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Article contents

A stakeholder perspective: origins and core concepts.

• Pernille Eskerod Pernille Eskerod Management and Organizational Behavior, Webster University
• https://doi.org/10.1093/acrefore/9780190224851.013.3
• Published online: 30 June 2020

Organizations (whether they are permanent or temporary) have stakeholders, that is, individuals and groups that can affect or be affected by the organization’s activities and achievements. Assuming that the fundamental driver of value creation is stakeholder relationships, managing those relationships well is a prerequisite for obtaining and sustaining success in all businesses, regardless of the success measures applied. Therefore, applying a stakeholder perspective is of significant importance for any manager or entrepreneur. However, the essentials as well as the implications of applying such a perspective are not clear. Researchers and practitioners have offered many contributions, however, the existing literature is inconclusive. To provide clarity, stakeholder concepts (e.g. stakeholder definition, systems perspective, separation thesis, stakeholder analysis, stakeholder engagement, perception of fairness, stakeholder utility function, stakeholder salience, stakeholder disaggregation, stakeholder multiplicity, managing for stakeholders, Value Creation Stakeholder Theory, value destruction, shadows of the context) are defined and 15 propositions for further inquiry are offered. The Scandinavian and American origins of stakeholder thinking are presented. The propositions are intended to invite discussion—and could form the basis for future research questions as well as provide guidance for managers. By drawing on (a) Professor Eric Rhenman, who in the 1960s first proposed an explicit theoretical framework on stakeholder thinking; (b) Professor R. Edward Freeman, who has been the most influential contributor to the field; and (c) additional, selected contributions, the aim is to providevalue for both new and seasoned researchers as well as for managers, consultants, and educators. In order to give the reader the opportunity to self-assess and interpret the “raw data,” the text is rich on citations.

• stakeholder
• stakeholder thinking
• value creation
• stakeholder definition
• stakeholder relationship
• stakeholder engagement
• perception of fairness
• managing for stakeholders
• project stakeholder management

Introduction

Applying stakeholder thinking within business and management is “a way to see the company and its activities through stakeholder concepts and propositions. The idea … is that ‘holders’ who have ‘stakes’ interact with the firm and thus make its operation possible” (Näsi, 1995b , p. 19). The underlying premise is that all organizations have stakeholders, that is, “any group or individual who can affect or is affected by the achievement of the firm’s objectives” (Freeman, 1984 , p. 25). Managing stakeholder relationships well is a prerequisite for obtaining and sustaining success in any business, regardless of the success measures applied.

“Stakeholder theory has been intimately connected to the idea of strategy from the earliest days, [and] its origins and early development were clearly aimed at making business policy and strategy more effective” (Freeman, Phillips, & Sisodia, 2020 , p. 214). Observations of value creation in the business world have had a central role in the development of stakeholder theory. “Every business has always created and sometimes destroyed multiple kinds of value (e.g., financial, intellectual, social, emotional, spiritual, cultural, and ecological) for customers, suppliers, employees, communities, and financiers” (Freeman et al., 2020 , p. 225). The important message is that the stakeholder relationship and its interconnections with other relationships should be the unit of analysis instead of “the most common unit of analysis [which] is the ‘economic transaction,’… [Economic transactions are] ultimately summed to measure business success. But relationships are not the summation of a group of transactions. Focusing on the value created for investors is far too narrow a focus for building a great company” (Freeman et al., 2020 , p. 225). For Harrison and Wicks ( 2013 ), value is perceived broadly as the aggregated utility (economic and non-economic) the focal organization and the stakeholder receive by engaging with each other, and which would not have been received had they not engaged. Here, the term engagement is used rather loosely. It could be that a given focal organization is merely complying with the requirements outlined in a permission granted by a local authority.

Applying a stakeholder perspective to an organization, that is, making strategic decisions and actions based on an understanding of the relationships between the organization and its stakeholders as well as the stakeholders’ characteristics, for example, demands, wishes, contribution potential, legitimacy, power, network, and more, is of major importance for any manager or entrepreneur. This is agreed upon among researchers and practitioners. However, the essentials as well as the implications of applying such a perspective are not clear, as the existing literature is inconclusive. The aim of this article is to help new and seasoned researchers as well as practitioners (such as managers, consultants, and educators) within management by clarifying core concepts and offering propositions relevant for discussions and future research.

This article draws on many contributions within the very big field of stakeholder thinking. Contributions by two authors have, however, had the biggest influence on the article: (a) the Swedish professor Eric Rhenman, who in the 1960s offered a theoretical framework as well as a thorough description of an in-depth case study on stakeholder thinking; and (b) the American professor R. Edward Freeman, who has had a tremendous influence on researchers, educators, consultants, and managers alike through his numerous contributions within the field, including his groundbreaking book Strategic Management: A Stakeholder Approach (Freeman, 1984 ).

Examples to Set the Stage and Establish an Initial Understanding of the Phenomenon

The Textbook Case (based on Eskerod & Jepsen, 2013 ): A printing company entered into a contract with two authors of a well-known and well-esteemed self-published textbook on management. A new printing company had been sought by the authors for several reasons, none of which are relevant for the purpose of this case study. Agreements on specifications, the budget, and deadline were stated in the contract, and everything seemed fine from the perspective of the printing company as well as that of the authors.

Previous editions of the book featured a unique design feature, that is, that the printed book consisted of pages with different colors. The first half of the book was printed on white paper, whereas the second half was printed on yellow paper. This design, which was also intended for this edition, guided readers to hands-on management tools, located in appendices in the second half of the book, that is, on the yellow pages.

Unfortunately, the printing company’s paper supplier could not deliver yellow paper in time. Shortly before the agreed deadline for the book’s delivery, the printing company informed the authors that the book would be delayed due to the lack of yellow paper. As a result, the book was not available for the start of the semester—resulting in many frustrated bookstore sales personnel, professors, and students; less revenue from the book’s sale; and the risk that the book would not be included in book lists in subsequent years.

The authors were very unhappy about the situation. “Had they just contacted us,” they said, “then we would have told them to print the appendices on white paper. To have the textbook delivered in time for the semester start was our highest priority.”

Undertaking a brief case analysis, we see how the printing company failed to apply the stakeholder perspective when an unexpected event outside the company’s control (i.e., the missing yellow paper supply) occurred. The failure had multiple aspects:

When the printing company realized that it could not fulfill the contract, that is, deliver the books on time with the agreed upon specifications (i.e., the yellow paper), it did not inform the stakeholder.

When the printing company was faced with a trade-off decision between time (delivering on time) and specification (delivering the appendices on yellow paper), the company opted for the solution (delaying delivery) that best suited itself (if the alternatives were considered at all), instead of asking the stakeholder about her or his priorities in the trade-off situation.

When the company made the trade-off decision, it did not consider the core interests of the stakeholder’s stakeholders, that is, the bookstores, the professors, and the students. The conclusion is that by not applying the stakeholder perspective, the printing company failed to minimize the negative consequences of the unexpected event for most parties involved. Through actions within its control, the publishing company made the situation worse.

The Employee Participation Case (based on Rhenman, 1968 ): If a company decides to grant employees the right to participate in the management of the company (inspired by the concept “industrial democracy,” which was heavily debated in the 1960s), it may turn out to be more difficult than anticipated. Employees A and B may both agree that participation in management is desirable; however, they may consider quite different courses of action, that is, means, to bring it about. They may also disagree about ideological goals. Employee A may strive for increased productivity (i.e., his ideological goals) through profit-sharing and suggestion schemes (i.e., his preferred means), whereas Employee B may strive for increased security and satisfaction from work (i.e., her ideological goals) through works councils and the right to information (i.e., her preferred means).

Undertaking a brief case analysis, it first becomes clear that individuals and groups within a company, here the employees, should also be considered stakeholders. Second, we see that individuals within a specific stakeholder label, here again the employees, may have different perceptions and preferences, in this case related to the means and goals of a management initiative. This is true even though Employees A and B both appreciate the overall initiative of employee participation in management. This makes us realize that (a) a stakeholder perspective must somehow incorporate the fact that the stakeholders at hand can have different perceptions (wishes, aims, requirements, and expectations), so communication efforts will be needed to make these differences visible and thereby points for discussion; and (b) that a stakeholder label may group together individuals with differing views, as exemplified in this case by Employees A and B, meaning that we need concepts within the theoretical framework to discuss stakeholders at a more granular level.

The Origins of the Stakeholder Perspective

The scandinavian origin.

The first book that explicitly named stakeholders and stakeholder thinking was written by a Swedish business professor, Eric Rhenman, who worked at the Economic Research Institute at the Stockholm School of Economics in Sweden. The book was published in Swedish in 1964 and in English in 1968 : Företagsdemokrati och företagsorganisation (Rhenman, 1964 ) and Industrial Democracy and Industrial Management (Rhenman, 1968 ). Only a year later, Rhenman and Stymne ( 1965 ) published the book Företagsledning i en föränderlig värld (which translates to Corporate Management in a Changing World ). It was published only in Swedish. In 1969 , Rhenman published the book Centrallasarettet: Systemanalys av ett Svenskt Sjukhus about an in-depth single case study of a Swedish hospital (Rhenman, 1969 ). It was published in English with the title Managing the Community Hospital: Systems Analysis of a Swedish Hospital (Rhenman, 1973 ). In 1970 , Rhenman and two colleagues, Strömberg and Westerlund, published the book Conflict and Co-operation in Business Organizations (Rhenman, Strömberg, & Westerlund, 1970 ). A Swedish version had already been published in 1963 , and the inspiration for the book (and maybe also for the other books) came from a series of seminars for business leaders in which real-world management problems were discussed. The seminars took place at the Economic Research Institute at the Stockholm School of Economists, starting in 1959 .

As can be seen from Table 1 , it is worth noticing that of the mentioned books in English, only Industrial Democracy and Industrial Management (Rhenman, 1968 ) explicitly uses the word stakeholders. However, when reading the other books, it becomes quite clear that they are rooted in stakeholder thinking as well. As an example, Rhenman ( 1973 ) states that “the participants in an organization are the individuals and groups that depend on it for the realisation of their personal goals, and on whom the organisation depends for its existence” (p. 13)—and gives reference to Rhenman ( 1968 ). However, Rhenman ( 1968 ) states that “the stakeholders in an organization are the individuals or groups dependent on the company for the realization of their personal goals and on whom the company is dependent for its existence” (p. 25). Due to the similarities of the two definitions, we clearly see that Rhenman is writing about the same phenomenon in both books, even though the nomenclature changes from stakeholders in Rhenman ( 1968 ) to participants in Rhenman ( 1973 ). Additional evidence supports this argument; a visual representation of Rhenman’s stakeholder theory—in some publications called “Rhenman’s Rose” (Andersen, 2008 )—appears alongside the definitions mentioned previously in both books. In Rhenman ( 1968 ), The Company is placed in the rose’s middlle, and the rose petals consist of Employees, Management, Local authorities, Owners, Customers, The State, and Suppliers (p. 25). In Rhenman ( 1973 ), Hospital is placed in the rose’s middle, and the rose petals consist of Personnel, Hospital management, County authorities, Patients, State and local government, and Suppliers (p. 13). The application of the same visual representation, that is, the rose, strongly suggests that both books are rooted in a stakeholder theory mindset.

The following citation from Rhenman et al. ( 1970 ), begun in 1962 , illustrates how deeply rooted his approach to organizations and business was in stakeholder thinking:

The complex interplay between individuals and task in the “organized” business enterprise has long been a subject of great interest to practising managers and organization theorists… . management of a business enterprise may—or must—[on top of economic objectives, long-term profitability, adequate liquid assets and the economic survival of the enterprise] also have the following goals: to provide work in forms acceptable to the state and the employees and to offer methods and types of work which permit the employee to develop his capacity and ability. The enterprise must also try to play its part in public life. In other words, it is a social institution with a duty to fulfill the various expectations of the community… . [O]thers besides management have goals related to the coordination of resources. All the people working in the enterprise or with an interest vested in it, have goals for their own participation in the coordination of resources. It is obvious that all these many objectives will conflict with one another and, for the good of the enterprise as a whole it will be necessary to find compromise goals to satisfy the special objectives of management, interested parties and employees. (Rhenman et al., 1970 , pp. 1–3).

Table 1 provides an overview of Rhenman’s earliest books.

Table 1. Rhenman’s Books on Stakeholder Thinking (Chronological—Swedish Version)

As mentioned previously, the first text (based on the Swedish version chronology) on stakeholder thinking was initiated by seminars with business managers that started in 1959 . The book that explicitly mentions stakeholders, that is, Industrial Democracy and Industrial Management (Rhenman, 1964 , 1968 ), was begun in 1963 , when the Swedish Federation of Employers asked Rhenman and colleagues to develop a proposal for a conceptual and theoretical framework on industrial democracy. The aim was (among other things) to determine the effects of changing a company’s decision structure so that it welcomed employee participation in decision-making. Furthermore, the research aimed to identify the problems—or we can say challenges—of industrial democracy, as well as to figure out where relevant conflicts could be resolved, for example, within the company or on the labor market. The business environment in Scandinavia was at that time characterized by private enterprises, powerful unions, and extensive use of advisory councils, and this may have been a good fertilizer for stakeholder thinking, among managers as well as academics.

According to Rhenman ( 1968 ), the two goals of industrial democracy were (a) to increase productivity, and (b) to balance various interests within the company. The task of Rhenman and his colleagues was to trace the relation between these goals and various means.

The growing interest in industrial democracy in the early 1960s grew out of experiments initiated in various countries during t World War II and in the immediate post-war period. Wartime productivity councils were established in England (they were later replaced by various types of works councils); joint consultation committees were introduced in Sweden in 1946 ; the German so-called Mitbestimmung was introduced in the steel and coal industry in 1951 and in other industries (in a modified form) in 1952 ; workers councils were set up in Yugoslavia in 1951 ; and various attempts to introduce profit-sharing were undertaken in the United States, England, and other countries (Rhenman, 1968 ).

All of these initiatives matured in the economic, political, and social climate of the post-war period until a point when it seemed relevant to start discussing industrial democracy in more detail, particularly in England and Scandinavia, where negotiation rather than legislation was already the preferred method for solving industrial conflicts and related problems.

In the early 1960s, a search began for new ways to increase productivity as well as to raise the standard of living. There was an increasing awareness that workers (including the growing number of white-collar workers) should demonstrate willingness for cooperation in order for improvements in efficiency to materialize. In addition, technological and economic progress put new demands as well as new opportunities on company management and administration. Rhenman ( 1968 ) mentions three assumptions underlying the rationale of implementing industrial democracy:

if democratic measures are implemented, it will arouse the employee’s interest and cooperation;

if employees have a greater part in running the business, it will be easier to tap their resources of experience, knowledge and ideas; and

the positive effects of industrial democracy (mentioned in the two assumptions above) will in the long run provide the employees with greater opportunities for personal development and education. (p. 5)

All three assumptions relate implicitly to both (a) the concept of stakeholders and (b) a stakeholder perspective on running a business: employees have resources in terms of experience, knowledge, and ideas; their interest and cooperation can be enhanced; and if they have more involvement in running the business, the business will more easily tap these resources. Engaging with the employees creates value for the company (implicitly stated) as well as for the employees (in terms of greater opportunities for personal development and education).

Implementation of democratic measures within companies can be seen as one means to enhance value creation for both parties, and these are the means with which Rhenman ( 1964 , 1968 ) is concerned. However, we feel safe to say that the underlying logic of Rhenman’s argumentation is also relevant for other means a company can employ to enhance their employees’ (as well as other stakeholders’) interest, cooperation, and “part-taking” in the business.

