Abstract
The main focus of this work is to explicate the stakeholder management framework and philosophy in general terms. The author emphasizes how the three levels of analysis - rational, process, and transactional - must be consistent if the stakeholder concept is to make a difference in the way that organizations are managed. Moreover, this chapter offers a brief sketch of the principles of voluntarism which goes hand in hand with the application of the stakeholder concept to strategic management processes.
Originally published in: Strategic Management: A Stakeholder Approach, 52–82, © Cambridge University Press, 2010
Reprint by Springer, Reproduced with permission of The Licensor through PLSclear, https://doi.org/10.1017/CBO9781139192675.006
This is a preview of subscription content, log in via an institution to check access.
Access this chapter
Tax calculation will be finalised at checkout
Purchases are for personal use only
Notes
- 1.
The ideas presented in this chapter form part of a paper, “Managing Stakeholders: One Key to Successful Adaptation” presented to the Academy of Management National Meeting in August 1982. I wish to thank the participants in the Symposium on managing adaptation, and its chairperson, Professor Bala Chakravarthy, for many helpful comments. In addition, several Faculty members at the University of Pittsburgh’s Graduate School of Management and Rutgers University’s Department of Management have made helpful comments. In particular Barry Mitnick and Aubrey Mendelow have been encouraging over the past year.
- 2.
- 3.
My use of “rational,” “process” and “transactional” parallels Graham Allison’s (1971) three levels of organizational analysis. However, the three levels are not mutually exclusive as is often interpreted from Allison’s account. Each level of analysis offers a different “lens” for viewing the organization and offers different kinds of explanation for some underlying phenomena broadly called “organization behavior.” While the explanations at each level need not be identical, they do need to be consistent. Hence, the concept of “fit” among the three levels. The application of this three-leveled conceptual scheme is not unique to the stakeholder concept, as it is conceivable that we could define the process and transactional levels to complement a “portfolio approach” to strategic management.
- 4.
Chakravarthy (1981) defines a similar concept of the adaptive capabilities of an organization using “management capability” and “organization capability.”
- 5.
- 6.
The point here is that any theory must explicitly define the range of entities over which the propositions in the theory range. Sometimes it is convenient to speak of “stakeholders” as referring to categories, or sets, of specific groups. But, I insist that, strictly speaking, it is specific groups and individuals which are real, and hence, which can be strictly said to “hold stakes.” For a philosophical treatment of the rather nominalistic position taken here see Nelson Goodman (1955).
- 7.
- 8.
- 9.
For a discussion of this grid in the context of corporate governance see Freeman and Reed (1983).
- 10.
The approach to “power” outlined here is quite simplistic, and should be viewed as illustrative rather than definitive. Pfeffer (1981) is suggestive of a more comprehensive analysis of the concept which could be applied to the “power and stakes” grid.
- 11.
- 12.
- 13.
The critique of portfolio theory surfaced here is quite general in that it applies equally well to “misuses” of other processes. The point is that the processes must be capable of “fitting” with the other levels of analysis. They must describe the world as it is, and must prescribe transactions that are consistent with such a description.
- 14.
See Schendel and Hofer (1979) for several review articles on the State of the art in environmental scanning.
- 15.
Lorange (1980) explores the Communications aspects of strategic management, and recommends a 3 × 3 matrix to diagram such processes.
- 16.
- 17.
- 18.
Interview with Professor Currin Shields, University of Arizona, and past President of the Conference of Consumer Organizations, a national consortium of local consumer advocate organizations.
- 19.
The structure of the payoffs of the game outlined here presupposes that the issue is vague enough for there not to be a “clearly optimal” solution, but that a solution which is mutually acceptable is possible, and further that this mutually acceptable solution is preferable by both parties to a solution which is imposed by external parties, such as government.
- 20.
There is a vast literature on the Prisoners’ Dilemma, however, a clear discussion of the game can be found in Luce and Raiffa (1957). The game described here is similar to the plight of wheat farmers that is taught in every introductory economics class and chronicled by Garrett Hardin in the “Tragedy of the Commons.”
- 21.
I am not claiming that every game that a Corporation plays with stakeholders is a Prisoners’ Dilemma game, but only that some interactions are Prisoners’ Dilemmas. The use of game theory in strategic management, as an explanatory tool, is a long-neglected research issue. McDonald (1977) is one source. Recent work in applying game theory at the conceptual level can be found in Brams (1981) and Muzzio (1982). Both of these works by political scientists yield interesting insights into the workings of individuals in organizations.
References
Abell, D. 1980. Defining the Business. Englewood Cliffs: Prentice Hall, Inc.
Allison, G. 1971. Essence of Decision. Boston: Little Brown.
Brams, S. 1981. Biblical Games. Cambridge: MIT Press.
