enterprise module sect 8

8/12/2019 Enterprise Module Sect 8

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GOVERNING THE

ENTREPRENEURIAL VENTURE:

STAKEHOLDER MAPPINGJEAN CLARKE

LEEDS UNIVERSITY BUSINESSSCHOOL


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AIMS OF THE LECTURE To understand the meaning of stakeholder

Understand the importance of accounting for

a range of stakeholders in the entrepreneurialventure

Examine different types of stakeholders

Introduce the concept of stakeholder mapping

Understand the importance of mappingstakeholders


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STAKEHOLDER DEFINITION

Any group or individual that can affect, or is affectedby, the performance of the organisation (Freeman1987)

Individuals or groups who depend on the organisationto fulfil their own goals and on whom, in turn, theorganisation depends (Johnson & Scholes 1999)

The firm is a system of stakeholders operating within

the larger system of the host society that provides thenecessary legal and market infrastructure for the firmsactivities (Clarkson, 1994)


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Organisational purposes

Mission

Objectives

Corporate governance

Whom should the

organisation serve?

How should purposes

be determined?

Business ethics

Which purposes should

be prioritised? Why?

Cultural context

Which purposes are

prioritised? Why?

Shareholders

Whom does the

organisation serve?

EXPECTATIONS AND PURPOSES


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WHY CONSIDER

STAKEHOLDERS? Failure to account for stakeholders often leads to poor

performance, failure or even disaster.

Nutt (2002) analysis of 400 strategic decisions - half failed

because didnt attend to interests and information held by keystakeholders.

Increased globalization, interconnected nature of the world(Bryson and Bromiley, 1993)

Increasing tendency to make organisations more visibly

accountable to shareholders and also the wider community. Emphasis on markets, participation, flexibility, and

deregulation (Peters 1996).

To manage is to govern. (Feldman and Khademian, 2002)

As entrepreneurial ventures grow they are likely to have

increasing numbers of stakeholders who can impactperformance


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DIFFERENT TYPES OF

STAKEHOLDER GROUPS Primary: a firm cannot exist without their

continuing participation

Primary stakeholders include: shareholders &

investors, employees, contractors, customers &suppliers

Secondary: those who influence or affect or areinfluenced/affected by, the corporation, but they

are not engaged in transactions with thecorporation or essential for its survival

Secondary stakeholders include: media, actiongroups, government agencies, trade unions,regulatory authorities


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Stakeholder

Corporation

DIFFERENT TYPES OF STAKEHOLDERS


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Entrepreneurship and Stakeholders:

Opportunity Recognition Typical personality characteristicslocus of control, need for

independence and need for achievement - suggests thatentrepreneur will tend to take a central position in theirstakeholder environments

Cognitive approaches focus on the individual entrepreneurssearch for and the analysis of information and, as aconsequence constrain the identification of opportunities.

Fail to adapt to the complexity of stakeholder relationships intheir entrepreneurial activity.

This approach is too narrowentrepreneurs should use thecomplexity of stakeholder relationships in order to go beyondtheir cognitive limitations and thus facilitate the discovery ofnew opportunities.(Vandekerckhove and Dentchev, 2005)


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Entrepreneurship and Stakeholders:

Ethics and Social Responsibility While entrepreneurship and innovation are widely seen as key

sources of economic growth and welfare increases they havealso meant losses and hardships for some members of society.

It is destructive of some stakeholders wellbeing even as it

creates new wellbeing among other stakeholders Both the positive benefits and negative externalities of

innovation are problematic because entrepreneurs initiate newventures before their private profitability and/or social costscan be fully recognised. (Dew and Sarasvathy, 2007)

The small business context can sometimes impose constraintson the firms corporate social responsibility e.g. lack ofawareness, size, resources, time etc(Lepoutre and Heene,2006)

Burgeoning area of academic interest


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STAKEHOLDER THEORY

(Donaldson and Preston, 1995)

Takes account of the various needs of the different

interested parties

Stakeholder power is key Stakeholders get traded off against each other

Stakeholder interests are not always consistent

Stakeholders are rewarded in different ways

Stakeholders are not affected in the same way by

every strategic decision


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ACTIONS FOR THE

ENTREPRENEUR/MANAGER Identify the stakeholders & identify key individuals

Identify the orientation of different stakeholders

Establish political priorities and trends in the political environment

Assess the strength of the stakeholder influence on the company

behaviour

Evaluate stakeholder attitudes towards the business mission,

strategies, activities

Identify potential strategies to influence the perceptions of

individual stakeholders

Win over antagonistic stakeholders


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STAKEHOLDER MAPPING I To assist entrepreneurs/managers to

understand the socio/economic/political

context To identify potential strategies

To identify the orientation of differentstakeholders

To establish socio/economic andpolitical priorities and trends


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STAKEHOLDER MAPPING II Used in relation to a particular strategic

development e.g. launch/withdrawal of a product/service

Identifies the relationship that needs to beestablished with the various groups ofstakeholders

Identifies key blockers & facilitators of

change Underlines the importance of ethical issues

for managers

Relates power and interest


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STAKEHOLDER MAPPINGTHE

MATRIX

Level of interest

Power

Low High

Low

High

A

Minimal effort

B

Keep informed

D

Key players

C

Keep satisfied


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GROUP TASK: AN EXAMPLE OF

STAKEHOLDER MAPPING

Divide into groups of five individuals

Launch of a New Product/Service

Step 1: Plot stakeholders in terms of theirlevel and nature of interest and power

Step 2: How you would need them to line upto be successful?