As mentioned, Rhenman ( 1968 ) defines stakeholders as “individuals or groups dependent on the company for the realization of their personal goals and on whom the company is dependent for its existence” (p. 25). Rhenman ( 1968 ) differentiates between “chief stakeholders” and other stakeholders. The former category consists of the customers, the shareholders, and the employees, whereas the latter consists of the state, the local authorities, the suppliers, as well as other individuals or groups that, in Rhenman’s own words, “at times [can] be the source of pressing or awkward demands” (Rhenman, 1968 , p. ii). In other parts of the book (Rhenman, 1968 ), he adds to the list by also mentioning creditors, managers, the local community, and the society as a whole. Even if we just stick narrowly to the “chief stakeholders,” that is, the customers, the shareholders, and the employees, their interests will almost certainly clash, according to Rhenman ( 1968 ).

Rhenman ( 1968 ) states that the interaction between the stakeholders and the company is characterized by the fact that the stakeholders and the company have claims on each other. The claims can be economic, for example, employees expecting wages, creditors and owners expecting interest and dividends, and suppliers expecting payment; or non-economic, for example, influence through joint decision-making. The goals and the needs of the stakeholders govern such claims.

Rhenman ( 1968 ) emphasizes that, due to the fact that most stakeholders are voluntary members of the organization, they can decide to take actions to withdraw from the relationship, for example, employees leaving the company to take other positions, investors transferring their investments to other companies, customers and suppliers transferring their business elsewhere, and the community removing its support.

The decisions and actions of the stakeholders will be based on the expectations they form (based on their conceptions of the company’s goals and plans and of the likelihood of their claims being fulfilled), the urgency of their claims, as well as their knowledge of alternative ways to fulfill those claims. “Stakeholders who wish to exert influence on the business leader have many sanctions at their disposal other than a refusal to give the company their support. For example, employees can strike; politicians can threaten restrictive measures; or several groups can ally themselves to assert their claims. Furthermore, all categories—customers, employees and society—have come to rely increasingly on the social pressure of public opinion” (Rhenman, 1968 , p. 27).

Rhenman ( 1968 ) states that even though management of a company can be regarded as a stakeholder, this group has the responsibility to act as a mediator that resolves conflicts between the stakeholders and, when necessary, decides which claims to satisfy. According to Rhenman ( 1968 ), “management is usually the group most inclined to identify itself with the organization and to fight for its survival, expansion and future security” (p. 26). The author points out that management often has very little freedom of action when it comes to formulation of goals, norms, and plans, as it “cannot realize its own goals without taking into consideration the claims of the many other stakeholders” (Rhenman, 1968 , p. 26).

When discussing the dependence management has on the company’s stakeholders, Rhenman ( 1968 ) points to illustrative studies prior to his own work by Selznick ( 1949 ), Höglund ( 1953 ), and Brown ( 1960 ). Further, he states that he himself was particularly influenced by Chester Barnard, Herbert Simon, and Philip Sleznick (Rhenman, 1968 ).

In sum, we can conclude that Rhenman ( 1968 ) sees employees and managers as two particularly important stakeholders. Characteristically, a manager both represents the company and pursues personal interests.

Rhenman and his colleagues undertook an in-depth case study of a Swedish hospital, starting in February 1965 (Rhenman, 1969 , 1973 ). Rhenman ( 1973 ) considered the case study as pioneer work and saw his contribution as “to suggest languages … which can be used to describe important sub-systems of an organization in great detail” (Rhenman, 1973 , p. xviii).

The researchers perceived the hospital as an open, controlled production system, and they selected stakeholder relationships for study on the basis of which ones they thought were the most important relationships in relation to the hospital’s production. They analyzed the stakeholders’ contributions to the operation of the hospital and the inducements the stakeholders received in return, as well as incentives offered in the form of possibilities for extra inducements for increased contributions. On the basis of the hospital’s annual report and other available documents, a preliminary overview of the contribution–inducement balance was produced. For the analysis, the researchers tried to classify the identified stakeholders into groups consisting of those who made more or less similar contributions and received similar inducements. This made the researchers differentiate, for example, the stakeholder “personnel” into department chiefs, junior doctors, nurses and midwifes, office staff, maintenance staff, and more. Furthermore, they analyzed the stakeholders’ relative power and internal relations as well as the institutions the hospital used to resolve conflicts with the stakeholders (Rhenman, 1973 ).

Rhenman ( 1973 ) gives a very interesting contribution to stakeholder research when he states that “measurement of results is aimed primarily at evaluating whether the hospital has been able to maintain good relations with its various participants [i.e., stakeholders] … [and] relations with a [stakeholder] are a measure of the [stakeholder’s] willingness to continue to associate with the hospital” (p. 16). He points to various ways in which poor relationships, anchored in dissatisfaction, may manifest: patients can complain, even via the press; personnel can be disloyal or have a high frequency of absenteeism; suppliers can be unwilling to make quick deliveries or offers; or the participants, that is, the stakeholders, can begin to desert the hospital, that is, withdraw.

Rhenman ( 1973 ) states that

relations between an organization and its participants [i.e., stakeholders] usually depend on the way in which the inducements received by the [stakeholders] are related to their demands and expectations. Since most organizations have a scarcity of such inducement, some symptoms of poor relations are a normal phenomenon. An organization seldom has the ability to satisfy all its participants. This means that only the most serious symptoms of poor relations are perceived by the management as alarming. (p. 16)

It is worth noting that Freeman et al. ( 2010 ) point to Simon ( 1947 ) as the one behind the inducement–contribution model, as he identifies customers, employees, suppliers, and entrepreneurs as relevant organizational participants. Simon points back to Barnard ( 1938 ) when it comes to the executive’s role, which implies that Chester Barnard, an American business executive, public administrator, and author of the landmark book The Functions of the Executive (Barnard, 1938 ), is a primary figure in both the American and Scandinavian origins of stakeholder theory. This is also the opinion of Freeman et al. ( 2010 ), as they state, “Barnard … articulates the problems of value creation and trade, the ethics of capitalism, and managerial mindsets. In our view it is really Barnard who set the stage for the development of modern stakeholder theory” (p. 50).

Rhenman ( 1973 ) is focusing on the organization’s ability to gather and process contributions (which he calls internal effectiveness) as well as on the expenditures to secure these contributions (which he calls external effectiveness). He points to two factors influencing the scarcity of inducements the management has at its disposal. First of all, the supply of inducements depends on the way in which the organization is run. The more inducements produced per given contribution, the more inducements there will be altogether. Second, “the more … contributions … an organization can obtain from its [stakeholders] for a given quantity of inducements, without deterioration of relations, the less scarce the inducements will be” (p. 17).

Rhenman ( 1973 ) points to consultation and negotiation as institutions used by the organization to establish working relations with these stakeholders in order to resolve potential conflicts. In addition, “the hospital can use the market as the most important institution for resolving conflicts in relation to its suppliers and personnel” (p. 50). Rhenman ( 1973 ) emphasizes the importance of defining the range and boundaries of the organization to be studied. In the hospital case study, the researchers have chosen to define the range of the hospital on the basis of its formal management structure. In sum, Rhenman ( 1973 ) provides a thorough template for conducting an in-depth case study as well as how to apply and study stakeholder thinking in business and management.

According to Näsi ( 1995a ), the stakeholder approach, proposed by Rhenman ( 1964 ) and Rhenman and Stymne ( 1965 ), became the dominant paradigm in Europe, especially in Scandinavia and Finland, in management teaching at universities. It was also frequently used as a framework in academic research and for practical company planning. The authors’ (Rhenman, 1964 ; Rhenman & Stymne, 1965 ) main contribution, according to Näsi ( 1995b ), was to offer a theory of the firm. This dominant position was maintained until the beginning of the 1980s, after which the theory remained one theory among others (Näsi, 1995a ). Professor Rhenman passed away in 1993 (SIAR, n.d. ); however, his legacy has been kept alive by the Scandinavian Institutes for Administrative Research (SIAR) as well as by researchers, managers, educators, and consultants around the globe.

The American Origin

The interest in stakeholder thinking in the United States was sparked by the publication in 1984 of the book Strategic Management: A Stakeholder Approach by R. Edward Freeman, who was a professor at the University of Minnesota. The book (Freeman, 1984 ) “was written as a textbook for business policy and strategy courses … [with] the explicitly normative idea of helping decision makers make better decisions” (Freeman et al., 2020 , p. 215). The core suggestion in the book is to apply a stakeholder framework within strategic management as an alternative to the existing way of thinking about strategic management.

The book was very well received and can be seen as the starting point for a massive interest in the stakeholder concept around the globe, and it has kept its status as “the” reference book ever since. The interest has been so significant that some authors (Friedman & Miles, 2006 ) even refer to the early uses of the stakeholder concept “pre-Freeman, 1984 .”

A book by Freeman, Harrison, Wicks, Parmar, and De Colle ( 2010 ) offers a personal story of how Freeman got into the field. In his early years, Freeman, who had studied philosophy and mathematics, worked as a junior researcher at the Wharton School at the University of Pennsylvania. He first worked on projects conducted by the Busch Center, a group chaired by Russell L. Ackoff, who is acknowledged for his pioneering work in operations research and systems theory. A few months later, he was transferred to a newly established group, the Wharton Applied Research Center, which was chaired by Janes R. Emshoff, one of Ackoff’s former students, and organized like a consultancy, with projects and development areas. Ackoff had already worked with stakeholder thinking himself, drawing on systems theory, in his book Redesigning the Future (Ackoff, 1974 ) (more description is offered later in this section). Freeman took part in a seminar on stakeholder thinking and was very inspired by listening to the seniors’ discussions. Emshoff, who had extensive experience as a management consultant, encouraged Freeman to work on his various ideas, and together they published some of the first texts on stakeholder management (i.e., Emshoff & Freeman, 1978 , 1979 ). The Wharton School had already begun a “stakeholder project” in its Applied Research Center in 1977 ; it applied an action research model to generate stakeholder theory from real cases (Freeman & Reed, 1983 ). The researchers’ conceptual point of departure was the Stanford Research Institute (SRI)’s definition from 1963 of stakeholders as “those groups without whose support the organization would cease to exist” (SRI, cited in Freeman, 1984 , p. 31).

Even though many acknowledge Freeman as the founder of stakeholder management theory (and he certainly has had a tremendous influence), he gives credit to a number of other researchers for stakeholder thinking. He initially traced the stakeholder concept back to 1963 , when researchers in an internal memorandum at the SRI defined stakeholders, as cited in Freeman ( 1984 ). Further, Barnard ( 1938 ), Abrams ( 1954 ), Dill ( 1958 ), March and Simon ( 1958 ), Cyert and March ( 1963 ), Ansoff ( 1965 ), Thompson ( 1967 ), and Ackoff ( 1974 ) are among those who have given the main impulses to stakeholder thinking (Freeman, 1984 ). Freeman et al. ( 2010 ) point also to Mary Parker Follet as an important early contributor. Her contributions are clearly described by Schilling ( 2000 ).

In his book Corporate Strategy: An Analytic Approach to Business Policy for Growth and Expansion , Ansoff ( 1965 ) states that “the objectives of the firm should be derived balancing the conflicting claims of the various ‘stakeholders’ in the firm … The firm has a responsibility to all of these and must configure its objectives so as to give each a measure of satisfaction” (referred to in Friedman & Miles, 2006 , p. 5). We see that this is in line with the thoughts offered by Rhenman.

In his book, Freeman ( 1984 ) points to the fields of corporate planning, systems theory, corporate social responsibility, and organization theory (even though not all contributors used the word “stakeholder,” e.g., Pfeffer & Salancik, 1978 , as will be discussed). The benefit of letting stakeholder groups participate actively in decision-making had already been articulated in strategic management literature in the mid-1970s, as Dill ( 1975 ) states:

For a long time, we have assumed that the views and initiative of stakeholders could be dealt with as externalities to the strategic planning and management process; as data to help management shape decisions, or as legal and social constraints to limit them. We have been reluctant, though, to admit the idea that some of these outside stakeholders might seek and earn active participation with management to make decisions. The move today is from stakeholder influence towards stakeholder participation. (Cited in Freeman, 1984 , p. 38)

Two American researchers who have had a major influence on the field of project management, William R. King and David I. Cleland, worked in the field of corporate planning during the 1970s. Both had worked for the U.S. Air Force before they joined academia. When King earned a PhD in 1964 in Operations Research, his doctoral supervisor was the previously mentioned contributor to stakeholder thinking, Russell L. Ackoff. In their book Strategic Planning and Policy , King and Cleland ( 1978 ) state that “a firm has responsibilities and moral obligations to a number of claimants, including stockholders, managers, employees, suppliers, distributors, and supporting service organizations such as advertising agencies, various interest groups, public agencies, and the public at large” (referred to in Eskerod, Huemann, & Savage, 2015b ). The authors mention that managerial thinkers such as Churchman ( 1968 ) and McConnell ( 1971 ) believe, like themselves, that the organizational clientele of a company should function as the basic foundation for setting business objectives and strategies. An important contribution of the King and Cleland ( 1978 ) book is that they propose a method for analyzing “‘clientele groups,’ ‘claimants,’ or ‘stakeholders’ of the organization” (p. 149) based on their work in project management. They state that “if the diverse objectives of various claimants are to be considered by the business firm, or any organization, in determining their own objectives, some methodology is essential. Otherwise, consideration of clientele may be reduced to value musings about what they want to get out of us… . We shall present such as a methodology” (King & Cleland, 1978 , p. 149).

In the same year as King and Cleland published their book ( 1978 ), the American researchers Jeffrey Pfeffer and Gerald R. Salancik published The External Control of Organizations: A Resource Dependence Perspective . Pfeffer and Salancik ( 1978 ) were concerned by the extent to which organizations were dependent upon external constraints—and aimed to contribute to the field by pointing out ways of designing and managing organizations to decrease their dependency on external constraints. In addition, another aim was to explain how external resources affect executives’ behavior, based on the fact that any organization needs to procure resources (Pfeffer & Salancik, 1978 ).

Comparing the two 1978 books, it becomes clear that Pfeffer and Salancik ( 1978 ) focus on stakeholders possessing resources, which is in line with the SRI’s stakeholder definition as “those groups without whose support the organization would cease to exist” (Freeman, 1984 , p. 31), whereas King and Cleland ( 1978 ) focus on the company’s moral obligations to fulfill various stakeholder groups’ claims.

Russel L. Ackoff (who studied corporate planning, among other things; see, e.g., Ackoff, 1970 ) made an important contribution to stakeholder thinking by suggesting that stakeholders should be seen as elements of a system (Ackoff, 1974 ). He proposed a method for doing stakeholder analyses of organizational systems. Furthermore, he stated that system-wide problem-solving requires that stakeholders participate. He therefore also offered a method for including stakeholder groups in analysis and problem-solving, which he illustrated with case studies on designing large-scale projects (Ackoff, 1974 ). Freeman et al. ( 2020 ) point to “early applications by Ackoff ( 1974 , 1981 ) aimed at assisting a Mexican brewer in understanding the importance of government in their business model” (p. 214–215). While keeping previous contributions to stakeholder thinking in mind, it was Freeman’s book ( 1984 ) that constituted the breakthrough of the stakeholder approach.

Another American professor, Archie Carroll ( 1989 ), connected the stakeholder approach to business and society—and thereby the ground was fertile for discussing value issues, ethics, and social responsibility for companies. These are all recurring topics in stakeholder thinking.

