developing stakeholder theory - friedman - 2002 - journal of management studies - wiley online...

© Blackwell Publishers Ltd 2002. Published by Blackwell Publishers, 108 Cowley Road, Oxford OX4 1JF, UKand 350 Main Street, Malden, MA 02148, USA.

DEVELOPING STAKEHOLDER THEORY

A L. F

University of Bristol

S M

Oxford Brookes University

Previous literature has led to a lack of appreciation of: the range of organiza-tion/stakeholder relations that can occur; the extent to which such relationschange over time; as well as how and why such changes occur. In particular,extremely negative and highly conflicting relations between organizations andstakeholders have been ignored. Due to this lack of appreciation it is argued thatcurrent attempts at integrating the separate strands of stakeholder theory toachieve a convergent stakeholder theory are premature. A model is presentedwhich combines stakeholder theory with a realist theory of social change and differentiation. This model is intended to highlight why it is important to distin-guish different stakeholders. The model also enables an analysis of the organiza-tion/stakeholder relationship, which is not exclusively from the organizationperspective and which is capable of illuminating why and how organization/stake-holder relations change over time. The history of Greenpeace is used as anexample.

Stakeholder theory has burgeoned in recent years. Donaldson and Preston (1995,p. 65) noted that a dozen books and more than 100 articles primarily concernedwith the stakeholder concept had appeared. Since then interest in stakeholdertheory has quickened, not only in the academic world (note the recent issue of TheAcademy of Management Journal (1999, 42/5) devoted to it), but also in common par-lance. References to stakeholders are commonplace in the media, particularly withthe current British government’s association of the term with their ‘big idea’of the Third Way and their use of the term in specific policies, such as with therecent introduction of stakeholder pensions (Halligan, 1998). As contributions tothe stakeholder concept have grown, they have also become diffuse. Integration ofseparate methodological strands of stakeholder theory to achieve a ‘convergent

Address for reprints: Andrew Friedman, Management Research Centre, University of Bristol, 43 Wood-land Road, Bristol BS8 1TT, UK. ([email protected])

Journal of Management Studies 39:1 January 20020022-2380

stakeholder theory’, has been identified by some as ‘the most interesting problemin stakeholder theory today’ (Donaldson, 1999, p. 237; Jones and Wicks, 1999).This refers to the integration of types of theories within the classification suggestedby Donaldson and Preston (1995) as normative, instrumental or descriptive.[1] Inrelation to this we argue the following three points.

First, this integrating exercise is premature. Not enough work has been done on the organization/stakeholder[2] relation itself in order to combine the differentstrands of stakeholder theory into a single meaningful framework. This is due to lack of work that distinguishes different types of stakeholders (Harrison andFreeman, 1999, p. 480). In particular most contributors limit their discussion tolegitimate stakeholders, using different (often implicit) definitions of legitimacy,without exploring what distinguishes legitimate from illegitimate ones.[3] In addi-tion it is implicitly assumed that the boundary is obvious, clear-cut and stable,thereby precluding exploration of the boundary and consideration of how certainstakeholders may cross it (or even straddle it).

Mitchell et al. (1997) develop the idea that stakeholders become salient to man-agers to the extent that those managers perceive them as possessing power, legiti-macy and urgency. They note that each attribute is a variable rather than a steadystate, and they briefly discuss dynamism in stakeholder–manager relations (pp.304–5). However their focus is on defining who or what are the stakeholders ofthe firm, rather than the dynamics of the organization/stakeholder relation. Agleet al. (1999) test the model with positive results. However they do not explore:

(1) why some stakeholders will be perceived as having more of the three attrib-utes than others;

(2) how managers’ perceptions of stakeholders may change;(3) differences in the way managers behave in relation to stakeholders perceived

as possessing widely different degrees of these attributes.

Second, in the well-discussed recent contribution by Jones and Wicks (1999), theintegration attempted was for the normative to dominate the instrumental. Thiswe believe to be inappropriate at this stage. For Jones and Wicks normative stake-holder theory involves specifying the moral obligations stakeholder theory placeson managers. One strain of normative theory (the strain Jones and Wicks favour)involves creating alternative narrative accounts of moral behaviour in a stake-holder context. Advocates believe that representation of these alternative accountsinfluences individual conceptions of what constitutes reasonable strategic actionand can thereby ‘make a difference’ in how managers think and act. Jones andWicks note the similarity of this approach to the interpretivist paradigm in orga-nization studies which assumes people construct and sustain their own organiza-tional realities. However, trying to develop a convergent stakeholder theory basedon normative cores at this stage lays stakeholder theory open to Gioia’s (1999) criti-cism of naivety. Such criticism may be countered if descriptive stakeholder theorywas formulated in a manner that allowed a better understanding of the pragmaticforces operating in the corporate world as they apply to particular organiza-tion/stakeholder relations.

Third, stakeholder theory has been hampered by almost exclusive analysis ofstakeholders from the perspective of the organization. Freeman (1984) justifiedconsideration of stakeholders for their contribution to the strategic management

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© Blackwell Publishers Ltd 2002

of firms. According to Jones and Wicks (1999, p. 206), one of the essential premisesof stakeholder theory is that it focuses on managerial decision-making. Generallystakeholder theory has been approached from the point of view of business ethics, corporate governance and/or corporate social performance. This puts theorganization at the centre of the analysis and discourages consideration of stake-holders in their own right as well as discouraging balanced viewing of the orga-nization/stakeholder relation. Two notable exceptions have been Hill and Jones(1992) and Calton and Kurland (1995).

Hill and Jones (1992) develop an ‘agency-stakeholder model’. The firm is viewedas a ‘nexus of contracts between resource holders (stakeholders)’. They considermarket processes at work in relation to these contracts by which institutional struc-tures[4] evolve in order to monitor and enforce the terms of implicit contracts.These institutional structures reduce transaction costs to the point where furtherreductions in such costs are balanced by the costs of developing more complexinstitutional structures to reduce them.

Calton and Kurland (1995) claim that their postmodern theory of ‘stakeholderenabling’ decentres organizational discourse by replacing privileged managerialmonologues with multilateral stakeholder dialogues. We build on the idea ofdecentring the discourses of stakeholder theory from organization managementin order to illuminate and understand stakeholder/organization relations. We are less sanguine than Calton and Kurland (1995, p. 164) that our analysis will‘empower the silent voices of marginal groups by deconstructing the hiddenmeaning within the predominant organizational context, thus enabling multiplestakeholder discourses’. Nor do we begin from the normative premise that ‘stake-holders must have capacity to co-determine their own identity and destiny by exer-cising the right of voice or exit in the process of organization discourse’ (p. 171).

