who are the actors and who are the owners?	p. 59
What are the main attributes of actors and their behavior?	p. 60
What are the conditions of the environment?	p. 62
The assumptions of different paradigms	p. 63
Our understanding of the stakeholder paradigm and its operationalization	p. 71
Our understanding of the stakeholder paradigm operationalized in the three licenses	p. 73
Our claim for the stakeholder paradigm	p. 73
The economic paradigm in an endless series of constraints	p. 73
Challenging the dominance of self-interest	p. 74
The fundamental shift to mutuality in a network view	p. 74
Putting the paradigm into dperation: the three licenses	p. 76
License as entitlement	p. 76
Licenses stimulate value creation	p. 78
Take another look at the Matterhorn	p. 78
Embeddedness in networks	p. 82
Stakeholder licenses	p. 86
Multiple roles of stakeholders	p. 88
Common dimensions of the three licenses	p. 88
Content of the licenses	p. 89
The cast of relevant stakeholders	p. 89
Contributions to value creation	p. 89
Value distribution	p. 90
Firm and stakeholder strategies	p. 90
Evaluation of mutual value creation	p. 91
License to operate	p. 95
The content of the license to operate	p. 95
The cast of stakeholders: society as an end and value contributor, not as a constraint	p. 98
Mutual value creation with and for social and political stakeholders	p. 102
Corporation perspective	p. 102
Stakeholder perspective	p. 104
Important benefit and risk potentials from the perspective of the license to operate	p. 105
Value distribution to social and political stakeholders	p. 109
Strategies from the perspective of the license to operate	p. 110
Evaluation from the perspective of the license to operate	p. 111
Concluding remarks to the license to operate	p. 113
License to innovate	p. 114
The content of the license to innovate	p. 14
The cast of stakeholders: from the resource-based view to the resource owner view	p. 115
Stakeholders as resource contributors	p. 115
Stakeholders as providers of non-limited resources	p. 118
Stakeholders as direct and indirect resource contributors	p. 120
Stakeholders as voluntary and involuntary resource
contributors	p. 21
Mutual value creation	p. 123
The motivation of stakeholders to contribute resources	p. 123
The dynamics of resource contribution	p. 125
Value distribution to stakeholders from the perspective of the license to innovate	p. 128
Strategy and core competencies from the perspective of the license to innovate	p. 129
Evaluation from the perspective of the license to innovate	p. 130
Concluding remarks to the license to innovate	p. 131
License to compete	p. 133
Content of the license to compete	p. 133
The cast of stakeholders: from the industry structure view to the dynamic network structure view	p. 133
The nature of stakeholder networks	p. 133
The attractiveness of stakeholder networks	p. 135
Dynamics of stakeholder networks	p. 138
Mutual value creation: positioning in and among stakeholder networks	p. 139
Forms of positioning	p. 139
Benefit and risk potentials in stakeholder networks	p. 140
Multiple roles of stakeholders	p. 141
Positioning on the continuum between cooperation and confrontation	p. 144
Value distribution to stakeholders from the perspective of the license to compete	p. 145
Generic strategies from the perspective of the license to compete	p. 147
Evaluation from the perspective of the license to compete	p. 149
Concluding remarks on the license to compete	p. 151
Challenges resulting from a paradigm shift	p. 54
What are the main challenges for the required change?	p. 154
What are basic change patterns and processes?	p. 155
General principle of change	p. 155
Gradual change	p. 156
Fundamental changes	p. 157
Three basic learning processes	p. 158
Economic impacts	p. 162
Requirements in the perspective of the license to operate	p. 162
Requirements in the perspective of the license to innovate	p. 163
Requirements in the perspective of the license to compete	p. 163
Cultural impacts	p. 164
Different levels of culture	p. 165
Role of leaders	p. 167
Structural and legal impacts	p. 171
Structures and processes of firms and stakeholders	p. 171
Distinctiveness and complexity of network structures	p. 172
Governance systems and legal impacts	p. 173
Epilogue	p. 179
Appendix: Methodological considerations	p. 181
Glossary	p. 194
Notes	p. 201
Bibliography	p. 224
Index	p. 269
Table of Contents provided by Ingram. All Rights Reserved.

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Stakeholders Matter: A New Paradigm for Strategy in Society

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