In line with Rhenman ( 1964 / 1968 ) and Rhenman and Stymne ( 1965 ), Freeman ( 1984 ) aimed to discuss a theory of the firm. In his book, Freeman ( 1984 ) proposed a Stakeholder View of the Firm. This view was meant to replace the two dominant views: the Production View of the Firm and the Managerial View of the Firm. A manager applying the Production View of the Firm focuses on efforts to procure resources from suppliers, efforts to turn the resources into projects, and efforts to sell the products to customers. The narrow focus on satisfying suppliers and customers was sufficient before the 19th century , as most companies were small, owner-entrepreneur founded entities with the owner and her or his family members as the only workers. With the arrival of the Industrial Revolution, the business environment became characterized by new production processes, adoption of new technology, rapid urbanization, and significant investments in production facilities and infrastructure. Companies grew bigger, and the founder(s) and their family members were no longer sufficient to staff a workforce or even the managerial positions of these larger enterprises. With hired managers as well as non-family workers, the managerial task expanded to include concerns of the owners and the employees. Therefore, the Production View of the Firm was replaced with the Managerial View of the Firm (Freeman, 1984 ).

In mature and post-industrial societies, democratic developments allowed for more individuals and groups to voice their opinion(s), for example, governmental authorities, unions, consumer advocates, competitors, environmentalists, special interest groups, and the media (Freeman, 1984 ). Therefore, a Managerial View of the Firm, according to Freeman ( 1984 ), was no longer sufficient for business success. Instead, Freeman ( 1984 ) suggested managers and directors apply a Stakeholder View of the Firm when formulating corporate objectives and consider “any group or individual who can affect or is affected by the achievement of the firm’s objectives” (p. 25). This view entails an integration of the understanding of the needs and concerns of stakeholders in the corporate objectives as a prerequisite for ensuring the stakeholders’ support for the company’s current operations and future survival. At the same time, Freeman ( 1984 ) argues that stakeholders that are affected by the firm’s strategies have a legitimate right to have their interests considered. We see that these thoughts are very much similar to Rhenman’s (presented in the section “ The Scandinavian Origin ”), so both the Scandinavian and the American origins of stakeholder thinking have the same line of reasoning.

Stakeholder Thinking Post-Freeman (1984)

Edward Freeman has been a major contributor to the field, and he has published (alone and with colleagues) many works in which he clarifies and adds to the stakeholder framework offered in his seminal 1984 book. These later works also point to, in his opinion, misunderstandings as well as discussions that have gone off track in the stakeholder theory discourse (e.g., Freeman et al., 2020 ). Four good reference books to understand the current stand of stakeholder thinking are Stakeholder Theory: Concepts and Strategies (Freeman, Harrison, & Zyglidopoulos, 2018 ), Stakeholders: Theory and Practice (Friedman & Miles, 2006 ), Stakeholder Theory: The State of the Art (Freeman et al., 2010 ), and The Cambridge Handbook of Stakeholder Theory (Harrison, Barney, Freeman, & Phillips, 2019 ), as they give an overview of the field; present the core concepts in a very clear way (Freeman et al., 2018 ); discuss foundations for stakeholder thinking, for example, liberal pragmatism (pluralism) as an underlying philosophy (Friedman & Miles, 2006 , referring to Freeman, 1994 ); point to application areas, for example, strategic management, finance, accounting, and marketing (Freeman et al., 2010 ); and relate stakeholder theory to (among other topics) society (Harrison et al., 2019 ).

The stakeholder field is characterized by the fact that not much consensus exists. Just looking at the definition of stakeholders, Miles ( 2012 ) identifies hundreds of different definitions, ranging from narrow to wide (Freeman & Reed, 1983 ). An example of a narrow definition of stakeholders is “any identifiable group or individual on which the organization is dependent for its continual survival” (Freeman & Reed, 1983 , p. 91), whereas the widest definition (far beyond anybody else), according to Friedman and Miles ( 2006 ), is offered by Starik ( 1994 ), who suggests stakeholders are “any naturally occurring entity which affects or is affected by organizational performance” (p. 90), including animals, plants, rocks, water, ecosystems, the Sun–Earth system, and the cosmos. While this definition is unusually broad, it has become more and more common to propose stakeholder status for the natural environment (see, e.g., Driscoll & Starik, 2004 ).

Chronologically, stakeholder thinking “entered scholarly discussion with full force only in the 1990s” (Näsi, 1995b , p. 21). This is documented by the content of most journals in the field of management and ethics from the time, especially the Academy of Management Review (AMR), as well as by proceedings from management and ethics conferences around the world. Moreover, a number of special conferences, seminars, and other academic events started to appear. Among these were:

Reflections on Stakeholder Theory, mini-conferences in Toronto, Canada, 1993 ;

Understanding Stakeholder Thinking, symposium in Jyväskylä, Finland, 1994 ;

Stakeholder mini-conference in Tampere, Finland, 2008 ;

Stakeholders, Resources & Value Creation, EISAM 1st Interdisciplinary Conference in Barcelona, Spain, 2011 .

Reviewing the various books, articles, and conference papers published by many authors since 1984 , it appears that the stakeholder framework is perceived in the same way around the globe, implying that it is not meaningful to differentiate between a Scandinavian/European approach and an American approach. Instead, a differentiation can be made between scholars within strategic management and scholars within ethics. Roughly speaking, the former are focused on the purposeful, strategic interactions with stakeholders in order to enhance the achievement of an organization’s goals, whereas the latter are focused on fair treatment and the legitimacy of all stakeholders, regardless of their power or other characteristics.

An important conceptual contribution to strategic management thinking is offered by Savage, Nix, Whithead, and Blair ( 1991 ), who give suggestions for strategies to assess and manage organizational stakeholders. The authors (building on Freeman, 1984 , and implicitly also on Rhenman, 1968 ) emphasize that stakeholders have the potential to help or harm an organization by providing or withholding contributions. The potential is determined by the stakeholder’s capacity and opportunity to contribute to or threaten the organization (Savage et al., 1991 ). The authors therefore suggest that management continuously assesses each stakeholder’s capacity, opportunity, and willingness to help or harm the organization. Based on the assessment, management should choose strategies to deal with the various stakeholders and, if necessary, prioritize among them. It is important to notice that the assessment and prioritization should not be done once and for all, but should be issue-based (Savage et al., 1991 , building on Freeman, 1984 ).

Hill and Jones ( 1992 ) suggest the application of agency theory within stakeholder thinking. They employ the idea of the firm as a nexus of implicit and explicit contracts between stakeholders and managers—and with the managers as the central node, “where managers have the responsibility to reconcile divergent interests by making strategic decisions and allocate strategic resources in a manner that is most consistent with the claims of the other stakeholder groups” (Mitchell, Agle, & Wood, 1997 , pp. 870–871, referring to Hill & Jones, 1992 ). In this way, the authors explicitly draw a stakeholder constellation with the firm in the middle, in line with Rhenman’s Rose (see the section “ The Scandinavian Origin ”).

In 1995 , Freeman identified a hidden assumption in most business theories and named it the Separation Thesis. “The discourse of business and the discourse of ethics can be separated so that sentences like, ‘x is a business decision’ have no moral content, and ‘x is a moral decision’ have no business content” (Freeman, 1995 , p. 37). Freeman ( 1995 ) suggests that we (as researchers, managers, educators, and consultants, we add) should give up this separation thesis and acknowledge that “almost every decision that a manager makes has consequences that are at once economic and moral, and that it is not always possible to separate out which is which” (p. 38). Instead of applying the separation thesis, we should find “conceptual mechanisms which do not distinguish clearly between the business and ethical parts of a decision. What we need are concepts and ideas that mix up our understanding of business and our understanding of ethics” (Freeman, 1995 , p. 39).

One way to do this is to understand

value-creation activity as a contractual process about those parties affected … then we can construct a normative core that reflects the liberal notions of autonomy, solidarity, and fairness … The normative core … will capture the idea of fairness if it ensures a basic equality among stakeholders in terms of their moral rights as these are realized in the firm, and if it recognizes that inequalities among stakeholders are justified if they raise the level of the least well-off stakeholder. The liberal idea of autonomy is captured by the realization that each stakeholder must be free to enter agreements that create value for themselves, and solidarity is realized by the recognition of the mutuality of stakeholder interests. (Freeman, 1995 , p. 42)

Subsequently, a ground rule proposed by Freeman is the “Principle of Externalities,” saying that “if a contract between A and B imposes a cost on C, then C has the option to become a party to the contract, and the terms are renegotiated” (Freeman, 1995 , p. 43).

In 1995 , Donaldson and Preston published an article that has since been highly cited. The authors (Donaldson & Preston, 1995 ) point out that basic concepts within the field, that is, stakeholder, stakeholder model, stakeholder management, and stakeholder theory, are explained and used in the literature in very different ways, and that neither this diversity nor its implications are often discussed. The article points to some of the distinctions, problems, and implications related to the stakeholder concept; it also clarifies and justifies the concept’s essential content and significance. The authors conclude that (a) stakeholder theory is managerial, (b) an instrumental assumption (stakeholder management contributes to successful financial performance of the organization) is not a sufficient basis for understanding the theory, and (c) its normative basis is the ultimate justification for the theory. Referring to the normative basis, Donaldson and Preston ( 1995 ) define stakeholders as “persons or groups with legitimate interests in procedural and/or substantive aspects of corporate activity. [They] are identified by their interests in the corporation, whether the corporation has any corresponding functional interest in them [or not]” (p. 67, boldfaced in the original text). Donaldson and Preston ( 1995 ) suggest that a modern and pluralistic understanding of the so-called theory of property rights, as opposed to a firm-as-a-set-of contracts (Evan & Freeman, 1988 ), is meaningful for understanding the normative basis for stakeholder theory. A property consists of a bundle of rights, and those of the landowner are not unrestricted. He or she has to stick to and consider human rights and other possible restrictions against harmful use. The landowner needs to protect the interests of others including the broader society. Theories of distributive justice are relevant.

In 1997 , Mitchell et al. published an article that became one of the most cited in the field of stakeholder thinking. Based on a discussion of broad versus narrow stakeholder definitions (originally proposed by Freeman & Reed, 1983 ), the authors (Mitchell et al., 1997 , pointing to Freeman, 1994 ) point to the need for helping managers figure out how to identify and respond effectively to stakeholders instead of being paralyzed by the bewildering complexity of a broad definition. Their contribution is a stakeholder typology to guide managers on how to identify and decide on “who and what really counts” (Mitchell et al., 1997 , p. 853, referring to the expression’s origin in Freeman, 1994 ) when it comes to managerial attention. The core idea is to systematically evaluate actual and potential stakeholder–manager relationships in the absence or presence of three attributes, that is, the stakeholder’s power, the stakeholder’s legitimacy, and the urgency of the stakeholder’s claim. An individual or a group that scores on all three attributes is a stakeholder with the highest so-called salience and should therefore be given most managerial attention. An individual or group lacking all three attributes is a non-stakeholder. Mitchell et al. ( 1997 ) point out two challenges: (a) that the evaluation is based on the manager’s/managers’ perception of the stakeholders and their attributes, and (b) that stakeholders’ salience is dynamic and will typically change from issue to issue and over time. An implication of the two challenges is that management should be aware that making a stakeholder map can only give static clarity of the perceived stakeholder constellation at a particular point in time. The analysis needs to be repeated, for different issues and at different times, and the scores need to be well argued and supported by data.

In 1997 , Rowley suggested changing the stakeholder constellation from one consisting of dyadic ties between individual stakeholders and a focal organization (as illustrated, e.g., in Freeman ( 1984 ), who considers relationships involving the focal organization; in Rhenman’s Rose; and in Hill and Jones’s ( 1992 ) nexus of contracts image) to one consisting of a network of actors potentially influencing each other. He offers the concept of “stakeholder multiplicity” (Rowley, 1997 ). The idea of mutual influences across the stakeholders was already present in earlier works, including in Rhenman ( 1968 ); however, Rowley ( 1997 ) made an important contribution by explicitly stating that the dual contacts do not exist in a vacuum and that the stakeholders may influence each other significantly, suggesting that social network analysis would be a valuable means to understand the stakeholders and the stakeholder constellation. Many authors followed the network idea, including Rowley and Moldoveanu ( 2003 ), who made an interest- and identity-based model of stakeholder group mobilization, and Savage et al. ( 2010 ), who discussed implications of stakeholder collaboration for stakeholder theory and practice.

In 1999 , the Clarkson Center for Business Ethics proposed seven principles to summarize the essentials of stakeholder management (Donaldson, 2002 ):

Managers should acknowledge and actively monitor the concerns of all legitimate stakeholders, and should take their interests appropriately into account in decision-making and operations.

Managers should listen to and openly communicate with stakeholders about their respective concerns and contributions, and about the risks that they assume because of the involvement with the corporation.

Managers should adopt processes and modes of behavior that are sensitive to the concerns and capabilities of each stakeholder constituency.

Managers should recognize the interdependence of efforts and rewards among stakeholders, and should attempt to achieve a fair distribution of the benefits and burdens of corporate activity among them, taking into account their respective risks and vulnerabilities.

Managers should work cooperatively with other entities, both public and private, to ensure that risks and harms arising from corporate activities are minimized and, when they cannot be avoided, appropriately compensated.

Managers should avoid altogether activities that might jeopardize inalienable human rights (e.g. the right to life) or give rise to risks that, if clearly understood, would be patently unacceptable to relevant stakeholders.

Managers should acknowledge the potential conflicts between (a) their own role as corporate stakeholders; and (b) their legal and moral responsibilities for the interests of stakeholders, and should address such conflicts through open communication, appropriate reporting, and incentive system, and where necessary, third party review. (Appendix: Principles of Stakeholder Management, 2002 , p. 260) The principles can be seen as an answer to Freeman’s ( 1995 ) request to avoid separating business and ethical issues. They also reflect the analogy offered by Donaldson and Preston ( 1995 ) of property rights and their owners’ obligations.

Freeman, Harrison, and Wicks ( 2007 ) published the book Managing for Stakeholders: Survival, Reputation, and Success , in which they differentiate between a “managing stakeholders approach” and a “managing for stakeholders approach.” In a managing stakeholders approach, the individuals undertaking stakeholder management focus on procuring stakeholder contributions needed by the focal organization, whereas stakeholders who do not possess resources needed by the organization, and who may be affected, are nevertheless not considered. All actions are carried out with a self-serving mindset of the focal organization, and ethical treatment in all stakeholder relationships is not part of the agenda. On the contrary, the managing for stakeholders approach allocates rewards including information among a wide range of stakeholders, who are also invited to take part in decision-making. Ethical considerations are also taken into account. “Firms that manage for stakeholders allocate more value than that which is necessary simply to maintain their willful participation in the workings of the firm” (Harrison, Bosse, & Phillips, 2010 , p. 153). In other words, they overinvest in some of the stakeholders (Freeman et al., 2007 ).

In 2009 and 2010 , Bosse, Harrison, and Phillips published two articles that give strong conceptual contributions to the field. In Bosse, Phillips, and Harrison ( 2009 ), the authors discuss reciprocity and perception of fairness as two important concepts to understand the behavior of both the stakeholder and the focal organization. Because the stakeholder and the focal organization are in a reciprocal relationship, future exchanges (e.g., contributions for rewards) are influenced by past ones. The authors argue that if a party receives more than they have expected, then they may offer or contribute more in the next exchange. This creates a positive, upward spiral or “gift exchange.” Conversely, reciprocity can, according to the authors, also lead to a negative, downward spiral. If a party gets less than expected, this may lead to disappointment and a type of “punishment” in return, in turn disappointing the first party. This initiates the downward spiral that deteriorates the relationship, as each party receives less and less. According to Bosse et al. ( 2009 ), the exchange can also relate to information exchange. This leads to their other important concept, the perception of fairness. This concept concerns three dimensions: (a) distributional fairness, (b) procedural fairness, and (c) interactional fairness. The authors’ message is that stakeholders are willing to settle for rewards that are “good enough” instead of pursuing their maximal self-interests if they feel that (a) the sum of rewards offered by the focal organization is distributed among the stakeholders fairly, (b) procedures (e.g., on decision-making or knowledge sharing) take place fairly, and (c) the interactions are undertaken fairly, for example, respectfully. All three dimensions must be deemed fair in order for the stakeholder to perceive fairness in the relationship. Both the reciprocity concept and the perception of fairness concept contribute to a nuanced analysis of the relationship between the focal organization and any of its stakeholders.