It is argued here that previous literature has led to a lack of appreciation ofthe range of organization/stakeholder relations that can occur. In particular,extremely negative and highly conflicting relations between organizations andstakeholders have been ignored or under-analysed. The extent to which organi-zation/stakeholder relations can change over time, together with analysis ofhow and why such changes occur, has also been neglected. We believe that ourmodel will contribute to the alleviation of these deficiencies and thereby strengthenstakeholder theory. In addition, we believe our model is capable of illuminating the organization/stakeholder relation from both stakeholder and organizationalperspectives. The model presented here is based on a realist theory of social differentiation developed by Archer (1995, 1996).

Realism and EmergenceScientific realists contend that the ultimate objects of scientific inquiry exist andact (for the most part) independent of scientists and their activity. The objects ofscientific thought are considered real structures, mechanisms or relations ontologi-cally irreducible to appearances or events they generate. It is not necessary to per-ceive directly those real structures, mechanisms or relations, in order for them toexist. A causal criterion for existence is accepted, rather than merely a perceptualcriterion as presumed in empiricist individualism.

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Social realists regard society differently from the natural world. They recognizethat society depends on human activities and that both society and people arechangeable and affected by each other. Social realists also accept that, in thecontext of social interaction, actions are taken and ideas formed in relation to aperceived (socially constructed) reality, thereby changing the social reality. Thesesteps are sometimes conflated, as implied by Giddens’ use of the term duality(Bryant and Jary, 1991; Giddens, 1979, 1991), whereby ‘structure is both mediumand outcome of the reproduction of practices’ (Giddens, 1979, p. 69). However,for social realists like Bhasker (1989) and Archer (1995), rules, structures, and cul-tural systems should be treated as analytically distinct from perceptions of themor actions taken through them. Individual and collective efforts to change societywill alter it, but not as intended, because of imperfectly understood rules and struc-tures as well as actions of others. We are both free and constrained. However thisdoes not mean that social change cannot be explained. In order to explain socialchange, the analytical distinction is made by separating these steps in time to allowanalysis of manner of social construction and consequences of those construc-tions. Social structures (itinerary of interests, roles, opportunities, power differen-tials) and cultural systems (sets of ideas about what is true or false which are therebysubject to presumed universal laws of logic) shape actions, perceptions of ideasand people’s attempts to influence the ideas and actions of others. These in turnlead to further development of those social structures and cultural systems. Humanpractice cannot simply be derived from social structures and/or cultural systems,neither can structures or systems of ideas be ‘simply formed and transformed bysome untrammelled dominant group or placed at the mercy of capricious re-negotiation by unconstrained agency’ (Archer, 1996, p. xv). Rather, social structuresand systems of ideas endow different sections of society, with different vested inter-ests and opportunity costs associated with different responses to those structuresand systems. These do not force actions, rather they put prices and premiums ondifferent interpretations of situations as well as associated activities. Acting orchanging perceptions then result in further elaboration of the social structures andsystems of ideas. What distinguishes the realist position is that facts and values orsubjects and objects are viewed as analytically distinct.

This is achieved in Archer’s model by the analytical device of distinguishing atemporal sequence with three distinct, partially overlapping, phases: structural con-ditioning, socio-cultural interaction and structural elaboration. In this expressionof analytical dualism Archer makes explicit the importance of the time sequence‘through which structure and agency themselves emerge, intertwine and redefine oneanother’ (emphasis in original, Archer, 1995, p. 76). Structural conditioning com-pletely precedes structural elaboration, but socio-cultural interaction overlaps themboth, beginning after structural conditioning begins and continuing into the periodof structural elaboration, but ending before the end of structural elaboration. Thusstructure pre-dates the actions that transform it, but structural elaboration neces-sarily post-dates those actions which have transformed it (Archer, 1995, p. 157).Structural elaboration restarts the cycle because it introduces a new set of influ-ences which both constrain and facilitate further interaction.

Archer distinguishes her position from methodological individualism by which‘social interaction forms and transforms structures whose properties are merely the resultants of domination or objectification’ (Archer, 1995, p. 80). This she calls‘upward conflation’. On the other hand there is what she calls ‘downward confla-

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tion’ by which social structure is presumed to organize social interaction. In thefirst, structural properties become merely the epiphenomenon of the interactionof agents; in the second, structural properties ‘engulf agency through the basicprocesses of regulation and socialization’ (Archer, 1995, p. 80). A third possibility,which Archer criticizes, is what she calls ‘central conflation’. This is the charge shelays against Giddens’ structuration theory. Here neither structure nor agency isconsidered as epiphenomena of the other, however ‘autonomy is withheld fromboth levels and this has exactly the same result of precluding any examination oftheir interplay’ (emphasis in original, Archer, 1995, p. 81). For Giddens ‘structureis both the medium and outcome of the reproduction of practices’ (Giddens, 1979,p. 69). What Archer calls this intimacy of mutual constitution between structureand practices means that ‘the only way in which structure and agency can beexamined “independently” is through the artificial exercise of “methodologicalbracketing” ’ (Archer, 1995, p. 87). A less contentious way in which Archer distin-guishes her model from Giddens is her assertion that they both consider laws insocial science as mutable over time, but for Giddens this view rests principally onthe reflexive knowledge and behaviour of individuals, and for her it is based onchanges in the social structure itself (Archer, 1995, p. 79).

The key aspect of emergence emphasized by Bhaskar (1989) and Archer (1995)is relational; that is, it arises out of combination. Combinations can react back ontheir elements, but combination has causal power irreducible to the powers of thecomponents.[5] Accepting emergence in a realist theory implies accepting thatwithin society there are layers or strata of phenomena or relationships that areanterior to others; that is, certain phenomena emerge from other, ‘anterior’ or‘prior’ phenomena. Such emergent phenomena may be out of phase with, or inopposition to the real structures or relations that cause them. However, onceemerged, the two sets of phenomena will have a degree of autonomy from eachother and those autonomous properties can themselves exert causal influences intheir own right (Archer, 1995, pp. 12–15). Social reality is therefore stratified withdifferent strata having different emergent powers and properties. The organiza-tion/stakeholder relation is such a combination, out of which emerges a furtherelaboration of ideas, material interests and institutional supports. This is demon-strated in the Greenpeace case study.

