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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