Harrison et al. ( 2010 ) discuss the “controversy [on] the degree to which firms should allocate firm value to satisfy the needs and demands of a broad group of stakeholders beyond what is necessary to simply maintain their willful participation in the workings in the firm [i.e., applying a managing for stakeholders approach]” (p. 150, referring to Harrison & Freeman, 1999 ; Jensen, 2002 ) and the question posed by Sisodia, Wolfe, and Sheth ( 2003 ), “how is it that these companies can be so generous to everyone who costs them money (customers, employees, suppliers, communities) and still deliver … superior returns to investors?” (p. 17). Harrison et al. ( 2010 ) point to a research gap when they state that “there is not much in the research literature that systematically describes, at the level of a firm’s relationship with a stakeholder, how a particular type of stakeholder treatment leads to competitive advantage” (p. 150). The authors point to trust building as an important but insufficient means to create competitive advantage. Instead, they explain how understanding of the stakeholder-perceived distributional, procedural, and interactional justice (together with the related concepts of salience, reciprocity, and generalized exchange) can “facilitate the acquisition of knowledge about stakeholder utility functions” (p. 151). This implies that a precondition for creating value for the stakeholders is to have nuanced knowledge about what it is that means something of value for them, that is, their utility functions, such as in the examples with the Textbook case and the Employee Participation case presented in the section “ Examples to Set the Stage and Establish an Initial Understanding of the Phenomenon .” The message is that knowing the factors that drive utility for each stakeholder as well as the weighting assigned to these factors can give the focal organization a competitive advantage because the knowledge can be used to fine-tune tactics, resource allocations, and strategies as well as give rise to value-creation opportunities. The authors explicitly mention that their contribution is to strategic management and not corporate social responsibility. Moreover, they limit themselves to focusing on the stakeholder types that are most closely related to the focal organization’s operations or objectives, that is, employees, managers, customers, suppliers, and owners. In addition, it is important to notice that they do not claim that investment in stakeholder relationships will always lead to superior performance, and that it should be acknowledged that overinvestment as well as unwise investment certainly can happen, implying that stakeholder management is a difficult and uncertain process. Harrison et al. ( 2010 ) state that

a firm that manages for stakeholders seeks to identify and understand how the welfare of its stakeholders is affected by the actions it takes. It also seeks to act in a way that demonstrates to stakeholders that it understands and respects how their welfare is affected. Welfare refers to the well-being of an individual or group and is often conceptualized by a utility function… . the relevant “utility function” of a stakeholder specifies that stakeholder’s preferences for different combinations of tangible and intangible outcomes resulting from actions taken by the firm. (p. 156)

Cost, time, and quality are all mentioned as examples of tangible outcomes, whereas examples of intangible outcomes include self-image, fairness, process, and relationships. According to the authors, some of the expected and measurable outcomes from a managing for stakeholders approach include growth, efficiency, and higher levels of innovation.

Freeman et al. ( 2010 ) state that stakeholder theory “is fundamentally a theory about how business works at its best, and how it could work … It is about value creation and trade and how to manage a business effectively. ‘Effective’ can be seen as ‘create as much value as possible’” (p. 9), realizing that the fundamental driver of value is stakeholder relationships. “Stakeholder theory focuses on the jointness of stakeholder interests rather than solely on the trade-offs that sometimes have to be made … [It] solves the value creation question by asking how we could redefine, redescribe, or reinterpret stakeholder interests so that we can figure out a way to satisfy both, or to create more value for both” (Freeman et al., 2010 , p. 15).

Freeman et al. ( 2010 ) state that many stakeholder theorists have focused on the inherent conflict between stakeholder interests instead of focusing on joint stakeholder interests. Ackermann and Eden ( 2011 ) introduce the concept of stakeholder disaggregation, highlighting the notion that subcategories or a segmentation of stakeholder types may be relevant in order to do stakeholder analysis and engagement well, for example, deciding whether to focus on a single customer, segments of customers, or all customers as the unit of analysis.

Sisodia ( 2011 ) discusses a philosophy of doing business, that is, “Conscious Capitalism,” in which (and based on a higher purpose of the company than profit maximization) the relationship to the stakeholders, especially the SPICE stakeholders—society, partners, investors, customers, and employees—is at the center of attention. The underlying idea is that by explicitly managing for the simultaneous benefit of the SPICE stakeholders, the company will experience “far more engaged and fulfilled employees, loyal and trusting customers, innovative and profitable suppliers, thriving and environmentally healthy communities, and more” on top of financial wealth (p. 99). Enduring, endearing, self-organizing, self-motivating, and self-managing organizations are created due to extraordinary levels of employee (and stakeholder in general, we may add) engagement based on alignment of personal passions and corporate purpose. Building on Gupta ( 2011 ), this can be seen as a result of the focal organization applying a relational perspective to their stakeholder relationships in opposition to a transactional perspective. Applying a relational perspective in its pure form to the stakeholder relationships will mean to “treasure a harmonious maintenance of existing social relations above all else” (Gupta, 2011 , p. 20) and consistently search for win–win situations instead of trade-offs. This is in line with the managing for stakeholders approach (Freeman et al., 2007 ); however, it broadens the perspective, as it not only focuses on the focal organization’s point of view as the approach does, that is, how to manage, but also sees it from the stakeholders’ point of view, that is, that they will be looking for ways to continue the organization–stakeholder relationship by all possible means. This is the exact opposite of applying a transactional perspective, as this “operates on the premise that each transaction is complete in itself and that interacting parties [i.e., the stakeholders] make no assumptions about the continuity of the relationship beyond the focal transaction” (Gupta, 2011 , p. 20). Realizing that both perspectives in their pure form have major weaknesses (the relational perspective may foster a pathological situation and suboptimal lock-ins, whereas the transactional perspective may imply very high transaction costs, complex contracts, and no investment in future-oriented assets), Gupta ( 2011 ) points to the benefit of integrating the two perspectives. His own suggestion would be to focus on choices by the focal actor related to the three following dimensions: relationships, contexts, and time.

Freeman et al. ( 2020 ) proposes that stakeholder theory should concern value creation (economic value as well as other values). To emphasize this, they point out that they are dealing with a strand of the stakeholder theory that they have called “Value Creation Stakeholder Theory.” Where Freeman et al. ( 2010 ) use the formulation “a theory about how value gets created” (p. 14), Freeman et al. ( 2020 ) explicitly point to the managerial perspective by stating that “stakeholder theory is about ‘knowing how’ to engage stakeholders and create value for them” (p. 5). (Notice that “knowing how” instead of “knowing that” is also emphasized in Freeman et al., 2010 ). The authors (Freeman et al., 2020 ) emphasize the importance of seeing the business as an interconnected and interdependent system, where all stakeholders contribute in order to flourish collectively, and where each stakeholder must also benefit from the system in order to continue to flourish. All the components in the system as well as their interactions and interdependencies should be considered, particularly for its long-run viability. In other words, adopting a systems perspective (Kast & Rosenzweig, 1972 ; Rousseau, 1979 ) and acknowledging that a broad, holistic perspective on business instead of a narrow, reductionist one is needed (Freeman et al., 2020 ).

According to Freeman and colleagues ( 2020 ), 21st-century executives already understand that “having shared values and shared purpose, a long-term orientation, consciously building trust and fostering agility in the system lead to greater value creation. It is not stakeholders versus shareholders, or economic versus social value. In today’s business world, ‘and’ is the most important word” (Freeman et al., 2020 , p. 226). The authors illustrate their message by pointing to the difference between a value network (where the participants have a shared purpose that guides them to move forwards together) and a value chain (where the value creation roughly is seen from the shareholders’ perspective and focuses on the linear creation of financial value). The authors point to the “alignment of values, norms and ethics as mechanisms for efficient and effective flourishing within and among organization” (Freeman et al., 2020 , p. 219), while acknowledging that economic relationships will be characterized by both cooperative and competitive elements. Further on, they point to the importance of acknowledging the need for (more) behavioral theory as well as “a more humanistic concept of business as a vehicle for human cooperation to realize outcomes not otherwise attainable” (Freeman et al., 2020 , p. 219) to take the field of stakeholder theory further.

Barney ( 2018 ) takes the discussion in a slightly different direction when he couples the resource‐based theory with a stakeholder perspective. Though he acknowledges that an organization may need resources from a number of internal and external stakeholders in order to generate profit, he points to the fact that a company that is able to assemble co-specialized resource bundles that other companies are unable to assemble will be able to generate more profit than those other companies. Stakeholder(s) who possess resources necessary for this unique resource bundling should be the focus of and given first priority by the focal organization. This is relevant when bargaining both about contributions and about distribution of created value. Therefore, Barney ( 2018 ) addresses the perennial question at the heart of stakeholder theory, that is, “who and what really counts” (Freeman, 1994 , referred to by Mitchell et al., 1997 , p. 853), which is discussed by almost every researcher writing about stakeholder perspective.

In 2019 , researchers pointed to the potentials of considering and developing a behavioral stakeholder theory (Crilly, 2019 ) and a behavioral view on stakeholders (Bundy, 2019 ). Even though references to human nature and micro and behavioral foundations have been mentioned since Rhenman (e.g., Rhenman, 1968 ) and Freeman’s (e.g., Freeman, 1984 ) very early works, it seems that a lot could be done in order to understand stakeholders better, including their perceptions and ways of interpreting their interactions with the focal organization and other stakeholders. Future research could be both conceptual and empirical. Moreover, Nartey ( 2019 ) suggests bringing more contextual richness to new stakeholder research.

Considering the recent focus on value creation for, by, and with stakeholders, Harrison and Wicks ( 2019 ) have identified another important topic: they point to the fact that a focal organization’s actions can be value-destroying for the stakeholder as well as being harmful to the stakeholder either emotionally, economically, or physically. Subsequently, the stakeholder can respond reciprocally to perceived harmful decisions and actions. The authors suggest that

in addition to asking how much value a strategy is likely to produce, decision makers should ask how much value it will destroy (e.g., who the strategy is likely to hurt, and how will it hurt them). Doing so will allow firms to assess the potential costs of a strategy more completely. For example, they can factor in any costs associated with potential legal suits, walkouts, boycotts, or lost business, in addition to considering the less easily quantifiable costs associated with a damaged reputation, reduced motivation and loyalty, and negative reciprocity. (Harrison & Wicks, 2019 , p. 13)

Stakeholder Thinking in Projects and Other Temporary Organizations

The two seminal books presented in this article, Rhenman ( 1968 ) and Freeman ( 1984 ), contribute explicitly to a theory of the firm; however, stakeholder thinking has been part of the project management literature since Cleland ( 1986 ) published an article titled “Project Stakeholder Management.” As previously mentioned, Cleland had proposed a method for analyzing stakeholders (based on his work in project management) in the 1970s in a book within strategic management (King & Cleland, 1978 ). Since the mid-1990s, projects have been conceptualized as temporary organizations (Lundin & Söderholm, 1995 ). This makes it very easy to apply stakeholder thinking to projects (see, e.g., Aaltonen, 2011 ; Eskerod, Hueman, & Savage, 2015b ; Karlsen, 2002 ; Lehtinen & Aaltonen, 2020 ). The implications of applying stakeholder thinking to a temporary organization instead of a permanent organization have been discussed in many publications, for example, Eskerod and Jepsen ( 2013 ) and Huemann, Eskerod, and Ringhofer ( 2016 ). The fact that a project cannot be lifted from the ground without contributions from stakeholders makes many researchers in project stakeholder management explicitly aim to contribute to Freeman et al.’s ( 2010 , 2020 ) call to “know how” to engage stakeholders and create value for them. Eskerod and Jepsen ( 2013 ) use concepts from (consumer) behavior theory to explain and predict stakeholders’ behavior, whereas Huemann et al. ( 2016 ) use systemic constellation methods rooted in family therapy and psychology for stakeholder analysis. More publications, for example, Eskerod and Huemann ( 2014 ) and Eskerod, Hueman, and Savage ( 2015b ), discuss the implications of applying a managing for stakeholders approach. Other recent publications discuss stakeholder value constructs in megaprojects (Eskerod & Ang, 2017 ) and the influence of “shadows of the context” on project stakeholders (Eskerod & Larsen, 2018 ).

Propositions for a Stakeholder Perspective

Based on the text of this article as well as deductions, propositions for a stakeholder perspective are offered in Table 2 . Each proposition can be an object for discussion as well as contribute to research questions for future research efforts.

Table 2. Propositions for a Stakeholder Perspective

Suggestions for future research.

The existing literature on stakeholders, the stakeholder perspective, and stakeholder theory is immense—and may make both young as well as seasoned researchers ask whether there really is more to be done in this field. The answer is yes; however, it could be that future research should be conceived of a little differently, or at least be supplemented by different research approaches. At the moment, the field is conceptually very strong. Even though considerable disagreements exist and are easily identifiable, particularly whether a stakeholder perspective should be seen with ethical lenses, strategic lenses, or both simultaneously (the latter being the case if the researcher or manager acknowledges that there should not be a separation thesis (Freeman, 1995 ), the conceptual path seems well identified. A challenge is, however, that the theoretical framework is rather abstract. Acknowledging it as a “know how” rather than a “know that” discipline (Freeman et al., 2010 , 2018b )—as well as a managerial discipline—it seems that now would be the time to “put meat on the bones.” Rhenman ( 1973 ) accomplished this early on by analyzing a Swedish community hospital from a systems approach, and this application continues today, for example, Aaltonen, Kujala, Havela, and Savage ( 2015 ). This type of less abstract, applied research aligns with Nartey ( 2019 ), who suggests adding more contextual richness in stakeholder research. This could be done by aiming for richer data sets, in-depth case studies, and a narrative research approach. Many topics seem relevant, for example, how to integrate (or we can also say balance) a relational perspective and a transactional perspective in the stakeholder–focal organization relationship, based on the relationships, contexts, and time dimensions suggested by Gupta ( 2011 ). It could also be done by giving focus to the micro foundations of a stakeholder perspective as suggested by Bundy ( 2019 ) and Crilly ( 2019 ), for example, on how to figure out a stakeholder’s utility function, and how to find ways to create value in a system. More research on the combination of behavioral theory and value destruction (Harrison & Wicks, 2019 ) would also be relevant.

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Research: Stakeholder Theory: A Case Study Of Virgin Atlantic And The Covid-19 Bailout

The context of the 2020 Covid-19 pandemic and the economic and reputation crises at Virgin Atlantic Airways accounts for the need to consider multilateral stakeholder relationships in crisis management for long-term sustainability. It is argued that a better comprehension of the dynamics of stakeholder relationships at Virgin Atlantic Airways could have fashioned a more proactive response to the crises. Government officials, civil society and the media condemned Virgin Atlantic Airways and its founder, Richard Branson, for the bailout request form the UK government. It is argued that in its initial response, Virgin Atlantic failed to engage in codetermination with social factors of key stakeholders and therefore failed to recognize the increase in salience of civil society. The ethical rationale of Virgin Atlantic was unintentionally amoral according to the best-case scenario, intentionally amoral according to the average-case scenario and immoral according to the worst-case scenario.