Archer’s ModelArcher’s typology (see figure 1) is based on two distinctions. First, whether rela-tionships are compatible or incompatible in terms of sets of ideas and material

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ConnectionsNecessary Contingent

A BCompatible Protectionist Opportunism

Sets of ideas and/or Defensive Opportunisticstructures ofmaterial interests D C

Incompatible Concessionary CompetitionCompromise Elimination

Figure 1. Institutional configurations with associated situational logics and strategic actions

interests associated with social structures: whether they help or hinder each other.Second, whether relationships between groups are necessary or contingent.Necessary relationships are internal to a social structure (such as an organization)or to a set of logically connected ideas. Contingent relations are external or notintegrally connected.[6]

Each of the four institutional configurations is associated with a particular situational logic and encourages a certain type of strategic action. These types ofsituational logic are common in sociological theory.

Necessary compatible [A] relations ‘invoke one another and work in terms of eachother’ (Archer, 1995, p. 219). Situations are created where everyone involved hassomething to lose by disruption to the relationship, even if some have more to losethan others. The associated situational logic is protectionist. All those involved willsee their interests as served by continuation of the relationship and they will beencouraged to act in defence of it.

At the opposite extreme are contingent incompatible [C] relations. Archer (1995)suggests that war or invasion are extreme cases. In the realm of ideas, this is a sit-uation where to advocate one set of ideas does not entail constant reference toanother set of ideas. The two are incompatible, but only come into conflict ifsomeone insists on counterpoising them, thus enforcing debate. The incompati-bility is made competitive by groups taking sides and by trying to mobilize others for support. The incompatibility is not immediately obvious to outsideparties. The associated situational logic is competition. It is a logic which forcespeople ‘to make choices, by accentuating differences, by insisting on their salience,by undermining indifference and by making the question of alignment inescapable’(Archer, 1995, p. 240). Defence of interests consists in inflicting maximum damageon the opposing party by seeking to eliminate it or by discrediting oppositionalviews.

Necessary incompatible [D] relations occur when material interests embedded insocial structures or sets of ideas are necessarily related to each other, but theiroperations will lead to the relationship itself being threatened. Such relationshipsmay be characterized as based on a contradiction. The situational logic is con-cession leading to compromise. If the vested interests of those associated with oneset of ideas or interests are advanced, the ideas or interests of the other party arethereby diminished. This then threatens the relationship itself.[7]

Finally there are contingent compatible [B] institutional arrangements. This is aloose situation that provides people with choices, in that those who adhere to oneview or derive material interest from one institution, are free to approach or avoid,people associated with other institutions or ideas. The situational logic associatedwith contingent compatibility is of opportunities or opportunism.

Grand narratives regard the whole of society as dominated by a single core typeof institutional arrangement, thus implying all actors follow the same situationallogic. At times an overall social system may be patterned along a single type ofinstitutional arrangement, but which one it may be, how long a single type ofarrangement holds sway, and the degree to which a society may be dominated,are contingent on many factors. Archer (1995) contends that one type of institu-tional arrangement will not generally dominate a society because people will playdifferent roles with respect to different institutions and sets of ideas. An ardentanimal rights supporter may be indifferent to environmental issues and workingconditions in an organization involved in animal testing. The same person may

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also be the top manager of some other organization. This means that there willbe different groupings of vested interests and opportunities associated with differ-ent types of resources and sets of ideas, leading to different situational logics oper-ating at the same time.[8] Therefore this sort of analysis may be most fruitfullypursued at the meso-level.

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The model demonstrated in figure 2 focuses, at the meso-level, on organization/stakeholder relations and the institutional intermediaries (social and cultural)between them, differentiated by situational logics. This typology provides us witha reason why we should distinguish different stakeholders. Like Archer (1995) wedistinguish four structural configurations. We accept the same general associatedsituational logics. To connect the model to previous work that uses implicit con-tract theory to underpin stakeholder legitimacy, we propose different contractualorganization/stakeholder forms associated with each structural configuration.

We define contracts as relationships entered into with some degree of freedomand in accord with at least some of the interests of the parties. The ideal type ofcontract is entered into without any coercion or duress and is beneficial to allparties (though not necessarily equally beneficial).[9] Ideal contracts may be asso-ciated with the assumptions behind perfect competition in neo-classical econom-ics: perfect information about alternatives and about the value of all contracts toall parties, an infinite number of parties to contract with and perfect mobility, sothat exit from contracts is costless. Here we are not concerned with ideal contracts.We assume a world of imperfect information, imperfect mobility and smallnumbers. Contracts can exist where one of the parties may well wish to terminateor alter it, but does not do so. This could be because there are no apparent accept-able alternatives or where opportunities to ‘vocalize’ their desire to alter the con-ditions of the contracted relationship do not exist. This in turn, can be due to alack of conception of how to change the nature of the contract or because vehi-cles for doing so do not exist or are not accessible. In these circumstances it is pos-sible for explicit contracts to exist among parties whose interests and views areprimarily incompatible.

Implicit contracts are relationships whereby there are no intentions to contract,although all elements of a contract may be present. The presumption of ‘implicit’social contracts filling all gaps between social relations which are not character-ized by explicit contracts (such as by Hill and Jones (1992) and other stakeholder

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Necessary ContingentA B

Compatible Explicit/implicit recognized Implicit unrecognizedDefensive Opportunistic

D CIncompatible Explicit/implicit recognized No contract

Compromise Elimination

Figure 2. Stakeholder configurations and associated contractual forms and strategic actions

theorists) is unwarranted. Such an assumption limits analysis of the ways stake-holders might influence organizations. It presumes a degree of common under-standing and social cohesion, which may be present in certain circumstances, andamong certain groups, but will not always be present and not apply to all groups.Deciding when and for whom it is present, or the degree to which its precondi-tions are present, are tasks of analysis, and should not be presumed at the outset.Donaldson and Preston (1995) refer to the problem by noting that both Hill andJones (1992) and Freeman and Evan (1990) stress mutual and voluntary accept-ability of bargains by all contracting stakeholders. Both neglect the roles of poten-tial stakeholders not conspicuously involved in explicit and implicit contracts withthe firm.

The contractual forms used in figure 2 are drawn from the following scaleranked according to the visibility of the contract:

(1) Explicit recognized contracts (written or verbal, can be via a third party).(2) Implicit recognized contracts (recognized by parties involved and/or signifi-

cant others, such as governments or regulators or partners).(3) Implicit unrecognized contracts (not recognized by the parties involved, but

recognized by certain ‘sensitized’ others, such as academics, novelists andactivists). If the parties involved went through some process of sensitizationit is likely that recognition would follow.

