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Syllabus B. Governance B2. Stakeholder Analysis & Social Responsibility

B2b. Stakeholders Definitions and Influence

Stakeholders Definitions and Influence

Definition

Freeman,1984 defined a stakeholder as:

‘Any group or individual who can affect or [be] affected by the achievement of an organisation’s objectives’.

This definition shows important bi-directionality of stakeholders - that they can be affected by - and can affect - an organisation.

Small v large companies’ stakeholders

Compare, for example, the different complexities of a small organisation, such as a corner shop with a large international organisation as a major university.

The stakeholders can be:

  1. shareholders

  2. management

  3. employees

  4. trade unions

  5. customers

  6. suppliers

  7. communities

Stakeholder Theory

Business are now so large and pervasive they are accountable to more than just direct shareholders; they are also accountable to other stakeholders

STAKEHOLDER ‘CLAIMS’

A stakeholder makes demands of an organisation.

Some shareholders want to influence what the organisation does (those stakeholders who want to affect) and the others are concerned with the way they are affected by the organisation.

Some stakeholders may not even know that they have a claim against an organisation, this brings us to the issue of..

  • Direct stakeholder claims

    Direct stakeholder claims are made by those with their own ‘voice’. 

    These claims are usually unambiguous, and are made directly between the stakeholder and the organisation.

    Stakeholders making direct claims will typically include:

    1. trade unions

    2. shareholders

    3. employees

    4. customers

    5. suppliers

    6. in some instances, local communities

  • Indirect stakeholder claims

    Indirect claims are made by those stakeholders unable to make the claim directly because they are, for some reason, inarticulate or ‘voiceless’.

    This does not invalidate their claim however. 

    Typical reasons for this include the stakeholder being:

    • (apparently) powerless (eg an individual customer of a very large organisation)

    • not existing yet (eg future generations)

    • having no voice (eg the natural environment), or

    • being remote from the organisation (eg producer groups in distant countries).

The claim of an indirect stakeholder must be interpreted by someone else in order to be expressed, and it is this interpretation that makes indirect representation problematic.

How do you interpret, for example, the needs of the environment or future generations?

The example is an environmental pressure group