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Dr. Karina Ochis is a Dual PhD / Doctor of Applied Leadership Graduate. She holds the position of Professor Professor of Communication Studies at Monarch. She holds a Master of Arts in Political Marketing from the Rome Business School and a Bachelor of Arts in Politics from The University of London. She also holds a Certificate in Digital Strategy from the Online Marketing Institute in San Francisco. Dr. Ochis is an author, CEO and coach. She has spoken at TEDx, Million Marketing Tour (London � Charlotte � Copenhagen � Kiev), Women Speakers Summit Nigeria, Business Days, Elite Business Woman, The Woman, Romanian Academy of Economic Studies and several others. At present, she is CEO of Ana Karina Luxury Concept and of KO by Karina Ochis in Romania.

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Original research article, stakeholder influence on sustainable supply chain management: a case study of a german apparel frontrunner.

• Chair of Supply Chain Management, Faculty of Business and Economics, University of Kassel, Kassel, Germany

Although interest in green and sustainable supply chains has been growing for over a decade in the academic discourse, the textile industry still embraces numerous examples of non-sustainable behavior (i.e., environmental damage, poor working conditions, or modern slavery). While there is a general agreement that stakeholder pressure can lead to more sustainable SCs, a lot remains for a more differentiated stakeholder perspective in sustainable supply chain management (SSCM). Thus, this study aims for theory elaboration by structuring relationships between SSCM and stakeholder constructs through an exploratory single case study design on the Otto Group, a German apparel frontrunner. It enables an in-depth investigation of the complexity of both stakeholder engagement/relationships and SSCM. As key results, sustainability managers and employees are important facilitators to realize win-win situations. Further, most progress is nowadays made in participating in multi-stakeholder-initiatives (MSI) and with standards to tackle sustainability issues in SCs. Furthermore, this study shows the importance of a shift from the perspective of sustainable products toward sustainable values, and it outlines best practices regarding the integration of stakeholders' expectations in SSCM.

Introduction

Although interest in green and sustainable supply chains has been growing for over a decade in the academic discourse ( Ansari and Kant, 2017 ), the apparel industry embraces numerous examples of non-sustainable behavior. For example, clothing production is associated with myriad environmental damages, such as the contamination of rivers by chemicals used to dye the textiles. Moreover, working conditions, especially in manufacturing countries like China, Bangladesh, or Cambodia, are anything but sustainable – some even speak of modern slavery ( Hasan, 2019 ). Most companies strive to achieve classical business targets rather than a genuine orientation toward sustainability ( Gold and Schleper, 2017 ). Many companies have their own (in contrast to industry-wide) instruments and standards, which are not always applied comprehensively. Although anchoring sustainable and responsible supply chain management (SCM) on a strategic level and in corporate values is considered as essential ( Beske and Seuring, 2014 ), the impact of stakeholders on sustainable supply chains (SCs) should not be underestimated ( Wolf, 2014 ). One example is the Clean Clothes Campaign which advocates for workers' rights and improved working conditions in the international apparel industry and successfully calls for transparency in global SCs ( Robledo and Triebich, 2020 ). Given that stakeholders come from different contexts, they have diverse expectations of a company. In addition to profit-oriented stakeholders, others are also concerned with social or environmental issues and therefore aim for sustainability in SCs. This stakeholder approach can lead to a shift in focus from the single economic view toward a holistic view of the value chain and potentially lead to a more ambitious and sustainable SCM approach (e.g., Gold and Schleper, 2017 ).

As most companies' SCs are very complex and not always clearly transparent, it is challenging to determine which stakeholder has a relevant role and can actively influence the company's approach toward more sustainability ( Fritz et al., 2018 ). While there is a general agreement that stakeholder pressure can lead to more sustainable SCs (e.g., Wolf, 2014 ; Meixell and Luoma, 2015 ), a lot remains for a more differentiated stakeholder perspective in SSCM ( Parmigiani et al., 2011 ; Siems and Seuring, 2021 ).

In many cases, stakeholder groups are described as pressure groups of companies and are thus seen as drivers toward sustainability ( Meixell and Luoma, 2015 ). For example, Meixell and Luoma (2015) investigated stakeholder pressure toward the awareness, adoption, and integration of SSCM owing to a literature review. Fritz et al. (2018) developed a SC oriented iterative process to identify stakeholders in order to understand and address their concerns. This process includes, inter alia, stakeholder's engagement to spot other stakeholders. While apart from stakeholders as drivers or receivers of measures, other roles remain vague, Liu et al. (2018) attempted to explore additional possible stakeholder roles in the SSCM context. According to them, stakeholder groups can also act as facilitators or inspectors and thereby contribute to a more sustainable SC ( Liu et al., 2018 ). Nevertheless, their study results are limited to supplier development which is just one part of SSCM ( Beske and Seuring, 2014 ). In this context, the consideration of further SSCM constructs can be a valuable contribution. However, to the best of our knowledge, no empirical study has analyzed stakeholders in different roles in the context of SSCM. Thus, the following research question can be established:

How are stakeholders and their roles related to SSCM in the apparel industry?

To address this research question, an explorative case study on the textile division of Otto Group was conducted. As a large family-owned company with over 70 years of history they have experienced and initiated a transition toward a more sustainable SC. This transition was triggered by external pressure and stakeholders, but also actively driven by the company itself – not least because of the person at the top of the company. For example, the Otto Group was one of the first companies which introduced a Code of Conduct in Germany and can therefore be classified as a frontrunner ( Otto Group, 2019 ). Further, environmental protection has been anchored as a corporate goal since the 1980's which is why the incorporation of stakeholders along the SC is an essential issue. The Otto Group is also member and co-founder of several alliances and MSIs to implement environmental and social standards for the apparel industry ( Otto Group, 2020 ).

Thus, this research is relevant for the following reasons at least. First, several researchers called for more best practice case studies to learn from commendable companies in order to share SSCM practices (e.g., Silvestre, 2015 , Köksal et al., 2017 ). Second, according to Khurana and Ricchetti (2016) further research is needed to evaluate current developments in SSCM for the apparel industry. In this respect, following similar case study designs, e.g., Brix-Asala et al. (2018) 's study (2018) which analyzed practices in relation to sustainability tensions of the frontrunner Fairphone, this paper aims to contribute by identifying stakeholders in different roles of SSCM.

The following chapter lays the theoretical background using literature on both SSCM in general and on the influence that stakeholders have in this respect in particular in order to create a link between SSCM and stakeholders' contributions to sustainability. Subsequently, the methodology is outlined. Here it should be noted that the results of a case study of a single company cannot, of course, be applied to an entire industry, but it can be advantageous to approach a phenomenon on a small scale in order to then examine it at the next larger level. Therefore, the case study uses mainly publicly available data, which was enriched with primary data, and thus strives for a higher method variety in qualitative research, as demanded by Eisenhardt et al. (2016) and Bansal et al. (2018) . The following chapter shows the results of the analysis from the Otto Group's material and the interview by bringing together the previously theorized concepts of SSCM and stakeholder roles. In the discussion, the significance of the results is highlighted and the extent to which the case study brings value is elaborated. Finally, it will be shown how the results can be integrated into existing (scientific) discourses and where there is a need for further research.

Theoretical Background

Stakeholder and sscm terminology.

The ongoing globalization led to more globalized SCs, which results in sustainability issues beyond national and company boundaries. Manufacturing processes have been relocated to countries with lower labor and environmental standards, and suppliers fulfill these processes in a multi-tier SC ( Khurana and Ricchetti, 2016 ). Thus, the triple bottom line approach (TBL) ( Elkington, 1998 )– aiming to achieve simultaneously social, ecological, and economic business objectives – has become increasing attention. In the same line of argument -i.e., shifting attention toward a more differentiated business perspective – the stakeholder theory emphasizes that despite classical shareholders, other stakeholders, e.g., supplier, employees, or communities along with the SC, also require to be integrated into business decisions. Otherwise, a company may lose the legitimacy to do business. Parmar et al. (2010) define stakeholders as “any group or individual that can affect or be affected by the realization of an organization's purpose.”

Following to Mitchell et al. (1997) , stakeholders can be differentiated by three attributes: power, legitimacy, and urgency. Other studies distinguish stakeholders according to their relationship to a specific company. Therefore, Clarkson (1995) differs between primary and secondary stakeholders. For primary stakeholders, companies themselves “can be defined as a system of primary stakeholder groups, a complex set of relationships between and among interest groups with different rights, objectives, expectations and responsibilities” ( Clarkson, 1995 ). Secondary stakeholder groups can be defined as those who influence or affect a company or are influenced or affected by a company but are not engaged in transactions with the company and are not essential for its survival ( Clarkson, 1995 ).

Seuring and Müller (2008) incorporated those considerations in the SCM context. They defined SSCM as “the management of material, information and capital flows as well as cooperation among companies along the SC while taking goals from all three dimensions of sustainable development, i.e., economic, environmental and social, into account which are derived from customer and stakeholder requirements” ( Seuring and Müller, 2008 ).

In fact, not all sustainability dimensions can be considered equally, as there are different stakeholders (e.g., primary and secondary) with both different sustainability expectations and influence degrees ( Meixell and Luoma, 2015 ).

SSCM and Stakeholder Roles

Research on sustainability in the SSCM context highlights, among other foci, which economic or social goals are triggered by pressures and incentives from external demands such as governments, customers, and other stakeholders ( Seuring and Müller, 2008 ; Köksal et al., 2017 ). In this concern Meixell and Luoma (2015) state to what extent stakeholders can influence sustainability in SCs. They identify a positive correlation between stakeholder pressure in SCM and sustainability awareness, adoption of sustainability goals and/or implementation of sustainability practices.

According to Seuring and Müller (2008) , two different fields require attention to achieve a more sustainable SC: (a) supplier management for risks and performance and (b) SCM for sustainable products. To improve sustainability in SCs and of products, focal firms have to find ways to manage quality and sustainability criteria through the whole SC in order to guarantee a certain sustainability level. Thus, enhancing the SCs overall sustainability performance incorporates the selection of a reduced but reliable supplier base and thus the assessment and (self-) evaluation of their performance ( Siems et al., 2021 ). Implementing environmental and social standards, e.g., SA 8000 or ISO 14001, is a popular way to ensure a minimum performance and to manage risks along with the SC where the suppliers' involvement can facilitate the required exchange of information and coordination ( Hofmann et al., 2014 ; Köksal et al., 2017 ; Yawar and Seuring, 2017 ). In addition to enhanced coordination and communication with suppliers, supplier development and life-cycle assessment of products contribute to further sustainability improvements and facilitate joint (product) developments ( Beske and Seuring, 2014 ; Siems et al., 2021 ). This can ultimately lead to more efficient business operations while realizing win-win scenarios ( Seuring and Müller, 2008 ; Rodríguez et al., 2016 ). Due to complexity, transparency issues, and limited resources, the focal firm has limited access to its suppliers ( Busse et al., 2017 ). Thus, it sometimes faces trade-off decisions because goals of all three sustainability dimensions cannot be achieved simultaneously ( Seuring and Müller, 2008 ; Brix-Asala et al., 2018 ). These trade-off decisions affect the SC performance and require agreeing to the lowest common thread to minimize risks and improve the SCs conditions as much as possible ( Beske and Seuring, 2014 ; Seuring et al., 2019 ). Therefore, they can sometimes not solve an issue despite their willingness to tackle it ( Carter et al., 2015 ).

However, the cooperation with non-traditional SC members such as NGOs, competitors or research institutes, and universities with a broad knowledge about different topics might be a suitable strategy to solve these complex issues ( Rodríguez et al., 2016 ; Roscoe et al., 2020 ; Siems and Seuring, 2021 ). Liu et al. (2018) state that stakeholders can contribute to sustainable SCs as drivers, facilitators or inspectors within the process of supplier development at least. According to their study, drivers could be defined as actors “that provide pressure and/or incentives to initiate SDS [supplier development for sustainability] practices” ( Liu et al., 2018 ). Facilitators provide knowledge and/or resources for practices; and inspectors provide a neutral and scientific ground for SDS practices ( Liu et al., 2018 ). The fact that the role of drivers is mentioned more often in different studies than other roles is an interesting starting point for subsequent research. Other studies e.g., such as Köksal et al. (2017) , mention stakeholders' role as drivers and characterize them as initiating and motivating factors in implementing SSCM practices. According to Siems and Seuring (2021) , stakeholders can be integrated into SSCM practices at the internal and external dimensions of a focal firm to achieve true stakeholder orientation. Furthermore, Busse et al. (2017) illustrate how companies could identify SC sustainability risks with stakeholders' help. To monitor these risks, “gatekeeper instruments” such as Code of Conducts and processes (e.g., supplier selection) are in place, which can influence suppliers' behavior ( Busse et al., 2017 ). Busse et al. (2017) assume that many industries (above all the apparel industry) only have low SC visibility—e.g., not enough information about suppliers—is therefore an interesting field to conduct further research. Consequently, it is crucial to take a look at the apparel industry and identify its nature.Together, these studies indicate the requirement to unravel the various contribution of stakeholders within SSCM.

Table 1 shows the identified deductive constructs of stakeholder roles mentioned in the reviewed literature on SSCM ( Seuring and Müller, 2008 ; e.g., Liu et al., 2018 ; Seuring et al., 2019 ) and illustrates the underlying coding scheme. The table is derived from the SSCM construct of Seuring and Müller (2008) and the stakeholder constructs of Liu et al. (2018) and is furthermore enriched by the aforementioned current debate in SSCM literature.

Table 1 . Overview of the analyzed SSCM and stakeholder constructs.

Methodology

As there is insufficient evidence in previous publications on which stakeholders can influence corporate sustainability efforts and in which way, the Otto Group's SC is examined more closely in order to find out what impact stakeholders have on the implementation of sustainability in this area. However, we do not look at the individual steps of the Otto Group's SC because it is not fundamentally different in comparison to other companies, but rather at the complexity and structure of the SC in general to elaborate existing theory. Thus, the study aimed for theory elaboration by structuring relationships between SSCM and stakeholder constructs through a single exploratory case study design. It enables an in-depth investigation of the complexity of both stakeholder engagement/relationships and SSCM.

According to Stuart et al. (2002) a case study is helpful when the research question asks why or how things happen ( Stuart et al., 2002 ; Saunders et al., 2009 ; Yin, 2018 ). Besides, it looks at a real-world phenomenon, which means that the case's context is crucial and cannot be controlled ( Yin, 2018 ). In this respect, case-based research cures a “weak and limited understanding of the body of knowledge as a whole” ( Stuart et al., 2002 ). Case studies not only serve to capture a phenomenon and develop from their richness of observation, but they also allow to refute or extend existing theories. Since exploratory research seeks to define an identified problem ( Sreejesh et al., 2014 ), this case study aimed to explore stakeholders' influence by bringing together theoretical assumptions of both stakeholder theory and SSCM. As a case study should contain a transparent research process, the suggestions from Stuart et al. (2002) were followed with minor modifications: (1) Development of research instrument, (2) Data gathering, (3) Data analysis, and (4) Dissemination (see Figure 1 ).

Figure 1 . Applied research process (based on Stuart et al., 2002 ).

Development of Research Instrument: A Case Study

The apparel industry is an interesting field to research as it is one of the biggest industries with ~€1.5 trillion annual revenue ( Shahbandeh, 2021 ). As mentioned before, the industry is characterized by the complexity of their SCs and the existence of multiple stakeholders, some of which are loud, others are in the background. Further, it is very susceptible to disruption and often subject to criticism, especially regarding sustainability-related aspects.

The industry's development toward fast response to consumer demands and permanently changing trends ( Christopher et al., 2004 ) has led to lower producing costs resulting in bad environmental and poor labor conditions in SCs in producing countries ( Masson et al., 2007 ). Although some apparel companies have addressed sustainability for many years ( Khurana and Ricchetti, 2016 ), the industry is still known for incidents like Rana Plaza and environmental problems in their factories ( Köksal et al., 2017 ). Therefore, it seems necessary to conduct further research on the factors that could counteract these adverse events and consequences. In this context, it is crucial to consider the social conditions in SCs—especially in upstream tiers—as they have not been sufficiently appreciated in previous research compared to environmental and economic aspects.

