Lecture on stakeholder mapping

1. GOVERNING THE
ENTREPRENEURIAL VENTURE:
STAKEHOLDER MAPPING
JEAN CLARKE
LEEDS UNIVERSITY BUSINESS
SCHOOL

2. AIMS OF THE LECTURE
 To understand the meaning of stakeholder
 Understand the importance of accounting for
a range of stakeholders in the entrepreneurial
venture
 Examine different types of stakeholders
 Introduce the concept of stakeholder mapping
 Understand the importance of mapping
stakeholders

3. STAKEHOLDER DEFINITION
 “Any group or individual that can affect, or is affected
by, the performance of the organisation” (Freeman
1987)
 “Individuals or groups who depend on the organisation
to fulfil their own goals and on whom, in turn, the
organisation depends” (Johnson & Scholes 1999)
 “The firm is a system of stakeholders operating within
the larger system of the host society that provides the
necessary legal and market infrastructure for the firms
activities” (Clarkson, 1994)

4. 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

5. 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 didn’t attend to interests and information held by key
stakeholders.
 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 impact
performance

6. 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 are
influenced/affected by, the corporation, but they
are not engaged in transactions with the
corporation or essential for its survival
 Secondary stakeholders include: media, action
groups, government agencies, trade unions,
regulatory authorities

7. Secondary social
stakeholders
Primary non-social stakeholders
Secondary non-social stakeholders
Primary social
stakeholders
Local
communities
Suppliers
Custom
ers
InvestorsEmployees Stakeholder
Corporation
Natural Environment
Non-human species
FutureGenerations
Competitors
Environmental
Pressure Groups
Animalwelfare
PressureGroups
Trade Associations
Government
Social pressure
groups, unions
Media & Commentators
DIFFERENT TYPES OF STAKEHOLDERS

8. Entrepreneurship and Stakeholders:
Opportunity Recognition
 Typical personality characteristics – locus of control, need
for independence and need for achievement - suggests that
entrepreneur will tend to take a central position in their
stakeholder environments
 Cognitive approaches focus on the individual entrepreneur’s
search for and the analysis of information and, as a
consequence constrain the identification of opportunities.
 Fail to adapt to the complexity of stakeholder relationships in
their entrepreneurial activity.
 This approach is too narrow – entrepreneurs should use the
complexity of stakeholder relationships in order to go beyond
their cognitive limitations and thus facilitate the discovery of
new opportunities. (Vandekerckhove and Dentchev, 2005)

9. Entrepreneurship and Stakeholders:
Ethics and Social Responsibility
 While entrepreneurship and innovation are widely seen as
key sources of economic growth and welfare increases they
have also meant losses and hardships for some members of
society.
 It is destructive of some stakeholder’s wellbeing even as it
creates new wellbeing among other stakeholders
 Both the positive benefits and negative externalities of
innovation are problematic because entrepreneurs initiate
new ventures before their private profitability and/or social
costs can be fully recognised. (Dew and Sarasvathy, 2007)
 The small business context can sometimes impose constraints
on the firm‘s corporate social responsibility e.g. lack of
awareness, size, resources, time etc (Lepoutre and Heene,
2006)
 Burgeoning area of academic interest

10. 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

11. 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

12. STAKEHOLDER MAPPING I
 To assist entrepreneurs/managers to
understand the socio/economic/political
context
 To identify potential strategies
 To identify the orientation of different
stakeholders
 To establish socio/economic and
political priorities and trends

13. 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 be
established with the various groups of
stakeholders
 Identifies key blockers & facilitators of
change
 Underlines the importance of ethical issues
for managers
 Relates power and interest

14. STAKEHOLDER MAPPING – THE
MATRIX
Level of interest
Power
Low High
Low
High
A
Minimal effort
B
Keep informed
D
Key players
C
Keep satisfied

15. 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 their
level and nature of interest and power
 Step 2: How you would need them to line up
to be successful?
 Step 3: Any mismatches? Political priorities?
 Step 4: Maintain stakeholders in their current
positioning?

16. THE DEFINITION OF POWER
 “The extent to which individuals or groups
are able to persuade, induce or coerce others
into following certain courses of action”
(Johnson & Scholes 1999)

17. 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

18. 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

19. 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?

20. 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 Direction for opponents
 Direction: low power/low interest
 Styles depend on the position they should be in

21. NINE TYPICAL MAPS (Ambrosini et al 1998)
The political
battle
ground
The lone champion
The worthy case
+ + +
- - -
+
+ + +
+ + +
+ + +
+ + +
- - -
- - -
-
The dream ticket The dogged opponent
The political timebomb
Interest
Pow
er

22. NINE TYPICAL MAPS
The potential
lost cause
The political trap
The autocrat’s dream
- - -
- - -
? ? ?
? ? ?
? ? ?
? ? ?

23. THE POLITICAL BATTLEGROUND
 Many key players divided in
support and opposition
 Danger: Limbo
 Strategy:
 facilitate the dominance of supporters
 overcome the resistance of opponents by
communication or reduce their interests
 create a stalemate
+ + +
- - -

24. 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)
+

25. 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
+ + +
+ + +

26. THE DREAM TICKET
 Occurs infrequently
 Several powerful and
interested supporters
and no opponents
 Danger of complacency
 Keep stakeholders informed and
satisfied
 Key: alliance building and maintenance
+ + +
+ + +

27. 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
-

28. THE POLITICAL TIMEBOMB
 Several opponents with little
power
 Danger to disregard them
 May lead to alliances or
adverse lobbying of stakeholders
(box C)
 Political priorities: maintain stakeholders
in box B
- - -
- - -

29. 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
- - -
- - -

30. THE POLITICAL TRAP
 Low interest among all
powerful stakeholders
 May tempt managers to proceed
with strategy
 Dangerous as powerful stakeholder
may block strategy later in implementation
 Maintain stakeholders in current position
 Alternatively: Seek a champion
? ? ?
? ? ?

31. THE AUTOCRAT’S DREAM
 No powerful or interested
stakeholders
 Danger: complacency
 Style: direction, monitor stakeholder activities
? ? ?
? ? ?

32. Advantages of Stakeholder Analysis
 Stakeholder analysis can help entrepreneurs implement their
venture through securing support from powerful stakeholders
 Allow them to understand the impact they are making on
society.
 Help entrepreneurs to distinguish among competing voices
and various groups of stakeholders Mitchell (2002)
 Stakeholder identification and analysis techniques can help
entrepreneurs meet their mandates, fulfill their missions and
create public value.
 The use of stakeholder analyses can help frame issues that are
solvable in ways that are technically feasible and politically
acceptable and that advance the common good.

33. GROUP TASK
 Get into groups of five individuals
 Discuss how different stakeholders could be
moved to different positions on the typical
maps as outlined above
 Present results to other groups