Chakravarthy, B. 1981. Managing Coal. Albany: SUNY Press.
Charan, R. 1982. The Strategic Review Process. The Journal of Business Strategy 2 (4): 50–60.
Dill, W. 1975. Public Participation in Corporate Planning: Strategic Management in a Kibitzer’s World. Long Range Planning 8 (1): 57–63.
Emery, F., and E. Trist. 1965. The Causal Texture of Organizational Environments. Human Relations 18: 21–31.
Emshoff, J. 1980. Managerial Breakthroughs. New York: Amacom.
Emshoff, J., and E. Freeman. 1979. Who’s Butting Into Your Business. The Wharton Magazine 1 (44–48): 58–59.
———. 1981. Stakeholder Management: A Case Study of the U.S. Brewers and the Container Issue. Applications of Management Science 1: 57–90.
Evan, W. 1966. The Organization Set: Toward a Theory of Inter-Organizational Relations. In Approaches to Organizational Design, ed. J. Thompson, 175–190. Pittsburgh: University of Pittsburgh Press; also in W. Evan. 1976. Organization Theory: Structures, Systems, and Environments. New York: John Wiley and Sons.
———. 1976. Organization Theory: Structures, Systems, and Environments. New York: Wiley.
Freeman, E. 1983. Strategic Management: A Stakeholder Approach. In Advances in Strategic Management, ed. R. Lamb, vol. 1, 31–60. Greenwich: JAI Press.
Freeman, E., and D. Reed. 1983. Stockholders and Stakeholders: A New Perspective on Corporate Governance. In Corporate Governance: A Definitive Exploration of the Issues, ed. C. Huizinga. Los Angeles: University Press.
Goodman, N. 1955. Fact, Fiction, and Forecast. New York: Bobbs Merrill Co.
Hirschman, A. 1970. Exit, Voice and Loyalty. Cambridge: Harvard University Press.
———. 1981. Essays in Trespassing. Cambridge: Cambridge University Press.
Lorange, P. 1980. Corporate Planning: An Executive Viewpoint. Englewood Cliffs: Prentice Hall, Inc.
Luce, D., and H. Raiffa. 1957. Games and Decisions. New York: Wiley.
MacMillan, I. 1978. Strategy Formulation: Political Concepts. St. Paul: West Publishing Co.
McDonald, J. 1977. The Game of Business. New York: Anchor Press.
Merton, R. 1957. Social Theory and Social Structure. Glencoe: The Free Press.
Miles, R. 1982. Coffin Nails and Corporate Strategies. Englewood Cliffs: Prentice Hall Inc.
Muzzio, D. 1982. Watergate Games. New York: New York University Press.
Negandhi, A., ed. 1975. Interorganization Theory. Canton: The Kent State University Press.
Nystrom, P., and W. Starbuck, eds. 1981. Handbook of Organizational Design, Volumes 1 and 2. New York: Oxford University Press.
Ouchi, W. 1981. Theory Z. Reading: Addison Wesley.
Pascale, R., and A. Athos. 1981. The Art of Japanese Management. New York: Simon and Schuster.
Peters, T., and R. Waterman. 1982. In Search of Excellence. New York: Harper and Row.
Pfeffer, J. 1981. Power in Organizations. Marshfield: Pitman Publishing Inc.
Pfeffer, J., and G. Salancik. 1978. The External Control of Organizations. New York: Harper and Row.
Rothschild, W. 1976. Putting It All Together. New York: AMACOM.
Schendel, D., and C. Hofer, eds. 1979. Strategic Management: A New View of Business Policy and Planning. Boston: Little, Brown and Co.
Van de Ven, A., D. Emmett, and R. Koenig. 1975. Frameworks for Interorganizational Analysis. In Interorganization Theory, ed. A. Negandhi, 19–38. Canton: The Kent State University Press.
Wilson, G. 1981. Interest Groups in the United States. New York: Oxford University Press.
Author information
Authors and Affiliations
Corresponding author
Editor information
Editors and Affiliations
Rights and permissions
Copyright information
© 2023 Springer Nature Switzerland AG
About this chapter
Cite this chapter
Freeman, R.E. (2023). Stakeholder Management: Framework and Philosophy. In: Dmytriyev, S.D., Freeman, R.E. (eds) R. Edward Freeman’s Selected Works on Stakeholder Theory and Business Ethics. Issues in Business Ethics(), vol 53. Springer, Cham. https://doi.org/10.1007/978-3-031-04564-6_3
Download citation
DOI: https://doi.org/10.1007/978-3-031-04564-6_3
Published:
Publisher Name: Springer, Cham
Print ISBN: 978-3-031-04563-9
Online ISBN: 978-3-031-04564-6
eBook Packages: Religion and PhilosophyPhilosophy and Religion (R0)