SSCM in the apparel industry takes into account both internal company measurements and industry-wide practices for a sustainable value chain. This includes stakeholders who can act as primary and secondary drivers, enablers or barriers; but also technological improvements and cost-driven decisions can influence a company's business decisions ( Köksal et al., 2017 ). Khurana and Ricchetti (2016) describe the integration of SC sustainability into core business practices and the implementation of transparency in SCs as important instruments for more sustainability along the value chain of the apparel industry. The theoretical approaches cited above regarding a higher SC sustainability performance underline that a case study in the apparel industry is an appropriate approach to question theoretical hypotheses and identify challenges and methods for sustainability in SCM.

Regarding responsibility toward suppliers, Awaysheh and Klassen (2010) summarize four dimensions of socially responsible practices: supplier human rights, supplier labor practices, supplier codes of conduct and supplier social audits. In addition, Code of Conducts and Code of Ethics, and third party-audits that monitor compliance with the codes of the firms, can contribute to the implementation of sustainability in SCs ( Köksal et al., 2017 ). By taking into account these lines of argumentation, a case study on the apparel industry might be a suitable approach to question theoretical hypotheses and identify challenges and methods for sustainability in SCM.

With almost 50,000 employees, more than €15.5 billion in revenue, and more than 120 group companies ( Otto Group, 2021 ), the Otto Group is an outstanding example of a company in the apparel sector, primarily because of its long-standing focus on sustainability. The various group companies are linked to a highly complex SC. Against the background of this complexity, it is particularly interesting to identify and analyse the influences of different stakeholders and the mechanisms to manage them better.

As already outlined, the Otto Group's SC with the involved stakeholders as a frontrunner in the apparel industry offers an intriguing framework for this research due to the special conditions in a family-owned business and the company's long-standing sustainability orientation. This setting represents a different case compared to most apparel companies and could lead to a benchmark for the entire industry.

As already mentioned, the Otto Group can be seen as a role model/frontrunner in the apparel industry in terms of sustainability. Since the 1980's, environmental protection was implemented as a company goal. The Otto Group has been involved in the development of worldwide guidelines for social and environmental improvement. In order to increase their sustainable impact and to achieve sustainability goals, the Otto Group enters cooperation with different stakeholders along with the SC ( Otto Group, 2019 ). As a further instrument, the Otto Group uses financial incentives for its chair members with regard to variable remuneration that depends on the extent to which sustainability targets and goals are fulfilled ( CSR in Deutschland, 2014 ).

Beyond its long-term internal engagement on sustainability, the Otto Group is a member or co-founder of several alliances and MSIs to implement environmental and social standards for the apparel industry and in SCs ( Otto Group, 2020 ). The combination of the different alliances and methods to tackle sustainability issues leads to a variety of stakeholder involvement and thus an interesting angle for this case study.

In this respect, this paper does not conduct a multi-case study with the integration of several generic companies, but focuses only on the Otto Group to show what they do as a frontrunner and can thus be understood as a best practice example – as requested e.g., by Silvestre (2015) and Köksal et al. (2017) .

Data Gathering

According to material analysis, the case study was based on primary and secondary data (see Figure 1 ). As a starting point, the website of the Otto Group was scanned to get a first overview regarding the research scope. Two Otto Group annual reports (2018/2019 and 2019/2020) were used as secondary data in order to get an impression on the company's approach to sustainability. Furthermore, two articles about the Otto Group's sustainability strategy with a special focus on marketing opportunities but also the orientation and positioning of the company toward sustainable sourcing were used ( Riekhof, 2013 ; Brock and Streubig, 2014 ). As a final secondary source that should not be forgotten, existing research on SSCM and stakeholder management was included in the analysis.

To validate and complete the first analysis's insights, a semi-structured interview with an SSCM expert from the Otto Group was conducted. A guideline developed by the research team served as the basis for the interview questions. On the one hand, the interview allowed to elaborate on some of the issues that have been identified as of particular interest and, on the other hand, tried to generate information about the existence and importance of stakeholders. The advantage of semi-structured interviews compared to open discussions is that the respondent can answer in their own words and has sufficient time and space. Still, the interviewer ensures that the answers are focused on the relevant topic ( Sreejesh et al., 2014 ). Further, it allows going more into details on questions that appear during the interview and allows to ask further questions ( Saunders et al., 2009 ).

The questions for the interview were chosen based on the underlying theoretical constructs and supplemented during the discussion with further researchers. The interview was conducted in a video conference and by both researchers in order to be able to analyse it as neutral as possible. In addition, the transcription was carried out on the basis of already proven scientific rules by the research team. Internal validity was achieved by offering to return the interview summary to the interviewee and offering his consent.

The combination of both data from the company and external information gained in a direct dialogue results in a more complete picture of the phenomena ( Stuart et al., 2002 ).

Data Analysis

The case study aimed at theory elaboration, which define Fisher and Aguinis (2017 , p. 441) as “the process of conceptualizing and executing empirical research using pre-existing conceptual ideas or a preliminary model as a basis for developing new theoretical insights by contrasting, specifying, or structuring theoretical constructs and relations to account for and explain empirical observations.” The research started with an existing conceptual model; then, data was collected to refine theory and gain new insights (see Figure 1 ). As there is also potential to collect additional data, this method seemed appropriate ( Fisher and Aguinis, 2017 ). Both the interview and the secondary material were analyzed using the qualitative content analysis as it allows to analyse texts and draw conclusions ( Kassarjian, 1977 ). In this analysis, the procedure of structuring was used. The aim is to assess the material based on defined criteria in order to filter out certain aspects ( Mayring, 2015 ). According to Fisher and Aguinis (2017) , the structuring approach is appropriate if the study's primary focus is to improve an existing theory's explanatory and predictive adequacy ( Fisher and Aguinis, 2017 ). Which contents are to be extracted from the material will be developed by theory-guided categories ( Mayring, 2015 ). Therefore, an abductive approach was chosen which allows both the application of an established interpretative rule—which in this case is existing in theory—and the observation of an empirical phenomenon. This results in a re-interpretation of existing theory ( Alvesson and Kärreman, 2007 ). The advantage is that researchers can critically assess alternative ways of framing empirical material.

Therefore, the material to be analyzed was first condensed. As most of the material was published by the company, it is not neutral or scientific and consciously addresses certain aspects, while others are not mentioned. After an initial screening of the material, a first categorization was created based on the screened literature. The first draft of the category system was renewed in a next step by merging and omitting some of the categories according to Seuring and Müller (2008) . According to Gioia et al. (2013) , the reduction of categories helps to make the categories more manageable, so that in a second-order analysis it is easier to assess whether the categories are helpful to answer the research question. This was followed by a coding with the help of the software MAXQDA. In order to achieve as much neutrality as possible, the authors used a double coding by ensuring that two researcher analyzed the material and that only those factors were considered that coincided. Further, the authors see that the existing explanation is incomplete and therefore must be widened to unite stakeholder theory with literature on sustainable SCs.

Dissemination

According to Stuart et al. (2002) a case study must reflect the phenomena they are intended to, and must be repeatable and conclude with the same results. Thus, Table 2 condenses different validity and reliability measurements to disseminate the conducted qualitative research.

Table 2 . Research quality measures.

Within the analyzed material, different stakeholders were identified. These stakeholder groups have one or several stakes in the Otto Group's activities and can influence or were influenced by the Otto Group's actions (see Table 3 ). This fact often results in mutual relationships. Therefore, according to the definition of Parmar et al. (2010) , these stakeholders are relevant for the Otto Group and are listed below in different functions. The distinction of stakeholder groups into primary and secondary stakeholders ( Table 3 ) is based on Busse et al. (2017) .

Table 3 . Inductively identified stakeholders with definitions based on Busse et al. (2017) .

In the next step, the respective actors are assigned to the three roles (drivers, facilitators, and inspectors) according to Liu et al. (2018) that have been extracted through the material analysis. Within the categories, a further distinction is made between primary and secondary stakeholders to illustrate their influence. According to Table 1 , the stakeholders and their roles were then linked to the SSCM categories in terms of their influence on SSCM of the Otto Group. The coding allows categorizing and analyzing stakeholders' influence more precisely by revealing recurring patterns in individual stakeholder roles that relate to and influence sustainability in the Otto Group's SC. The extent to which these groups can affect the Otto Group's operations is outlined in the following chapters using the Otto Group's SSCM in combination with several stakeholder groups or response to pressure from stakeholder groups. Overall, it is a combination of different stakeholder groups that can influence the Otto Group's actions about sustainability in SCs in different ways.

In order to assign the various stakeholder groups to their most frequent roles, MO and customers as primary stakeholders and secondary stakeholders such as NGOs, civil society, and media are identified as drivers (see Tables 3 , 4 ). According to Busse et al. (2017) , drivers are stakeholders that push awareness for sustainability. In line with the arguments of Table 1 , the drivers were analyzed in combination with supplier management for risk and performance. In this regard, the implementation of standards is the most common way of the Otto Group to ensure a minimum SC performance also driven by stakeholder groups ( Beske and Seuring, 2014 ).

Table 4 . Cross-arrangement of SSCM categories and assigned stakeholder roles.

Supplier Management

All analyzed sources describe MO, the chairman of the supervisory board, as a primary driver. As the CEO of the Otto Group, his engagement can be linked to supplier management. Since the 1980s, he has promoted the Otto Group's commitment to sustainability through his position as CEO from 1981 to 2007 by defining environmental protection as a corporate goal in 1986 ( Otto Group, 2019 ). During this time, the Otto Group already implemented and pushed suppliers to incorporate environmental and social standards, e.g., child work restrictions or energy efficiency classes (Interview, 2020). While the implementation of standards is more a minimum requirement nowadays, it was a benchmark and not widely applied in the apparel sector or for large companies in general when the standards were implemented in the Otto Group. Therefore, MO's engagement has to be divided into two different stakeholder roles. The CEO's engagement can be classified as a driver and differs from his actual role, as he can be seen more as an inspector (see section Inspectors).

As a second stakeholder group identified as drivers concerning supplier management, customers play an essential role. In this context, the interviewee and several secondary sources mentioned the great relevance of customers. They do not directly reward positive, sustainable behavior and increasingly buy from such companies, but rather punish non-sustainable activities and then purchase from other companies. This means that any company must constantly be aware of and ensure compliance with specific standards. This expectation, combined with negative differentiation, makes positioning sustainability more difficult since positive differentiation does not have the expected effects on customers. Therefore, the Otto Group would welcome even greater commitment from customers so that a positive dedication to sustainability is also reflected in their purchasing behavior.

Nevertheless, customers in their role as drivers are granted a great deal of power, which, in conjunction with other secondary drivers, can often cause urgency. Urgency is, according to Mitchell et al. (1997) , one of three crucial attributes (power and legitimacy) in order to identify stakeholder's salience. Especially the interaction with NGOs, the media, and the resulting public opinion can ensure that specific trends in sustainability arise, and that unsustainable behavior of companies is avoided and even punished.

Sustainable Performance Relationships

As an essential point for the engagement of MO, the foundations of MO, which cooperate closely with the Otto Group, target, in particular, the upstream stages of the SC and—through cooperation with producers and farmers—attempt to produce more sustainable materials right at the beginning of the value chain. Pagell and Wu (2009) suggested that working with non-traditional SC actors yields the potential to achieve (sustainable) win-win situations by combining efforts and resources. Even though foundations like the “Aid by Trade Foundation” or the “Stiftung 2°” serve as facilitators, the engagement of MO within the company and in combination with his position as founder of the initiatives mentioned above can be linked to his role as a driver. Thus, this example outlines how one stakeholder can trigger other stakeholders to work together to advance a particular goal that cannot be achieved alone.

Sustainable Risk Management

Furthermore, several secondary drivers influence the commitment to sustainability in the Otto Group on different levels (see Table 4 ). As far as social risks are concerned, the issue is being promoted by NGOs in particular. In the interview, they are described as a kind of “watchdog” who pays close attention to how the Otto Group behaves in this area and communicates misconduct accordingly. Since NGOs often address corporate violations, they also ensure that social risks, especially in production, must always be considered, and the social situation in SCs needs to be communicated to the public – especially as this issue is of public interest (Interview, 2020). When media, public opinion/civil society, and customers come together, a unique dynamic develops, which can pose economic risks for companies by causing much sensible attention. In particular, negative publicity, e.g., the accusation of greenwashing, can lead to a generally negative image and lower sales figures ( Riekhof, 2013 ). This fact results in the Otto Group's strategy of not primarily targeting individual sales measures through sustainability, but rather to avoid customers perceiving the Otto Group as a non-sustainable company. The narrative has changed due to the possibility of differentiation through sustainability. While this used to be mainly positive, it now often happens that (some) customers ignore companies that are negatively associated with sustainability issues in their SC and do not buy products from them (Interview, 2020). Companies, including the Otto Group, must pay attention to this and recognize these trends through risk management and stakeholder dialogues in order to be able to react at an early stage so that the company is not negatively penalized by customers and potential customers ( Riekhof, 2013 ; Interview, 2020).

SCM for Sustainable Products

At this point, a link can be drawn to SCM for sustainable products. According to Pagell and Wu (2009) and Seuring and Müller (2008) , managing SCs for sustainable products requires enhanced coordination and communication and supplier development and joint innovation. According to Riekhof (2013) the Otto Group shifts the perspective from the narrative of sustainable products to values, where several stakeholders are co-producers of these values, and therefore, their roles and relationships must be reconfigured. This process can be seen as an outcome derived from customers as drivers regarding risk management. In this respect it is particularly striking that MO, in his role as a driver, is identified in all three risk dimensions. This can be explained by the early recognition of the social and ecological impact of companies which has led to a strong corporate focus on sustainability through MO since the 1980s. In addition, the company's name is automatically linked to his name, which is why unsustainable behavior is not only negatively linked to the company, but also to his person and family (Interview, 2020). As explained earlier, this stakeholder role is linked to his previous engagement with the company, and his current position may be more related to that of an inspector – also concerning risk management.

When it comes to SCM for sustainable products, the foundations are essential drivers to develop better solutions in SSCM. This can be seen, e.g., on the example of two foundations that were founded with the cooperation or under the initiative of MO – especially against the background that actors have not sufficiently addresses these issues. Despite sustainability measures focusing on the upstream SC stage, MO established the “Stiftung 2°,” a cross-market initiative for German companies to join forces for climate protection ( Otto Group, 2019 ). Through the “Aid by Trade Foundation,” the initiative “Cotton made in Africa” (CmiA) was founded, which promotes sustainable and organic cotton in cooperation with small farmers. CmiA supports farmers in the sub-Saharan region to establish sustainable and ecological businesses that provide better income for families in the region and further improve the environmental footprint of the buying companies ( Cotton made in Africa, 2021 ). With 86 million cotton articles, the Otto Group is a significant buyer from these farmers. For this reason, the Otto Group cooperates with foundations that tackle sustainability issues at different stages of the SC, e.g., through supplier development and joint innovations (CmiA) or improved coordination and communication, which is what the “Stiftung 2°” does.

Facilitators

When stakeholders act as facilitators, these stakeholder groups may provide the required know-how and resources to establish valuable measures for improving sustainable practices in companies ( Busse et al., 2017 ). Among the primary stakeholder groups, sustainability managers and employees were most frequently mentioned in the role as facilitators, while among secondary stakeholder groups, alliances and suppliers were attributed this role. In addition, acceptance by suppliers and employees is necessary to establish effective methods and standards. Sustainability managers as primary stakeholders and alliances on the secondary side help communicate this approach more effectively and provide appropriate expertise. The interview clarified that—especially in cooperation with the alliances—a certain amount of power must be ensured to drive forward sustainability efforts.

