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Blog, Bucknell, cases, Class, Philosophy or Ethics, Social Science

Stakeholder Pressure Keeping You Up At Night?


For the blog posting this week I chose to use a “piece of knowledge” on Freeman. An optional reading for our session 4 class back in February was Edward Freeman’s Stakeholder Theory of the Modern Corporation.  Ever since taking Management 101 the concept of stakeholders has interested me: how to identify who is a stakeholder, are their various levels, how does one encapsulate the needs of stakeholders and somehow make that align or fit within what the mission of the overall corporation is, etc.

I searched Stakeholder Theory and Freeman within the Web of Knowledge database. Since Stakeholder Theory of the Modern Corporation itself is within another piece of work, I browsed around a bit, checking out other pieces of work by Freeman regarding stakeholder theory. I spent some time searched within those for different terms, such as Wal-Mart, but did not come up with many results nor any I was particularly interested in. I eventually narrowed my focus onto Stakeholder Theory and “the corporate objective revisited” . This has been cited 76 times within the Web of Knowledge database! In settling on this document, I began sifting through the  76 items cited; I wasn’t really thrilled with this set of resources either. I eventually found an article that, from it’s abstract at least, appeared really interesting: Social Sustainability in Selecting Emerging Economy Suppliers by M. Ehrgott, F. Reimann, L. Kaufmann, and C.R. Carter. The source of the article is Journal of Business Ethics. I did a cited reference search on this article as well, but it has only been cited 3 times within Web of Knowledge.

The abstract provides great insight into what the study was about, summing it up better than I can attempt to: “Abstract: Despite the growing public awareness of social sustainability issues, little is known about what drives firms to emphasize social criteria in their supplier management practices and what the precise benefits of such efforts are. This is especially true for relationships with international suppliers from the world’s emerging economies in Asia, Latin America, and Eastern Europe. Building on stakeholder theory, we address the issue by examining how pressures from customers, the government, and employees as primary constituencies of the firm determine the extent to which firms consider social aspects in the selection of emerging economy suppliers. Further, we analyze how such socially sustainable supplier selection relates to the capabilities of the firm’s suppliers, its market reputation, and the learning in its supply management organization. We test the developed research framework empirically using data from 244 U.S. and German corporations. Our findings, consistent with our hypothesized model, suggest that middle-level supply managers as internal stakeholders play a major driving role for firms’ socially sustainable supplier selection, and that strong positive links exist between that selection and the investigated outcomes.” You can also view the full text here: PDF.

Two questions were posed in their research which they used to formulate their hypotheses. One question hones in on the extent to which primary stakeholders pressure firms to consider social standards in selecting suppliers from emerging economies. The second research question examined is in regards to three parts: capabilities of emerging economy suppliers, their market reputation and the organizational learning in their supply management functions. The question here was how to firms benefit from adhering to their social standards in regards to each of the three parts mentioned. From the study, they displayed their results in a structural equation model:

It is obvious to point out the .58 outcome of middle-level supply managers and how this internal stakeholder pressure plays a role as “the most significant driving force” to selecting emerging economy suppliers. What was interesting to me in the study, and what I feel could be most relevant to some of the discussions we’ve had in class, is the results could be used to infer the concept of person-organization fit. This concept suggests “it is beneficial for the firm to match employee social values and expectations by shaping supplier selection policies accordingly” (Ehrgott et al, 10). I made a connecting thought of Nike and the codes of conduct they provided to their independent contracted factories. In this case, I don’t think for a second the values of Nike cascaded to their sites of operations. This concept also provoked the thought of my experiences with J&J as a marketing co-op this past fall. The credo at J&J is highly regarded as being an authentic telling of what J&J stands for as a corporation. The culture there for the most part reflected the family atmosphere one would assume from their credo. It was also used various times throughout my co-op in discussions, which furthered my belief of people actually wanting the company to align decisions to the credo. Not to mention, the J&J Credo is sited TONS of times in a multitude of sources as a “best practice.”

Overall, I think the cited reference search tool has potential. Though there are varying degrees of results when looking through what has cited the initial work or “piece of knowledge” searched, Web of Knowledge is useful in that it allows you to search terms within those cited, date ranges, and other metrics to help narrow the search.