(4) No contracts.

Necessary compatible [A] characterizes relations between shareholders and corpora-tions, between top managers and corporations and among partners (see figure 3).Different types of shareholders and different levels of management will have dif-ferent forms of contracts, but in terms of our model, they are all within this struc-tural configuration. For the relationship between large or institutional shareholdersand top management, a formal explicit contract is expected. Institutional share-

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Necessary ContingentA B

Compatible � Shareholders � The general public� Top management � Companies connected through� Partners common trade associations/

initiatives

D C� Trade unions � Some NGOs

Incompatible � Low-level employees � Aggrieved or criminal members� Government and their of the public

agencies� Customers� Lenders� Suppliers and other

creditors� Some NGOs

Figure 3. Stakeholder configurations and associated stakeholder types[10]

holders can directly influence corporate policy through the size of their share-holding and can act as intermediaries for smaller shareholders. Conversely, forsmall, individual shareholders, contracts with top management are indirect. Theshareholder has a contract with the corporation yielding limited voting rights, butit is the corporation that has the contract with managers. The chief action share-holders can take is sell their shares or buy more.

The capital market for shares provides powerful institutional support for ensur-ing that these contracts are fulfilled de facto as well as de jure.[11] It is possible tobreach contracts by acting ‘opportunistically’ but these institutional supports makeexposure likely. Under these circumstances, all parties have an interest in buildingfurther institutions to monitor and enforce individual contracts and in defendingand strengthening existing institutional supports, thus enabling general enforce-ment and monitoring of the whole web of contracts that make up the market.Such strategic action does not rely on the form of contract, so long as the con-tracts are recognized as valid by the parties involved.

Contingent incompatible [C] organization/stakeholder relations do not involve acontractual relationship: implicit or explicit; recognized or unrecognized. We arenot suggesting that there is no general social contract, but rather that it does notalways operate. Generally people operate in a manner which accepts some oblig-ations to fellow human beings and to the social institutions which bind them.However, there are circumstances in which the connections between particularindividuals or groups are so fragile and their interests are so incompatible that theywill not regard each other as human and the normal social rules will be suspended.In these circumstances there is no social contract. The relationship between cor-porations and certain environmental activists and pressure groups may be so char-acterized. Those running the corporations regard the activists as religious fanatics,communists, Nazis, élitists, extremist, violent terrorists, who ‘care more about treesthan people’ (Rowell, 1996, pp. 192–3). This becomes more than rhetoric whentwo sides do not need each other for anything; they do not need the other to exist.It is the combination of this and their antagonism that gives them an interest ineliminating or completely discrediting each other. As long as the environmentalgroup remains immaterial to the corporation and relatively unknown to the publicor treated as eccentric in the media, the corporation may be able to choose toignore them (or fight them using illegal or unethical tactics) with little consequence.As long as the activists have few resources to lose, they too may use illegal orextreme tactics.

Similarly groups may be in this configuration if their sets of ideas are separate,opposed and unconnected. Such a comparison can be drawn between the ‘deepecology worldview’ and the ‘dominant worldview’ (see O’Riordan, 1981). Withinthe dominant view, some issues of concern to ‘deep ecologists’ may be recognizedas relevant in a market-led society (such as the limits to the earth’s resources impos-ing limitations to growth). However these are viewed as market imperfections. Thecost of resource depletion or environmental damage, from the perspective of cor-porations causing the damage, is an externality. If no institutional structure existsto internalize the externalities or for routinely imposing these costs on such cor-porations, there is no incentive to reduce them. According to the ecologists, thisway of conceptualizing environmental issues encourages corporations to ignorethem. For ecologists the dominant worldview is irresponsible and morally corrupt.For certain corporations the deep ecology worldview is naïve.

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With a necessary incompatible [D] configuration organizations are encouraged toanswer the claims and criticisms of stakeholders, in spite of incompatible inter-ests. Unlike [C], there is recognition by both parties that a contract exists betweenthem, whether implicit or explicit. Organizations compromise, or try to convincestakeholders that they have compromised and addressed stakeholder concerns.However, there are clear divergences of interests and the relation is primarilyantagonistic. Stakeholders want to force organizations to do things which organizations regard as unprofitable (up to, but not generally beyond, the point ofthreatening viability). Struggles over resources will characterize many organiza-tion/stakeholder relations. Workers make demands that will raise costs. They mayreduce productivity through reduced effort. Tax authorities and organizations areoften in conflict over the application of tax laws. Large long-term suppliers andcreditors may be able to increase prices and reduce features, while large long-termcustomers can force price reductions.

Adverse publicity and the possibility of attracting unwelcome attention fromintermediaries who represent stakeholders (such as labour unions, consumergroups, trade associations and government regulators), encourages organizationsto respond to stakeholder challenges. Claims that organizations simply cannotafford to give way on these disputes will temper stakeholder demands and actions.Though the interests behind these organization/stakeholder relations are antago-nistic, the parties still have an interest in the continuation of the relationship. It isa condition of being in this quadrant that opportunity costs of leaving the rela-tion are considered to be higher than the value of whatever is being fought overwithin it.

Intermediary institutions that limit the chances of one side losing out too muchthereby bind the parties in this contractual manner. Here we are concerned withexplicit long-term contracts that cover relations with employees and long-termfinanciers or suppliers. Here also are relations bound by implicit, but recognizedcontracts, such as the generalized duty of care embodied in the law of tort.

Contingent compatible [B] covers relations where there is no formal contract andno direct relationship between the parties. Circumstances are such that compati-ble interests may be furthered if further relations were to be formed or implicitcontracts recognized.

This includes situations characterized in neo-classical economic theory, wherethere is an acceptance by all parties of the rationale of markets and the rules of con-tract. No one enters into a contract that they do not consider advantageous. Con-tracts in effect only exist for an instant. None are bound by contracts that they cannotimmediately get out of if the balance of advantages lies elsewhere. Therefore, wehave a congruity of interests among potential contractors. This reflects an ideal world,though it may be approached at certain times and among certain parties.

This configuration will also cover situations in which parties consider themselvesto be bound to others by common ideas or material circumstances, without explicitcontracts: such as neighbours, countrymen, or those carrying out similar politicalactivities. Here we may speak of such parties being bound to each other by implicitcontracts. The strength of implicit contracts will be influenced by the strength ofinstitutions that bind parties together. Organizations connected through commontrade associations, or joined by national initiatives may thought of as linked bystrong implicit contracts. Here we have a basis for the development of legitimacytheory.

