Every organization involves a system of primary stakeholder groups with whom it establishes and manages relationships." Stakeholders are the individuals and groups who can affect the vision and mission of the firm, are affected by the strategic outcomes achieved, and have enforceable claims on a firm's performance." Claims on a firm's performance are enforced through the stakeholders' ability to withhold participation essential to the organization's survival, competitiveness, and profitability." Stakeholders continue to support an organization when its performance meets or exceeds their expectations." Also, recent research suggests that firms that effectively manage stakeholder relationships outperform those that do not. Stakeholder relationships can therefore be managed to be a source of competitive advantage."
Although organizations have dependency relationships with their stakeholders, they are not equally dependent on all stakeholders at all times;" as a consequence, not every stakeholder has the same level of influence." The more critical and valued a stakeholder's participation, the greater a firm's dependency on it. Greater dependence, in turn, gives the stakeholder more potential influence over a firm's commitments, decisions, and actions. Managers must find ways to either accommodate or insulate the organization from the demands of stakeholders controlling critical resources.
Classifications of Stakeholders
The parties involved with a firm's operations can be separated into at least three groups. As shown in Figure l.4, these groups are the capital market stakeholders (shareholders and the major suppliers of a firm's capital), the product market stakeholders (the firm's primary customers, suppliers, host communities, and unions representing the workforce), and the organizational stakeholders (all of a firm's employees, including both nonmanagerial and managerial personnel).
Each stakeholder group expects those making strategic...