Step 3: Any mismatches? Political priorities? Step 4: Maintain stakeholders in their current

positioning?


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THE DEFINITION OF POWER

The extent to which individuals or groups are

able to persuade, induce or coerce others intofollowing certain courses of action (Johnson

& Scholes 1999)


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SOURCES AND INDICATORS OF

POWER Within organisations

hierarchy (formal p.)

influence (informal p.)

control of strategic resources

possession of knowledge & skills

control of the environment

involvement in strategy

implementation

Within organisations

status

claim on resources

representation

symbols

For external stakeholders

control of strategic resources

involvement in strategy

implementation

possession of knowledge (skills)

internal links

For external stakeholders

status

resource dependence

negotiation arrangements

symbols

Indicators of power

Sources of power


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ASSESSING STAKEHOLDER

POWER If I were to pursue this strategy with disregard to

the views of this particular stakeholder,

could/would they stop me?

Analysis relates to particular strategy

Implementation of some strategies may be

within the approved discretion of a certain

stakeholder group Some stakeholders may not want to exercise

their power

This requires: sharp political instinct as well as

objective assessment of power


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ASSESSING STAKEHOLDER

INTEREST To assess likely actions of stakeholders

Use a variety of sources of information on stakeholder

interest

formal informal

Categorise interest as + (for) and - (against) or neutral

(0) in relation to strategy

Level of interest may be dependent on one person

Test question: How high is this strategy on their

priorities? Active support/opposition?


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MANAGING STAKEHOLDER

RELATIONSHIPS Different styles for different stakeholder groups

Participation: key players, need for

education/communication Intervention: low interest & high power: -

change agent drives & controls the strategy,but

threshold requirements are met

Education/communication: high interest/low

power (proponents), but Directionfor opponents

Direction: low power/low interest

Styles depend on the position they should be in


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NINE TYPICAL MAPS (Ambrosini et al 1998)

The political

battle groundThe lone champion

The worthy case

+ + +- - -

+

+ + +

+ + +

+ + +

+ + +

- - -

- - -

-

The dream ticket The dogged opponent

The political timebom

Interest

Pow

er


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NINE TYPICAL MAPS

The potential

lost causeThe political trap

The autocrats dream- - -- - -

? ? ?? ? ?

? ? ?

? ? ?


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THE POLITICAL BATTLEGROUND

Many key players divided in

support and opposition

Danger: Limbo Strategy:

facilitate the dominance of supporters

overcome the resistance of opponents bycommunication or reduce their interests

create a stalemate

+ + +- - -


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THE LONE CHAMPION

One powerful key player

Potential loss of the champion

due to decline in interest loss of power

Alternatives:

broaden base of support build power-base of supporters (box B)

+


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THE WORTHY CAUSE

High levels of interest from

stakeholders with little power,

no key player Cinderella strategy: find a

champion (key player - box B and C)

Empower stakeholders through

assistance in forming alliances

provision of info to lobby stakeholders in box C

+ + +

+ + +


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THE DREAM TICKET

Occurs infrequently

Several powerful and

interested supportersand no opponents

Danger of complacency

Keep stakeholders informed andsatisfied

Key: alliance building and maintenance

+ + +

+ + +


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THE DOGGED OPPONENT

One powerful opponent

Change direction by reducing

resistance

Or reduce their interest, reduce

power

Associate strategy with an elite or a more

powerful champion

-


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THE POLITICAL TIMEBOMB Several opponents with littlepower

Danger to disregard them May lead to alliances or

adverse lobbying of stakeholders

(box C)

Political priorities: maintain stakeholders in

box B

- - -

- - -


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THE POTENTIAL LOST CAUSE

Several powerful opponents

May lead strategy to be abandoned

or modified

May create political difficulties

wider than particular strategy

Priority: change the orientation of

at least some stakeholders

Involve respected outsider

- - -

- - -


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THE POLITICAL TRAP

Low interest among all

powerful stakeholders

May tempt managers to proceedwith strategy

Dangerous as powerful stakeholder

may block strategy later in implementation

Maintain stakeholders in current position

Alternatively: Seek a champion

? ? ?

? ? ?


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THE AUTOCRATS DREAM

No powerful or interested

stakeholders

Danger: complacency

Style: direction, monitor stakeholder activities

? ? ?

? ? ?


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GROUP TASK

Get into groups of five individuals

Discuss how different stakeholders could be

moved to different positions on the typicalmaps as outlined above

Present results to other groups

enterprise module sect 8

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