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Some people believe, and act as though there is a web of connections amongall humanity. This may be called the tie of sympathy or empathy, or an implicitcontract which could cover all the quadrants. However there have always beenthose who consider those of other tribes, other religions or other nationalities tobe outside this web, particularly during actual conflict.

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Our model provides a framework that enables analysis of how and why such organization/stakeholder relations change. Change can occur in any direction.Generally a realignment could transpire if: (a) institutional support changes; (b)contingent factors emerge; (c) sets of ideas held by stakeholders and/or organiza-tions change; (d) material interests of either side change.[12] All these factors willbe illustrated by the case of Greenpeace below.

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Phase 1Greenpeace was established in 1971 by a handful of committed environment-alists. The nature of the relationship it had with organizations was antagonistic.Greenpeace campaigned against the ‘enemy’, principally large corporations,viewing them as immoral, wasteful, and sometimes even harmful. Corporationsregarded Greenpeace as a bunch of cranks or radicals: a view that was reiteratedin the media. Both parties were not interested in interacting with each other. IfGreenpeace did interact it was to disrupt corporate activities, such as whaling(against Icelandic whalers, 1977) or the dumping of nuclear waste (againstdumping in the Atlantic, 1979). The corporations tried either to ignore Green-peace or to assert property rights through the courts in order to get injunctionsagainst their actions or to sue for damages. The spirit of legal actions is adver-sarial and intended to lead to a clear winner and a clear loser. There is room forjudgements based on compromise (such as over the amount of a fine) within thelegal system, but it is not designed to encourage compromise. If the corporationscould have bankrupted Greenpeace they would not have hesitated to do so[13]; ifGreenpeace could have eliminated the corporations it would have. Both partieshad everything to gain from inflicting maximum damage on one another. In termsof sets of ideas the two groups were incompatible. Greenpeace was anti-materi-alist and their differences were as between the deep ecology and the dominantworldviews described above. Thus we suggest their relationship can be usefullydescribed as contingent incompatible [C] (see figure 4).

Phase 2A number of contingent factors in the form of major environmental eventsreceived wide media coverage during the 1980s: the discovery of a hole in theozone layer over Antarctica, 1984; evidence of acid rain damage in the mid 1980s;Bhopal, 1984; Chernobyl, 1986; and Exxon Valdez, 1989. While the immediatecause of some of these events could be clearly attributed to particular corpora-tions, others could not be so easily attributed.

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In 1985 the Greenpeace yacht The Rainbow Warrior was bombed. The vessel wasdestroyed and a Greenpeace photographer killed. Extensive media coverage ofthis, as well as connections drawn with regular reports of environmental disasters,resulted in an approximate increase in membership of 400,000. With largerbudgets came larger projects and the need for management and financial skillsthat are associated with mainstream business. Senior level management positionswere filled from commerce and industry. Thus the material conditions of Green-peace changed. The new management envisaged new corporate strategies and anew corporate image. In 1986 the ‘radical activists’ running Greenpeace (UK)were asked to resign. Priorities changed: it was now important to get as much aspossible out of the ‘supporters’ pound’. Greenpeace had much more to lose ifactions went wrong or if corporations tried to sue. Consequently many traditional‘actions’ were not permitted for fear of deteriorating funds. Radical supporters felt that Greenpeace was compromising its grassroots beliefs by toning downactions. As a result many left to join less compromised organizations such as Earth First!

Realignment occurred during this period. In terms of our model depicted infigure 4, the change involved both movement to the left and upwards: towards anecessary incompatible configuration [D]. The new management of Greenpeacewere more business orientated compared to their predecessors, and therefore lessantagonistic towards corporations. They were aware of the advantages of public

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Necessary

Compatible

Incompatible

Contingent

A B

D CPresentday

Mid1980s

Late 1980sand early1990s

1971

Phase 1

Phase 2

Phase 3

Phase 4

Key:

Figure 4. Stakeholder configurations and the changing nature of the Greenpeace/corporations relationship

relations and the corporate image that Greenpeace projected. International mem-bership continued to rise, reaching nearly 5 million by 1990. From the corpora-tions’ perspective Greenpeace could no longer be ignored: the media treated it asmainstream news and public support had increased. Concurrently corporationswere becoming aware of the advantages of environmental sponsorship and asso-ciations for their relations with other stakeholders. A less confrontational approachto Greenpeace became evident in ‘greenwashing’ attempts to convince stakehold-ers that environmental concerns were being addressed.

The resulting realignment meant that the parties were now more compatible,both in terms of sets of ideas and material interests. Relationships were alsobecoming less contingent, particularly where sponsorship deals were signed. Thestructural shift identified here is one towards a position that includes marginal ele-ments of the necessary incompatible relationship. The corporations/Greenpeacerelation became more necessary and more compatible. However, underlying char-acteristics of the contingent incompatible structure remained. Both sides still didnot want to interact to the point of compromise, though a weak association wasrecognized as beneficial to both: sponsorship money for Greenpeace and envi-ronmental credibility for corporations. Nevertheless, typical sponsorship dealsinvolved minimal interaction between the two parties.

Phase 3During the late 1980s/early 1990s an anti-green movement emerged in the US.The ‘green backlash’ movement, which includes groups such as Wise Use andAlliance for America, attempted to portray environmental groups as real threats tosociety, jobs, and tradition (Rowell, 1996, p. 28). The key aim of this movementwas to show the ‘other side of environmentalism’ by discrediting it. It lobbiedagainst environmental legislation, which was potentially very costly for corpora-tions. In 1990, $500 million was spent on corporate anti-environmental PR in theUS (Dowie, 1995, p. 85). Environmental groups were criticized for following aproblem-based approach, without any attention to possible solutions: tell thewhalers to stop whaling, regardless of the consequences for loss of livelihood, lossof tradition, and loss of profits and associated taxes.

Greenpeace members were labelled ‘environmental terrorists’ (Rowell, 1996, p.150), accused of ‘blackmail’ and ‘ignorance of environmental and social issues’(Hunter, 1994) and ‘threatening customers, using strong arm tactics, intimidationand unreasonable attack’ (MacMillan Bloedel, 1994). This is a clear case of‘de-humanizing’ Greenpeace. By focusing on the problem-based approach tradi-tionally associated with environmentalists, the backlash movement was highly successful in spreading the view that elimination of Greenpeace was the only solu-tion: alignment was not an option. One direct effect has been a fall in US mem-bership of Greenpeace by almost 81 per cent, from 1,845,272 in 1991 to 355,835in 1998 (Greenpeace, 1999).