Supplier Management for Risk and Performance

Supplier management for risk and performance is the first category, obtained from the Seuring and Müller (2008) framework. The analysis revealed that the Otto Group frequently uses both supplier involvement and implementation of standards. According to Beske and Seuring (2014) , implementing standards can ensure a minimum performance; the participation in alliances with competitors, NGOs or governments, facilitates the implementation of standards in the SC for the Otto Group.

Sustainability managers and employees are key facilitators for win-win situations in sustainable performance relationships. To strengthen the role of employees, the Otto Group implemented a Code of Ethics, providing employees with guidelines on how to act and work within the company. The idea is similar to a Code of Conduct for suppliers. Like the Code of Conduct, this instrument can be considered as a minimum requirement. According to Rodríguez et al. (2016) , minimum criteria can be seen as the lowest common thread for risk-avoiding and improving conditions in the SC. Still, they can also be a starting point to aim for win-win situations. It is worth mentioning that this Code of Ethics is not introduced top-down but has been developed in a participatory manner. A more value-oriented company can strengthen the identification of employees with the company and improve the good external image. Above that, suggestions can be presented more easily by employees -site and implemented to improve the sustainability performance. In the past, more than 4,500 personal commitments of employees have been implemented, enhancing profitability, innovation, diversity, and sustainability ( Brock and Streubig, 2014 ).

According to the SSCM expert interviews, this can be linked to suppliers in their role as facilitators with a win-win outcome in the sustainable performance relationship. The relationship to raw material suppliers is described with a push-pull effect. On the one hand, the Otto Group demands sustainable materials and can therefore be seen as a driver from the suppliers' perspective. On the other hand, suppliers rely on sustainability regarding the materials to receive better and stable contracts and establish a benchmark in the market so that the Otto Group must follow these trends accordingly to be perceived as sustainable. Besides, the interviewee also emphasized that it is a challenge not to fall into greenwashing attempts of suppliers but to build on long-term partnerships. With the possibility of achieving better orders, better acceptance, more extended collaboration, suppliers are incentivized to behave more sustainably. Despite the benefits for suppliers, this situation can be seen as a win-win situation because this also creates benefits for the Otto Group, as they can promote independent improvements and achieve higher SC sustainability performance (Interview, 2020).

The data revealed two different strategies to involve suppliers in progress toward a more sustainably SC. The first option is more direct and can lead to more holistic and more advanced sustainable solutions with a win-win outcome. Most outcomes in combination with competitors or alliances as drivers or facilitators led to minimum requirements as the environmental and social standards were implemented top-down in the SC. About the data, this led to joint innovation in the alliance and less supplier development and is used more for supplier assessment and supplier (self-) evaluation when it comes to supplier management ( Otto Group, 2019 ; Weber et al., 2020 ). The second option addresses SCM for sustainable products and is later outlined.

Concerning the avoidance and addressing of sustainability risks, sustainability managers act as facilitators since they provide know-how and resources to identify potential opportunities and risks in the impact process. These identification processes play an essential role both for the Otto Group's commitment to sustainability and for conducting materiality analyses in stakeholder dialogues (Interview, 2020; Otto Group, 2020 ), especially when it comes to internal management instruments. As a last instrument for sustainable performance relationships, the “impACT process” is an essential key tool to analyse and avoid sustainability risks with measures and training to improve sustainability in the SC. Therefore, it can be seen as the most critical gatekeeper instrument for supplier selection within the Otto Group. Furthermore, sustainability managers facilitate coordination and communication toward primary and secondary stakeholders to improve the necessity of SCM for more sustainable products ( Otto Group, 2020 ). This can be linked to Pagell and Wu (2009) , who suggested that enhanced coordination and communication with suppliers and other stakeholders can be used to manage SC for more sustainable products.

As already explained in the case of the win-win outcome with suppliers, this can, in turn, be linked to supplier involvement for supplier management and supplier development concerning SCM for sustainable products. Thus, Pagell and Wu (2009) suggest using supplier development to manage the SC for sustainable products. In combination with this stakeholder role, Beske and Seuring (2014) mention that supplier involvement can facilitate the necessary information exchange and coordination for minimum requirements. With the “EMPact Social” program, the Otto Group offers training in suppliers' factories for eight months to develop concrete improvement measures for several challenges. These workshops are held with factory representatives also to improve factory-specific topics ( Otto Group, 2020 ).

As a third stakeholder role, inspectors can be named. In this role, stakeholder groups provide a neutral or scientific ground for sustainable supplier development and evaluate or assess the implementation of sustainability practices along with the SC ( Liu et al., 2018 ). The results suggested governments as the key stakeholder for this role. Besides governments, MO as the primary inspector and NGOs as secondary inspectors were identified.

Beske and Seuring (2014) suggested that implementing environmental and social standards is common to ensure minimum performance. The interviewee defined the role of governments to ensure a level playing field in which all companies can and must operate (Interview, 2020). Thus, governments defined social and environmental standards, which, in turn, served as a core component for supplier management for companies ( Otto Group, 2019 ; Interview, 2020). Furthermore, in large MSIs where companies such as the Otto Group are involved, governments are in charge of coordination and communication to navigate the different companies and stakeholders and moderate the different opinions to reach a common perspective ( Weber et al., 2020 ). This combination can also be extended to other categories from the framework, like sustainable performance relationships, so the focus on this combination will be deepened in the following paragraphs. The data indicated that, as governments, NGOs nowadays could also be defined as inspectors regarding implementing Codes of Conduct and environmental and social standards for supplier management ( Riekhof, 2013 ).

The implementation of standards and Codes of Conduct results in most cases in implementing minimum requirements that triggered two changes: on the one hand, to avoid the identified risks. On the other hand, the requirements lead to a general improvement of the SC's conditions, which is in line, for example, with Seuring and Müller (2008) . Moreover, the interviewee suggested that standards must be developed for all market participants to ensure a neutral level playing field (Interview, 2020). Furthermore, the analysis revealed that another possibility for governments is to set up initiatives and alliances in which, under political pressure, companies agree to implement (more) sustainability practices within the SC ( Otto Group, 2020 ).

The data indicate that legal frameworks as minimum requirements come into place when voluntary solutions do not work. According to the analyzed data, there is, for example, new legislation for the delivery sector since 2019 ( Otto Group, 2020 ). This law is intended to improve working conditions in the distribution sector, as they have been massively criticized in recent years, especially in subcontractors. Furthermore, the German government plans a supply chain law that the European Union strives as a common regulation for the entire Union, aiming to make companies more responsible for their SCs (Interview, 2020). Thus, companies can also be held liable for infringements in the deeper SC. Initiatives like these often result in gatekeeper instruments such as Codes of Conduct or a suitable process for selecting suppliers to influence the suppliers' behavior ( Busse et al., 2017 ).

In the Otto Group, this is manifested in the “amfori Business Social Compliance Initiative” (BSCI), which is used throughout the industry ( Otto Group, 2019 ). According to the interviewee, the Otto Group wants to maintain long-term partnerships with suppliers and qualifies them through audits and training, which leads to a lack of consistency in non-compliance because so much has been invested in these partnerships (Interview, 2020). Nevertheless, it is still challenging to find suitable suppliers with very high sustainability standards because of the low margins, which already fulfill the supplier selection process and ambitious Codes of Conduct. In addition, the contracts with suppliers will be terminated if they do not comply with the Code of Conduct. For this reason, especially in earlier tiers of SCs, industry solutions or common standards are often developed as minimum requirements through alliances, as the selection of suppliers and training and education would require significantly higher resource input. Besides, these industry solutions offer more attractive margins for the suppliers to seriously and, on a large scale, align themselves with the customers' ideas (Interview, 2020).

As mentioned in the chapter about the role of drivers, MO can also be seen as an inspector when it comes to economic risks because the name of the company is automatically linked to his name, which is why unsustainable behavior is not only negatively linked to the company, but also his person and family and can affect the financial situation of the company and the shareholders (Interview, 2020).

Within SCM for sustainable products, joint innovations and supplier development can be tackled with NGOs in regulatory functions. They participate in the construction of Codes of Conduct or standards and the development of certificate systems and support monitoring, and reporting activities of companies ( Riekhof, 2013 ).

Synthesis of Detected Stakeholder Roles Within SSCM

Table 4 provides an overview which stakeholders could be assigned to which SSCM construct and what particular role they play. The identified stakeholders of the Otto Group are divided into primary and secondary stakeholders to allow further distinction. Together, the results yield meaningful insights into stakeholders' roles within the SSCM debate.

Since little research focused on a more differentiated view regarding stakeholder roles in the context of SSCM, the aim of this case study was to have a broader look. In many SSCM studies ( Wolf, 2014 ; e.g., Meixell and Luoma, 2015 ), stakeholders are described as drivers that force companies to establish or distance themselves from certain practices or products. By challenging this stigma, this research extends the debate on stakeholders' roles concerning SSCM and how a company responds to them by applying a single case study design.

In general, it is noticeable that various stakeholders exert their influence on different parts of the SC. In contrast to Meixell and Luoma 's study ( 2015 ), which describes sustainability action mostly as top-down decisions, our findings show that sustainability is more present in the analyzed company's DNA, so various departments consequently implement different sustainability issues. In many cases, these actions are also relevant tasks for secondary groups of stakeholders like alliances, NGOs, or governments. The consequent and fast implementation of sustainability issues may be since sustainability has been part of the Otto Group's core business for a long time and is profoundly established in operational and strategic processes, which is why important issues regarding SSCM can quickly be identified and addressed.

Turning to Table 4 , it is noticeable that inspectors were identified most for providing primary and minimum requirements. At the same time, drivers and facilitators were found in the context of more developed and in-depth sustainability issues. This finding might serve as a starting point for further research to scrutinize different stakeholders' allocation and their particular contributions. Other companies could adopt this approach when stakeholder groups are allocated to the various stakeholder roles and how often they occur.

Implementing industry-wide used standards can be seen rather as a complement to the already integrated sustainability practices/standards than an external stakeholder-driven requirement. This could be attributed to the fact that sector-wide standards may achieve greater comparability but do not improve further the processes in terms of content. On the one hand, this facilitates the process for suppliers to identify the criteria they have to meet to be accepted as a possible long-term partner, and shared knowledge within alliances or MSIs can be used to improve sustainability issues, which is in line with the current literature (e.g., Liu et al., 2018 ; Siems and Seuring, 2021 ). On the other hand, companies that use a uniform Code of Conduct are better positioned than companies applying individual standards to penetrate deeper SCs by putting pressure on suppliers through industry-wide uniformity.

Furthermore, the present study results could be compared to similar companies to identify similarities and differences and, thus, could serve as an interesting approach for further research. In the analyzed case, the Otto Group already achieved transparency for first-tier suppliers. Currently, the main effort lies in the extension beyond this directly visible horizon, as outlined by Busse et al. (2017) . However, it must also be made clear which limitations exist regarding the possibilities for advanced transparency in the SC. First, there are limited resources possessed by a company and the direct suppliers to track the relationships to the suppliers in the next tiers; fostered by a high fluctuation of suppliers in the upstream SC due to prize-driven competition (e.g., Beske and Seuring, 2014 ). For this purpose, incentive systems could be developed to be able to develop long-term relationships in deeper SCs with the push-pull effect without reducing potential innovation through competition. Secondly, the inherent motivation of the company to reduce uncertainties within the SC could be discussed in further studies.

In line with established literature (e.g., Meixell and Luoma, 2015 ; Oelze et al., 2016 ), the analysis revealed that another possibility for governments to trigger more commitment regarding sustainability in the SC in specific sectors, is to set up initiatives and alliances in which, under political pressure, companies agree to implement (more) sustainability practices within the SC.

As a solution for low transparency in SCs and identifying possible risks in the apparel industry (e.g., Hasan, 2019 ), the results indicate that cooperating with different stakeholders at different stages of the SC provide more insights in several steps and improve the transparency of their own SC. For example, the analyzed company use knowledge and resources gained from cooperation with foundations and NGOs, in line with current papers in the field ( Pagell and Wu, 2009 ; Roscoe et al., 2020 ; Siems and Seuring, 2021 ). In deeper SCs, they even cooperate with competitors in the form of alliances and with governments and further NGOs to implement standards like Codes of Conducts and training as well as possibilities to control implemented standards with audits. Further, the focal company faces/targets low levels of SC visibility and identifies sustainability risks with the help of its stakeholder network as described in Busse et al.'s (2017) framework.

The fact that sustainability is firmly anchored in the core business processes can also be traced back to MO. Since the former CEO is present throughout the analysis and assumes various roles, it is worth taking a closer look at his unique role. When MO was still CEO of the focal company, the focal company had not yet experienced any adverse effects from name-and-shame campaigns and has always presented itself as a driving force for the further development of sustainable practices. While the findings contained most of the SCM for sustainable products constructs, the life-cycle assessment was not identified as a relevant issue even outlined in the SSCM discussion (e.g., Beske and Seuring, 2014 ; Siems et al., 2021 ). As mentioned before, the focal company shifted the focus from sustainable products toward sustainable values to overcome challenges in the SC from a general perspective and not to deal with problems for single products periodically. For further research, it would be interesting to find out how this focus shifts toward a value orientation than on single products and the special role of MO differs from other companies and how the development of CSR is related to the upper echelons theory ( Petrenko et al., 2016 ). Among other things, this theory attaches great importance to the personal values of management board members regarding the orientation of the company. However, the differences between family-owned companies and corporate groups must also be highlighted, as the loyalty and thus the motivation of top management are different.

In this respect, the philosophy of the Otto Group regarding SSCM can also be well illustrated by the quote, “alone you can go fast, together we can go far” (Interview, 2020, l). This makes it clear that the Otto Group wants to achieve possible successes through joint efforts and that the resources for this are being bundled. From this, it can be concluded that stakeholders can best influence the Otto Group through support in the form of cooperation, the provision of know-how and resources with regard to a more sustainable SC. Nevertheless, empirical qualitative research contains limitations on both the empirical and theoretical sides ( Eisenhardt and Graebner, 2007 ).

On the one hand, there are limitations regarding the quantitative selection of the material. In particular, the fact that only one interview could be conducted could lead to an abbreviated view and result in limited generalization. Additional interviews with different managers, business partners and external stakeholders could have extended the studies insights. For example, the suppliers' point of view is particularly interesting to find out what the Otto Group's requirements mean to them. However, the study's research team conducted further interviews, but the company stated that more interviews were impossible due to limited personal resources.

Moreover, to address the issue of change over time, a comparison of several annual reports might have delivered interesting outcomes. Also, a direct comparison of different companies would have given more insights for further studies. It would also be helpful to conduct more interviews than just one. For that purpose, it would be particularly revealing to interview suppliers to find out how they understand their role. On the other hand, criticism can be made of the qualitative selection of the material, as many internal company materials were examined, which could lead to bias as these sources are not objective. Although we included other external sources (e.g., Riekhof, 2013 ; Brock and Streubig, 2014 ), the critic remains that mainly internal sources and perspectives were used, which does not reflect reality in a completely neutral way. In this respect, it would be interesting for a critical classification to include other external sources.

Furthermore, there are limitations to the comparability of stakeholder influence between companies. For example, the Otto Group has a special form of corporate philosophy with longstanding work in sustainability, which also includes the SC. Further, cooperation with stakeholders seems to play an important role. However, this situation cannot be fully transferred to companies with a different structure. Validating how beneficial the Otto Group's approach is for both stakeholders and companies, their way of stakeholder management could be compared to other, differently operating companies. Lastly, although the research was rooted in profound SSCM constructs (e.g., Seuring and Müller, 2008 ), applying different SSCM or stakeholder constructs might yield additional insights. The outlined papers' limitations provide a basis for further research, both to get a broader picture of possible stakeholder roles and to be able to make more precise predictions about how these can be more efficiently integrated.