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About Danielle Marquette

I'm a senior management major at Bucknell University. I took last semester off to work as a marketing co-op for a Johnson&Johnson consumer beauty brand. I'm from Douglassville, Pennsylvania. I have 3 younger brothers and 6 step-sisters. I could live on strawberries and pineapples.

Discussion

9 thoughts on “Stakeholder Pressure Keeping You Up At Night?

  1. Danielle – I think you found some very useful information in your search. The “Social Sustainability in Selecting Emerging Economy Suppliers” article seems very complex and detailed, but it provides great insights. I think it would be most useful if you want to do a specific paper on a business’ criteria for selecting socially sustainable suppliers and how stakeholder interests are involved in that decision.

    Posted by Lauren McGuiggan | March 26, 2012, 7:09 pm
  2. I liked your example of J&J. Even though I have never worked for them, last year I participated in their spring competition. In the competition, my group had to best decide how to launch a new product based on packaging, pricing, and market (as well as some other criteria that I have forgotten). After my group calculated future earnings, we ended up making most of our decisions based on J&J’s credo. The judges appreciated our technique and we ended up getting third. Even though our decisions didn’t maximize profits, they still liked how we emphasized the credo which would create customer loyalty. Overall, I think your topic is also interesting. In addition, the graph that you added was very helpful in organizing the made point of the article.

    Posted by Amanda Skonezney | March 27, 2012, 11:49 am
  3. Danielle,

    I really like that you took the time to poke around within WoK to see what you could find, and I think the article you started from and the article you read were really interesting and impactful. You mentioned that it had been 76 times within WoK, which is indeed a lot (especially for an article written less than ten years ago), but it actually has an even greater impact than what that number indicates. I did a Google Scholar search of the same article, and found that it has been cited over 330 times! That article definitely has some influence, which makes me wonder (playing off of Dana’s post) what has been written that has tried to discredit Freeman’s piece. Undoubtedly some of those 330+ sources disagree with him…

    Posted by Brody Selleck | March 27, 2012, 1:47 pm
  4. I agree with Lauren in that I think the “Social Sustainability in Selecting Emerging Economy Suppliers” article will be very crucial for your paper. I think it is important to look at stakeholder theory from the perspective of the emerging markets of Asia, Latin America, and Eastern Europe because the business practices that are developed there will most likely affect how we do business in the U.S. and vice versa. Therefore, I think this article will prove very useful for you!

    Posted by alyssakinell | March 27, 2012, 5:26 pm
  5. I also agree with Alyssa and Lauren as to the importance of the article you found. As we read in class, there are many companies out there that seem to focus in on short-term profits rather than sustainability for all stakeholders. Obviously this thought goes towards Freeman and against Freidman’s ideas, but that seems to be what you are going for! I enjoyed the personal example. Similar to Amanda, I also participated in the J&J competition (sophomore year) and definitely see where you are coming from with the idea of their business environment. I’d love to know where you go from here with this thought process.

    Posted by Catherine Gibbons | March 27, 2012, 9:20 pm
  6. Danielle- this is SUCH a critical finding, I will find this article and think about using it in the class. It reveals what i have thought often: there is more agency than most people realize by managers. In other words, we talk about “firms do this” companies do that” and so on. But that talk, and the theoretical orientation behind it- that the firm is some sort of uniform social group, hides how much happens “under the surface.” In their data, government pressure has almost NO EFFECT. The social impact of middle managers matters the most. If you do more with this, you might want to track down a piece by Robert Jackall called “the moral mazes of middle managers.” Or something like that. Author is correct. I have a copy in an anthology. My memory tells me it speaks to this issue as well.

    Posted by Jordi | March 30, 2012, 1:46 pm
  7. Did you understand what they were saying about SE modeling?

    Posted by Jordi | March 30, 2012, 1:46 pm

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Blog 5 before session 6 What (interest) or Who (person) Inspires You? For this week’s prompt, the Blog Council wants you to examine how this class relates to your own interests. So, please write about how this class relates to some of your own intellectual or other learning interests. We are NOT interested in how it relates to a specific career goal. Plan B: same idea, but based on a person. See whole post for details.

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