In the spring of 1995 the backlash movement came to the UK with the publi-cation of three books in one month (Beckerman, 1995; North, 1995; Ridley, 1995).The confrontation between Greenpeace and Shell (UK) over the disposal of theBrent-Spar offshore oil installation also occurred in 1995. Greenpeace activistsoccupied the oil installation (on and off ) from 30 April to 20 June. This receivedextensive media coverage, particularly on television, and encouraged a boycott ofShell’s petrol stations in Germany, Denmark and the Netherlands, as well as the

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passing of a resolution against Shell’s plans in the European Parliament. AlthoughGreenpeace achieved a victory, in that Shell abandoned its off-shore disposal of the oil rig, they came off badly in the press (Lawson, 1995; Routledge, 1995;Tsoukas, 1999; Vidal, 1995, p. 512). Views expressed in the British press contrastedconsiderably with press coverage of Greenpeace a decade earlier. From 1995 to1998 UK membership fell by 30 per cent, to just under 200,000 (Greenpeace,1999).

The green backlash led to a reversal of the trend towards a necessary andincreasingly compatible configuration between Greenpeace and corporations. Thenew position is not as extreme as in Phase 1. This is because Greenpeace becamemore mainstream in ideas and its material interests altered. Corporations couldnot ignore it to the extent that they used to, as Shell (UK) discovered over theBrent Spa disposal, or MacMillan Bloedel over the clear cutting of the Canadianforests. There is too much at stake for both parties. Furthermore, although thebacklash has been widespread, it has not been universal, thus limiting the extentof its effect.

Phase 4The disasters of the 1980s set in motion government actions, which have led to aset of institutions that mediate between errant corporations and deep ecologists.In 1991 the Rio Conference introduced the idea of sustainable development withan emphasis on finding workable solutions. This has led to increased sensitivity toenvironmental issues among governments as well as the general public. The effectsof Rio started to filter through to industry in the mid-1990s in several ways. Thishas had a major effect on corporate/NGO relations. Ethical investments, by whichcorporations are screened on a number of ethical and environmental issues, havebeen one of the fastest growing sectors in both the UK and US.[14] The pressurefor corporations not only to look good environmentally, but also to act in a suitable manner is increasing.[15] This has also impacted on supply chains. As aconsequence strategic alliances between corporations and selected NGOs areemerging. Both parties have something to gain from this relation. NGOs are real-izing the key role that corporations can play in forging workable solutions and cor-porations gain instant, verifiable green credentials.

Greenpeace has broadened out to work closely with other groups, and hasstarted to put forward a solution-based approach to actions. In September 1996Greenpeace held its first tailor-made conference for corporations. Examples ofalliances Greenpeace has forged with corporations include:

• Greenpeace and Calor collaborating on the Greenfreeze campaign to man-ufacture and promote environmentally friendly fridges and freezers.

• Greenpeace and UK retailers, including Tesco and IKEA, have been workingtogether on the impact of PVC packaging and building materials since 1996.

• Greenpeace investing DM2 million to develop a fuel-efficient version of theRenault Twingo.

• Greenpeace and British Petroleum Solar collaborating on ways of develop-ing solar energy.

What is evident is a distinct structural shift from a contingent incompatible rela-tion to a necessary incompatible one. This movement has been very dynamic. The

14 . . .


ideas of sustainability and finding positive workable solutions have led to strategicalliances, forged by recognized explicit contracts. The logic of compromise ratherthan elimination prevails as both parties have become aware of the benefits of co-operation. They need each other in order to achieve their objectives, which leads to concessions being made. Concessions are not necessarily equal or evencommensurate, but it is clear that no longer would either party benefit from theelimination of the other. Nevertheless becoming more compatible in terms ofideas is far from full compatibility. In joining forces with Renault, Greenpeace isattempting to provide a workable solution to the problem of depleting naturalresources and pollution. Renault, on the other hand, is probably more con-cerned with fuel efficiency as a selling point and generally to improve its green credentials.

Greenpeace is not an isolated example of an NGO that has forged corporatealliances (Murphy and Bendell, 1997). A 1996 survey of NGOs and corporationsin partnership revealed that over 85 per cent of respondents believed such part-nerships would increase in the next five years (Murphy and Bendell, 1997, p. ix).However, it is not certain that this type of corporate/NGO relation will continueindefinitely. The fear of loss of integrity when co-operating with corporations maydissuade some NGOs from going down this path or even reverse trends.

Now that some alliances and partnerships have been forged, there is greaterscope for the resulting interactions of the parties to lead to stronger structural con-nections. It is here that we would situate the power of a dialogic approach to stake-holder relations. It may not always be good to talk, but certainly once therelationships have crossed the ‘line’ from quadrant C to quadrant D, indicating‘necessary’ material and ideological links, then it is certainly good to talk. The sit-uational logic of this structural configuration is concession, leading to compro-mise. It will be interesting to explore structural consequences of this interactionin future research. Opinions are certainly divided on the consequences of the ‘solu-tions agenda’ as demonstrated in a recently published debate between JonathanPorritt (Friends of the Earth and Forum for the Future), representing the dialogicview, and George Monbiot (The Land is Ours), representing the view that ‘it is both naïve and dangerous to imagine that gentle persuasion can change their[corporations’] core activities’ (Monbiot and Porritt, 2000, p. 20).

We argue that the weakness of stakeholder theory lies in the underspecification ofthe organization/stakeholder relation itself. The stakeholder model presented hereis intended to allow a clearer understanding of:

1. Why different stakeholders influence organizations in different waysWe suggest four structural configurations for organization/stakeholder rela-tions. Associated with each are situational logics and strategic actions, whichcondition the way stakeholders interact with, and attempt to influence,organizations. This provides an explanation of certain stakeholder behav-iour: for example, why some NGOs act antagonistically towards organiza-tions, whereas others have forged strategic alliances and are prepared tocompromise.

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2. Why some stakeholders have more influence over organizations than othersThis is influenced by: (1) the structural nature of the organization/stakeholder relation; (2) the contractual forms existing; (3) the institutionalsupports available. For example, stakeholders in configuration [A] (figure 3)are likely to be more influential than those in any other category, becausethe nature of their relation with organizations is both necessary and com-patible. Both parties lose if the relationship does not run smoothly. Thecapital market, managerial labour markets, and associated regulatory agen-cies and other intermediaries provide institutional support for the continua-tion of these relations. For stakeholders in configuration [C], however, nocontractual forms exist and there is a lack of institutional supports. Conse-quently, the influence of such stakeholders is weak.

