This study answers two questions: 1) How do firms manage stakeholders to improve their market performance? 2) What competitive benefits can firms obtain by managing stakeholders? Firms that develop trust with stakeholders gain product acceptance and are better at finding shared solutions. To achieve these benefits, companies can make products more appealing by working in interdisciplinary teams, or with organizations that represent stakeholder interests.
Managing stakeholders in a responsible way improves the bottom line, but there has been limited guidance to help managers take action. This study examines how companies manage stakeholders to improve performance and what benefits they can expect as a result. It assesses these benefits using an in-depth case study of food companies as they introduced genetically modified (GM) foods.
Firms that develop trust-based cooperative stakeholder ties improve performance through:
Improving product acceptance by society. Industry members developed trust-based relationships with stakeholders to gain acceptance prior to introducing GM foods. They appointed a task force that held press workshops and launched a public campaign with brochures and a toll-free telephone line. They also arranged informal meetings with industry representatives and NGOs rather than dealing with individual stakeholders.
Finding shared solutions by working with stakeholders towards common goals. Numico, Unilever and Sara Lee successfully used open-dialogue with stakeholders to develop trust and achieve common goals. Before introducing GM food, they invited NGOs such as the Consumer’s League and Nature & Environment to participate in consultations. They found common interests with stakeholders by sharing information of mutual interest. The dialogue helped build partnerships to find shared solutions.
Implications for Managers
Develop trust-based relationships with stakeholders:
Build relationships with a few representative groups, which is more efficient than dealing with individual stakeholders. Support from these groups can make your products more appealing to society.
Gain the “consent” of important stakeholders by involving them in company policy decisions. For example, the Dutch food industry allows government to have informal influence on biotechnology policies.
Find overlapping interests with stakeholders, such as involving product design teams or incorporating the needs and preferences of journalists. For example, Unilever provided journalists a personal contact in their organization.
Work in interdisciplinary teams, such as with other departments and organizations. Exploring different viewpoints will help you work towards common goals to find shared solutions.
Implications for Researchers
We suggest research can test these results beyond companies in the Netherlands and identify additional factors that affect stakeholder management.
This research used Dutch case studies on the introduction of genetically modified foods from 1992-2000. Data were obtained from 23 interviews with industry representatives including a Shell public affairs manager and Ministry of Agriculture biotechnology coordinator. Information was also obtained from roundtables, archives, newspapers and magazines.