Journal of Business Ethics

, Volume 64, Issue 4, pp 327–342 | Cite as

Stakeholder Perspectives and Business Risk Perception

Article

Abstract

Stakeholder theory calls for decision makers to balance stakeholder interests, but before this can happen, management must understand how other parties view its decisions. Effective stakeholder dialogues convened to reach this understanding require management to appreciate how others perceive the risks posed by their decision. Although understanding others’ risk perception is crucial for effective communications, we do not have a clear idea of how viewing a situation from multiple stakeholder perspectives affects risk perception. Based on a technique derived from risk perception studies of health and environmental issues, an experiment with 224 business students examined how an individual’s risk perception can account for both managerial and customer perspectives. Factors described as customer participation, extent of the effect, and management input, together with the respondent’s self-assessed understanding of the decision process, help categorize overall risk perceptions and are shown to be associated with behaviors based on the decision’s riskiness. Discussion includes implications for designs of business communications, including their content and transparency, and for understanding the audience for these communications.

Keywords

business communication multi-stakeholder dialogues stakeholder analysis stakeholder network stakeholder theory 

Preview

Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.

References

  1. Atman, C. J., Bostrom, A., Fischhoff, B., Morgan, M. G. 1994‘Designing Risk Communications: Completing and Correcting Mental Models of Hazardous Processes, Part I’Risk Analysis14779788Google Scholar
  2. Buysse, K., Verbeke, A. 2003‘Proactive Environmental Strategies: A Stakeholder Management Perspective’Strategic Management Journal24453470CrossRefGoogle Scholar
  3. COSO [Committee of Sponsoring Organizations of the Treadway Commission]: 2004, Enterprise Risk Management – Integrated Framework (COSO, Jersey City, NJ).Google Scholar
  4. Daboub, A. J., Calton, J. M. 2002‘Stakeholder Learning Dialogues: How to Preserve Ethical Responsibility in Networks’Journal of Business Ethics418598CrossRefGoogle Scholar
  5. Das, T. K., Teng, B.-S. 2004‘The Risk-based View of Trust: A Conceptual Framework’Journal of Business and Psychology1985116CrossRefGoogle Scholar
  6. Donaldson, T., Preston, L. E. 1995‘The Stakeholder Theory of the Corporation: Concepts, Evidence, and Implications’Academy of Management Review206591Google Scholar
  7. Freeman, R. E. 1994

    ‘A Stakeholder Theory of the Modern Corporation’

    Beauchamp, T. L.Bowie, N. E. eds. Ethical Theory and BusinessPrentice-HallEnglewood Cliffs, NJ6676
    Google Scholar
  8. Frooman, J. 1999‘Stakeholder Influence Strategies’Academy of Management Review24191205Google Scholar
  9. “Have fat cats had their day?”: 2003, The Economist (24 May), pp. 63–64.Google Scholar
  10. Jones, T. M., Wicks, A. C. 1999‘Convergent Stakeholder Theory’Academy of Management Review24206221Google Scholar
  11. Karger, C. and P. M. Wiedemann: 1998, ‘Kognitive und Affektive Determinanten der Intuitiven Bewertung von Umweltrisiken’ [‘Cognitive and Affective Determinants of the Intuitive Evaluation of Environmental Risks’]. Working paper.Google Scholar
  12. Koonce, L., McAnally, M. L., Mercer, M. 2005‘How Do Investors Judge the Risk of Financial Items?’The Accounting Review80221241Google Scholar
  13. MacGregor, D. G., Slovic, P., Berry, M., Evensky, H. R. 1999‘Perception of Financial Risk: A Survey Study of Advisors and Planners’Journal of Financial Planning126886Google Scholar
  14. Nunnally, J. C. 1978Psychometric Theory2McGraw-HillNew York, NYGoogle Scholar
  15. Payne, S. L., Calton, J. M. 2004‘Exploring Research Potentials and Applications for Multi-stakeholder Learning Dialogues’Journal of Business Ethics557178CrossRefGoogle Scholar
  16. Rohrmann, B.: 1999, ‘Risk Perception Research: Review and Documentation’, rev. ed. Arbeiten zur Risiko-Kommunikation, v. 69, (Foschungszentrum Jülich, Programmgruppe Mensch, Umwelt, Technik [MUT], Jülich, Germany).Google Scholar
  17. Schütz, H., Wiedemann, P. M. 2003‘Risikowahrnehmung in der Gesellschaft’Bundesgesundheitsblatt, Gesundheitsforschung, Gesundheitsschutz46539555Google Scholar
  18. Schütz, H., P. M. Wiedemann, and P. C. R. Gray: 2000, ‘Risk Perception Beyond the Psychometric Paradigm’. Arbeiten zur Risiko-Kommunikation, v. 78, (Forschungszentrum Jülich, Programmgruppe Mensch, Umwelt, Technik [MUT], Jülich, Germany).Google Scholar
  19. Shapira, Z. 1995Risk Taking: A Managerial PerspectiveRussell Sage FoundationNew York, NYGoogle Scholar
  20. Shepard, J. M., Betz, M., O’Connell, L. 1997‘The Proactive Corporation: Its Nature and Causes’Journal of Business Ethics1610011010CrossRefGoogle Scholar
  21. Sjöberg, L.: 1999, ‘The Psychometric Paradigm Revisited’. Invited lecture given to the Royal Statistical Society Conference, University of Warwick.Google Scholar
  22. Sjöberg, L. 2000‘Factors in Risk Perception’Risk Analysis20111Google Scholar
  23. Sjöberg, L. 2002‘Are Received Risk Perception Models Alive and Well?’Risk Analysis22665669Google Scholar
  24. Slovic, P., Fischhoff, B., Lichtenstein, S. 1985

    ‘Characterizing Perceived Risk’

    Kates, R. W.Hohenemser, C.Kasperson, J. K. eds. Perilous Progress: Managing the Hazards of TechnologyWestview PressBoulder, CO91125
    Google Scholar
  25. Wiedemann, P. M. and I. Balderjahn: 1999, ‘Risikobewertungen im Kognitiven Kontext’ [‘Risk Assessment in the Cognitive Context’], Arbeiten zur Risiko-Kommunikation, v. 73, (Foschungszentrum Jülich, Programmgruppe Mensch, Umwelt, Technik [MUT], Jülich, Germany).Google Scholar
  26. Wiedemann, P. M. and R. M. Kresser: 1997, ‘Intuitive Risikobewertung – Strategien der Bewertung von Umweltrisiken’ [‘Intuitive Risk Assessment – Assessment Strategies for Environmental Risks’], Arbeiten zur Risiko-Kommunikation, v. 62, (Foschungszentrum Jülich, Programmgruppe Mensch, Umwelt, Technik [MUT], Jülich, Germany).Google Scholar

Copyright information

© Springer 2006

Authors and Affiliations

  1. 1.Adamian Academic Center 208Bentley CollegeWalthamU.S.A.

Personalised recommendations