3. Why only some stakeholders are regarded as legitimate by organizationsPrevious literature begs the question of how legitimation occurs and of howthe boundary is drawn between those who have legitimate claims on orga-nizations and whose claims are not regarded as legitimate. We suggest thatthe boundary is a contractual one. Only stakeholders in necessary relationswith the organization are regarded as legitimate stakeholders by it. Thesewould correspond only to those in configurations [A] and [D]. Stakeholdersin configurations [C] and [B] may think organizations ought to regard themas legitimate, but we believe organizations will, at best, either ignore or onlypay lip service to such stakeholders. However, if stakeholders are able to buildinstitutional connections with organizations, or if intermediaries developwhich provide such connections, then relations between organizations andsuch stakeholders will migrate into configurations [A] or [D] and their legit-imacy will increase. In this we are building on Suchman’s (1995) review oflegitimacy concepts and in particular on his recommendation that strategicand institutional perspectives on legitimacy be combined.[16]

4. How and why the organization/stakeholder relationship changes over timeAs noted above change can occur for a number of reasons. These are illus-trated by the Greenpeace case. The environmental disasters of the 1980sand the killing of a Greenpeace photographer (contingent factors) led toincreased institutional support for Greenpeace influence on corporations viathe newly sensitized media. These contributed to a tremendous rise in Green-peace membership, representing a change in its material conditions. Thiscontributed to a change in Greenpeace management and the subsequentwithdrawal of many of the radical activists whose attitude towards corpo-rations were most represented by the extreme bottom right hand corner ofquadrant [C] in our model during Phase 2.

Corporations too were becoming more sensitized to environmental issues due tothe change in general awareness of such issues. Particularly influential on them,as well as on Greenpeace, has been the emergence of a set of ideas, of a culture,around the concept of sustainable development during the mid-1990s followingthe Rio Conference. This has encouraged both sides to come together to develop solutions-based approaches. These require a degree of co-operation,which has thereby further pushed corporations/Greenpeace relations towardsquadrant [D].

16 . . .


The power of our model is that it predicts strategic logics associated with par-ticular configurations, and that it implies that these will, in the short-run, lead toreinforcement of the interests and ideas that situate relationships within these con-figurations. This is demonstrated by the backlash which occurred in what we havelabelled Phase 3. Single battles rarely settle wars, rearguard actions commonlyoccur. It is now 30 years since Greenpeace was established and it would be pre-mature at this stage to declare the war over. No doubt there are some within Green-peace who regard certain corporations as the enemy to be destroyed withoutquarter, and many corporations that regard Greenpeace similarly. However, emer-gent reinforcements continually interact, not only with new contingent factors andchanging institutional supports, but also with the long-run consequences of theplaying out of strategic actions. Eventually many wars lead to a clear victor anda vanquished party, with a change in configuration emerging from the playing outof the relationship itself.

Finally, we believe the model can help to develop a better understanding of therelation between normative, instrumental and descriptive stakeholder theory. Whatwe present could be called a ‘value attuned’ model (Swanson, 1999), wherebysystems of ideas with normative implications are explicitly considered along withmaterial structures and interests. Nevertheless, in Donaldson and Preston’s (1995)terms the model is descriptive rather than normative. We do not prescribe whatshould happen. However, we regard the distinction between descriptive and instru-mental as problematic. A theory that is purely descriptive is a contradiction interms. Describing what happens involves some interpretation. We regard ourtheory as providing explanation as well as description. In this it can provide con-tingent predictions in the form of ‘if–then’ statements (which Donaldson andPreston consider to be the hallmark of instrumental theory). If structures of inter-ests and ideas situate certain organization/stakeholder relations in a particularquadrant, then we predict certain strategic actions will occur. The problem withtheories taken by those writing in the stakeholder field to be descriptive is that theyhave been confined to variants of neo-classical economic theory. The core theoryis not value-attuned; it does not take into account different values or cultures.Instead it presumes extremely narrow structures of interests (material self-interest), forms of motivation (rational economic maximization) and forms ofinteraction (equilibrium). However, it is wrong to imply that neo-classical theoryprovides no basis for ‘if–then’ statements. What is needed is what Donaldson andPreston (1995) call descriptive theory that is capable of generating instrumentalpropositions and capable of situating normative interpretations on the part ofagents. In this sense our model helps to situate the convergence of stakeholdertheory based on a normative core suggested by Jones and Wicks (1999). Theirapproach seems prima facie to be valid for organization/stakeholder relations onlyin quadrant A. Its validity for quadrant B and particularly quadrant D would bemore difficult to establish, but could be done under certain circumstances.[17]

However, the approach is clearly not valid for relationships in quadrant C.

[1] According to Donaldson and Preston (1995, pp. 65–7) stakeholder theory is descrip-tive in that it describes ‘what the corporation is’; that is, as a constellation of coop-

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erative and competitive interests possessing intrinsic value. It is instrumental in that it‘establishes a framework for examining the connections, if any, between the practiceof stakeholder management and the achievement of various corporate performancegoals’. Principally that ‘corporations practicing stakeholder management will, otherthings being equal, be relatively successful in conventional performance terms (pro-fitability, stability, growth, etc.)’. Finally they state that the fundamental basis of stake-holder theory is normative, which involves acceptance that ‘(a) Stakeholders are personsor groups with legitimate interests in procedural and/or substantive aspects of cor-porate activity. Stakeholders are identified by their interests in the corporation,whether the corporation has any corresponding functional interest in them. (b) Theinterests of all stakeholders are of intrinsic value. That is, each group of stakehold-ers merits consideration for its own sake and not merely because of its ability tofurther the interests of some other group, such as the shareholders.’ According toSwanson (1999, p. 507) normative theories/research concern why organizations shouldtake stakeholder interests into account; descriptive ‘theories’/research concern whetherthey are taken into account; instrumental theories/research assesses the effects of stake-holder management on achievement of corporate goals.

[2] We refer to organization/stakeholder relations because we are concerned here withstakeholder theory in general. In the literature sometimes stakeholder analysis refersto relations with ‘firms’, ‘companies’, ‘corporations’ or profit-making organizations.We use these terms when specifically referring to this literature.

[3] With the notable exception of Mitchell et al. (1997) and possibly Donaldson andPreston (1995), though the latter only discuss this implicitly by noting different basesfor legitimacy which have been used in the literature.

[4] For example, consumer unions, labour unions, boards of directors, markets for infor-mation and legislation on information provision by corporations.

[5] For example, the division of labour is an emergent property that arises out of thecombination of many labourers. It can affect the labourers by increasing monotony,which can influence behaviour. However, the division of labour will cause a poten-tial rise in productivity, even if the observed rise is tempered by reduced effort due to increased monotony. The rise in productivity due to division of labour is independent of effort levels. It arises because the combination of workers leads tosavings in time required to change tasks and greater focus of whatever effort isexpended.

[6] For example, politics and economics are internally related in a command economy.Government and the market are only contingently related in a free market economy(if it comes close to the ideal type). The connection is a matter of policy and maydiffer between particular political parties. The economy must be managed throughpolicies as part of the defining characteristic of a command economy.

[7] Archer notes Weber’s (1967) view of patrimonial bureaucracy as a structural example,and Durkheim’s (1977) analysis of the contradiction between Christianity and clas-sicism as a cultural example. Permanent bureaucracy requires a stable income.Therefore the relation between bureaucracy and taxation is internal and necessary.However in a near-subsistence economy the aim of high taxes is constrained by theneed to placate the large landowners. Various parties become engaged in a situa-tional logic of compromise. The Prince, who relies on staff for tax collection, mustappeal to their self-interest in opposition to the subjects. Vested interests among offi-cials develop, primarily in passing on to the Prince only part of what they collectfrom the subjects. The Prince cannot dispense with staff and so must see-saw betweenbuying their loyalty and attempting to curb their autonomous powers derived fromtheir covert source of income. The peasantry could ally themselves with the landedestates against the Prince and his financial burdens, or revolt against local taxes andofficials in the hope of enlisting the support of the Prince. Their compromise is to

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choose an alliance with the lesser of their two oppressors. The configuration is inher-ently unstable because inadequate compromises were dangerous for all parties. Thelikely consequence was moves toward ‘Sultanism’ or ‘feudalism’ (Archer, 1995, pp.222–5). Durkheim points out that Christianity’s origins were Graeco-Latin. Its lan-guage was Latin and it was ‘thoroughly impregnated with Roman civilisation’(Durkheim, 1977, p. 21). Understanding of Holy Scripture was primary for devotees,but this could only be achieved by steeping themselves in pagan literature and culture.However, the Church had set itself the task of destroying this pagan spirit. Theincompatibility of these cultural systems was profound: one regarding happiness asan aspect of virtue, the other sanctifying and glorifying suffering. With one the nor-mative ideal for people was to live in harmony with nature, the other idealized peoplerising above their nature, taming and subjugating it to spiritual laws. Durkheimanalysed the gradual accommodation of Christian thought to the challenge of itsroots in classical rationalism over two thousand years (Archer, 1996, pp. 162–5).

[8] The situation is further complicated by the possibility that relationships which fit intoone category in terms of material structures, could fit into a different one in relationto cultural or sets of ideas. Groups with incompatible ideas may have compatiblematerial interests and vice versa. By and large Archer (1995, pp. 294–324) considersthe material and cultural systemic features to temper each other, without an inher-ent bias towards one or other; however, she implies that whichever of the two sets offactors leads to social change (generally the contingent relations) is more likely todominate over time.

[9] This scale is not based on what may be considered to be the ideal moral basis of con-tract such as that outlined in Velasquez (1998, p. 93). We are concerned with whatpotential and actual parties to the contract might regard as the core characteristicsof a contract, rather than what a regulating or public agent may consider to be idealfrom a moral or legal point of view. Contracts may well bind parties to what mostwould consider as immoral acts, but this does not stop the parties involved consid-ering the contract to be binding.

[10] The classification of stakeholders in figure 3 has been determined from a UK/USperspective. Elsewhere the classification of some stakeholders would differ due to dif-ferences in institutional support and organization structures. For example, where debtproviders sit on the board of directors, as is common in Germany, a necessary com-patible configuration is anticipated. The presence of works councils and tiered man-agement boards with employee representatives would also shift the classification oflower-level employees and trade unions closer to [A]. Over time the positioning ofcertain groups may change, as will be described below for Greenpeace. Finally manyare in ambiguous positions. Employees in particular have some interests which arecompatible with their employing organizations (vis-à-vis competitors) and some whichare incompatible (over whether wages are viewed as the livelihood of organizationmembers or as costs to be minimized). Even some shareholders can have short-terminterests that are incompatible with the long-term interests of organizations. Struc-tural ambiguity should lead us to expect greater variation of positions over time andwithin different broad cultural and political contexts.

[11] We assume such markets are heavily traded and that there is a relatively free flow ofinformation, which is relatively transparent. We do not assume the strong form ofmarket efficiency, but the level of efficiency is such that the vast majority of tradersbelieve they receive and are able to act upon accurate information.

[12] We would interpret Calton and Lad’s (1995, p. 278) description of micro social con-tracting as an example of (c) which emerges from the development of the contract-ing process itself.

[13] In 1983 Greenpeace were fined £50,000 for breaking a court injunction banningthem from interfering with the British Nuclear Fuels Industry outlet pipes at

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Sellafield. They faced bankruptcy. However, publicity surrounding this case led topublic donations which more than covered the fine.

[14] Since 1984 the UK ethical investment sector has increased from one fund to 49 fundsmanaging over £2.5 billion (Ethical Performance, 1999b). In the US assets undermanagement for the ethical sector have increased from $639 billion in 1995 to over$2.16 trillion in 1999 (Ethical Performance, 1999a).

[15] Significant sources of funds are no longer available to corporations that are regularlyexcluded from social and ethical funds. In 2000 the Prudential announced that theynow apply screens to all UK equity investments (www.prudential.co.uk). Some finan-cial and regulatory institutions, such as the Dow Jones Index, are looking to adoptthese screening models to rate corporate performance.

[16] The strategic approach adopts a managerial perspective and is concerned with howorganizations instrumentally manipulate actions and symbols to capture and main-tain social support. The institutional approach takes a more detached stance andemphasizes how sector-wide structuration dynamics generate cultural pressures thattranscend any single organization’s purposive control (Suchman, 1995, p. 572).

[17] This would depend on the extent to which conditions of high information, highmobility and many alternatives between and within particular organization/stake-holder relations exist for quadrant [B], as well as the availability of intermediaryinstitutional supports for coordinating interests and resolving conflicts both for quad-rants [B] and [D].

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