The academic contribution of our paper lies in its relevance to the management field. In particular, our research project has highlighted the need for research about the influence of a company's management on sustainable practices and how SSCM practices can differ by implementing a (more differentiated) stakeholder perspective. This field has not gained much attention so far but contains further research potential. Thus, this study answers the research question of understanding which stakeholders and their roles are related to SSCM in the apparel industry. The case study has shown how the Otto Group interacts with its primary and secondary stakeholders at different SC stages to enhance the overall sustainability performance. Thus, this research provides best practices for integrating stakeholders that practitioners can learn from as called for (e.g., Silvestre, 2015 , Köksal et al., 2017 ). For example, the Otto Group intensively communicates with their stakeholders in the whole SC, meets partners at eye level, and seeks to collaborate with non-traditional SC members. Additionally, the Otto Group takes different approaches to have an impact, particularly the upstream tiers, and, thus, takes a multi-tier approach, as suggested by Khurana and Ricchetti (2016) . This approach can be a contribution to the debate on the multi-tier SCM field.

Since the case of the Otto Group represents a particular case, the generalizability of the results might be questionable. Thus, the particular results could serve as a starting point for further research on stakeholders and their roles toward a more sustainable SC and, therefore, putting forward the current SSCM debate. However, the described issues and applied practices might help managers achieving a more sustainable SC and follow the call by Wickert et al. (2021) to conduct more research with managerial implications.

Furthermore, the findings indicate that family-owned companies and corporate groups might operate differently, which is in line with Maloni et al.'s (2017) call for research on family businesses SCs. As already mentioned within the limitations, different perspectives from other stakeholders could give further insights. For example, the supplier perspective could be taken into account to validate or oppose the current state. Thus, both the study's limitations and results can serve as the basis for further research. Therefore, we suggest applying a more differentiated view regarding stakeholder roles in the SSCM context and encouraging companies to enhance their degree of stakeholder interaction.

Data Availability Statement

The raw data supporting the conclusions of this article will be made available on request by the authors, without undue reservation.

Ethics Statement

Ethical review and approval was not required for this study with human participants, in accordance with the local legislation and institutional requirements. The participants provided their informed consent to participate in this study.

Author Contributions

All authors have contributed equally to this work and approved it for publication.

Conflict of Interest

The authors declare that the research was conducted in the absence of any commercial or financial relationships that could be construed as a potential conflict of interest.

Publisher's Note

All claims expressed in this article are solely those of the authors and do not necessarily represent those of their affiliated organizations, or those of the publisher, the editors and the reviewers. Any product that may be evaluated in this article, or claim that may be made by its manufacturer, is not guaranteed or endorsed by the publisher.

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Keywords: sustainable supply chain management (SSCM), stakeholder roles, collaboration, stakeholder engagement, sustainability practices, apparel industry, case study

Citation: Menke C, Hüsemann M and Siems E (2021) Stakeholder Influence on Sustainable Supply Chain Management: A Case Study of a German Apparel Frontrunner. Front. Sustain. 2:735123. doi: 10.3389/frsus.2021.735123

Received: 02 July 2021; Accepted: 10 September 2021; Published: 12 October 2021.

Reviewed by:

Copyright © 2021 Menke, Hüsemann and Siems. This is an open-access article distributed under the terms of the Creative Commons Attribution License (CC BY) . The use, distribution or reproduction in other forums is permitted, provided the original author(s) and the copyright owner(s) are credited and that the original publication in this journal is cited, in accordance with accepted academic practice. No use, distribution or reproduction is permitted which does not comply with these terms.

*Correspondence: Erik Siems, erik.siems@uni-kassel.de ; orcid.org/0000-0003-4805-6540

What Is Stakeholder Theory? Benefits, Challenges & Application

Economist Milton Friedman —one of the most famous economists of all time— put forward a theory that companies are ultimately beholden to just one stakeholder: their shareholders .

He called this 'Shareholder Theory'.

Stakeholder Theory is in many ways a direct contradiction to the ‘mono approach’ introduced by Friedman in that it suggests that organizations are responsible to many different stakeholders , of which shareholders are only one .

When you think about it, your own position on this is one of the first things you should do when defining your strategy. It goes to the very foundations of what you want to achieve and why you're doing it.

Are your shareholder interests your #1 priority? Or are you also trying to improve the lives of internal and external stakeholders?

In this article, we’ll explore not only what the stakeholder theory is, but also the benefits of applying it to your business and a step-by-step guide for successful implementation.

🎁 We’ll also provide you with a free Stakeholder Management Plan Template that you can tailor to your organization’s needs to help you maximize stakeholder engagement.

What Is Stakeholder Theory?

Stakeholder theory is based on the assumption that businesses can only be considered successful when they deliver value to the majority of their stakeholders.

One of the first and most influential books that explore this approach is Strategic Management: A Stakeholder Approach by R. Edward Freeman — American philosopher and professor of business administration at the Darden School of the University of Virginia. A very interesting read for all business leaders who see various stakeholder interests as crucial factors for success.

Stakeholder theory is widely applicable and can be used in many key fields, such as project management, strategic management, and business ethics.

It goes hand-in-hand with CSR (Corporate Social Responsibility) and, therefore, sustainability as well. That means that profit alone cannot be considered the only metric of business success, and value creation is not just about money.

Common Groups Of Stakeholders

Let's take a look at some of the common stakeholders for a typical business.

• Shareholders and/or stockholders: Despite stakeholder theory being positioned as the antithesis of shareholder theory, the reality is that shareholders will always be one of the biggest stakeholders of any business.
• Employees: Any business leader will agree that keeping your employees happy is important. Put simply, engaged employees perform better and drive better results.
• Customers: Customers are another obvious stakeholder group since their satisfaction and loyalty directly impact the company's success.
• Suppliers : They provide the raw materials or resources for a company's operations . The reliability and quality of their supplies are crucial to the organization.
• Communities: You can define community in a variety of different ways, from the local community to a virtual global one. Either way, they are a key player in stakeholder theory.
• Government and regulatory bodies : They can exert significant control and influence over a company's operations through laws, regulations, and taxation.
• Friends & family: This may seem a little odd, but your own friends and family (as well as those of your employees) are also critical stakeholders to satisfy under stakeholder theory.
• Competitors: The stakeholder theory suggests that a healthy competitive environment benefits everyone, including other stakeholders such as customers.

👉🏻 There are plenty of other stakeholders you could identify, such as NGOs, industry associations, trade unions, political groups, etc.

💡 Pro Tip : Every business has its unique cast of stakeholders, and there's no one-size-fits-all approach. The key to success lies in understanding, prioritizing, and effectively engaging with each one of them.

The stakeholder theory is not all about keeping stakeholders happy to make more money. Instead, it argues that companies play a vital role in the very fabric of our society (creating jobs, innovating, etc.) and that their success must be valued as a whole, not just in the returns they make for their shareholders. It’s about value maximization , not wealth maximization.

Benefits Of Stakeholder Theory

Stakeholder theory isn't just a philosophical concept; it's a practical guide to success in contemporary business since it offers various tangible benefits:

Enhanced reputation

Prioritizing the concerns of a wide range of stakeholders can boost a company's public image, which is invaluable in a world where perception strongly influences success.

Risk management

By addressing stakeholder concerns proactively, organizations can predict and mitigate potential conflicts and risks, reducing the likelihood of legal issues or reputation damage.

Sustainability & longevity

Stakeholder theory encourages long-term thinking, leading to sustainable practices that help companies thrive in a changing business landscape.

Informed decision-making

Focusing on stakeholders prompts organizations to consider a broader spectrum of factors in their decision-making , resulting in better strategic choices.

These benefits are just the tip of the iceberg when it comes to successfully building strong stakeholder relationships. While they may not appear to have an immediate impact on profits, they have the potential to yield significant financial advantages over the long term.

A well-rounded approach to the stakeholder theory can be a powerful source of competitive advantage for a business.

Maslow's Hierarchy

It’s interesting to draw a parallelism between the stakeholder theory and Maslow's Hierarchy of Needs —in which Maslow states that to achieve true happiness, one must go beyond material wealth toward a state of self-actualization.

Businesses adopting this approach can empathize with their stakeholders' basic needs and support their journey up the Maslow pyramid.

Challenges Of Stakeholder Theory

Stakeholder theory has its complexities.

It involves balancing diverse stakeholder interests, often pulling in different directions, all while working within resource constraints. It encourages organizations to embrace long-term sustainability, often calling for cultural shifts and ethical considerations when interests differ.

Crafting specific strategies for stakeholder engagement, understanding complex regulations, and showing quick financial gains can also be tricky when putting this approach into practice.

Stakeholder Theory Example

Let’s think of a practical example: a manufacturing company building a new production facility.

In a conventional approach, the focus would be shareholder returns. However, by applying stakeholder theory, the company considers a broader set of stakeholders, including employees, customers, the local community, environmental groups, and regulators.

Each of these stakeholders has different expectations and concerns. Employees may seek job security and safe working conditions, customers may want eco-friendly products, the local community may value reduced pollution and job opportunities, and environmental organizations may advocate for sustainable practices.

Applying stakeholder theory, the company conducts a comprehensive stakeholder analysis to ensure that the construction project aligns with the interests of all these stakeholders.

Applying The Stakeholder Approach To Your Business

Stakeholder theory isn't a traditional strategic framework in the same way as, for example, SWOT analysis or Porter's Five Forces model . Instead, it's more of a guiding philosophy for how you run your business.

💡 Pro Tip: While it doesn't fit the mold of a traditional strategic framework, it can complement and inform your strategic choices and actions when blended with other models.

We’ve prepared a step-by-step guide to help you adopt this theory:

Step 1: Conduct a stakeholder analysis

Begin by identifying your organization’s stakeholders. You can start with the list we shared previously, but you need to think about your unique context.

The normative approach is to examine the function of your organization and then decide who are the most important stakeholders.

The following questions might help:

• Who is directly influenced by our business operations?
• Which constituencies is our board of directors willing to consider?
• Which individuals or groups can shape our decision-making?
• Who aligns with our core values and mission?

List your stakeholder groups out in simple bullet point form—you should have at least 5 or 6 and possibly many more.

After that, build your stakeholder analysis matrix to understand how your company plans to engage with each of these groups.

This basic matrix is perfect to start:

Keep in mind that you’ll also have to create stakeholder engagement plans, at least for some groups. This matrix will help inform your engagement plans.

Step 2: Evaluate your strategy & initiatives

This step is about making sure your strategy is aligned and catering to the needs of your stakeholders.

So, look at your strategy—the objectives, goals, projects, and KPIs you’ve set to reach your core business metrics—and categorize your initiatives into the list of stakeholders you’ve identified.

Think about which stakeholders will benefit from your success against any given goal:

• Shift your focus towards the 'outcomes' and 'objectives' in your strategic plan, not just individual projects and KPIs .
• Don't think of this as a 1:1 relationship—a single outcome can contribute to multiple stakeholders.
• Don't be afraid to think broadly—it's likely you won't have specific goals for every single stakeholder group, but you'll probably find that some of the things you're working on will help them indirectly.

Step 3: Understand your gaps & opportunities

Now you should have a clearer picture of your current strategy and how it caters to your different stakeholders’ needs.

It’s very likely that the majority of your goals are contributing to either your shareholders, customers, or employees. But, as you’ve already realized, there are other important stakeholders you might need to consider.

Think about your strategy and your key stakeholders to identify gaps and opportunities:

• Does the breakdown look about right?
• Are there any key stakeholders that we’re not considering?
• Are there any areas where our strategy could better serve the identified stakeholders?
• How do the needs and expectations of these stakeholders evolve over time, and how can we adapt our strategy to keep pace?

This exercise might give you insights such as:

• We predominantly focus on shareholders, employees, and customers.
• We allocate more objectives to customers than shareholders, reflecting a product-centric approach.
• We are heavily invested in R&D to lead in technological advancements within a competitive landscape.
• Our engagement with local communities and environmental organizations falls short. We need to strengthen our involvement to make a positive impact.

Now that you uncovered these findings, you can adapt your strategy and ensure an accurate stakeholder alignment.

Step 4: Adapt to ensure stakeholder alignment

With a clear understanding of how your strategy relates to stakeholders and recognizing gaps and opportunities, it's time to put your insights into action.

Start by revisiting your game plan. Take a fresh look at your goals, projects, and KPIs.

Look through the eyes of your stakeholders—are you hitting the mark, or are there mismatches?

If you spot areas where your strategy can better align with stakeholder needs, don't hesitate to tweak things. This might mean shaking up your objectives, reallocating resources , or brainstorming new initiatives .

Step 5: Get ready for execution

You’ve made the necessary changes to your strategy, it’s time to ensure it’s execution-ready .

Here are some tips for successful implementation:

• Rally your teams and stakeholders, and get them on board with the changes.
• Share the 'why' behind these shifts and ensure everyone knows their part in the new plan.
• Keep a close eye on how things are progressing, track your results, and be open to further refinements.
• Ensure everyone understands that this isn't just about meeting stakeholder needs; it's about forging more meaningful connections with your key stakeholders.

💡 Pro Tip: For a smoother implementation and adoption of stakeholder theory, consider integrating it with other strategic frameworks. Check out our article on the " 11 Best Strategic Frameworks For Your Organization " for valuable insights.

👉🏻 Get your free customizable Stakeholder Communication Plan Template to craft an effective stakeholder communication plan.

Achieve Effective Stakeholder Management With Cascade 🚀

We’ve already walked you through the importance of successful stakeholder engagement and how these groups can influence your business outcomes.

Cascade , the leading Strategy Execution Platform , can help businesses achieve effective stakeholder management.

Cascade’s key features allow you to:

• Centralize your strategy , ensuring alignment across all stakeholders while keeping everyone informed and engaged.
• Create and share real-time reports with both internal and external stakeholders. Define customized report templates to provide shareholders with essential data.
• Engage your employees by enabling them to provide team updates , showing how their work directly contributes to the overarching strategy.
• Foster cross-functional collaboration and gain visibility into how initiatives from different departments work together to advance your overarching business objectives.
• Assess goal progress with real-time dashboards and ensure you're on the path to achieving the objectives you defined for your stakeholder engagement plan.

Discover the power of Cascade! Sign up today for free or book a guided 1:1 product tour with one of Cascade’s in-house strategy execution experts.

Related Resources

👉🏻 Bonus —a few classic texts by experts and theorists to dive deeper into the topic:

• ‍ The Stakeholder Theory of the Corporation: Concepts, Evidence, and Implications by Thomas Donaldson and Lee E. Preston ‍
• Stakeholder Theory: The State of the Art by R. Edward Freeman, Jeffrey S. Harrison, Andrew C. Wicks, Bidhan L Parmar, Simone de Colle ‍
• Stakeholder Theory and Organizational Ethics by Robert Phillips ‍
• Toward a Theory of Stakeholder Identification and Salience: Defining the Principle of Who and What Really Counts by Ronald K. Mitchell, Bradley R. Agle and Donna J. Wood

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Open Access

Peer-reviewed

Research Article

Stakeholder collaboration for solid waste management in a small tourism island

Roles Conceptualization, Data curation, Formal analysis, Writing – review & editing

* E-mail: [email protected]

Affiliation Department of Industrial Engineering, School of Engineering, King Mongkut’s Institute of Technology Ladkrabang, Bangkok, Thailand

Roles Conceptualization, Formal analysis, Writing – original draft

Affiliation School of Hospitality and Tourism Management, University of Surrey, Stag Hill, Guildford, The United Kingdom

• Jarotwan Koiwanit, 
• Viachaslau Filimonau

• Published: July 26, 2023
• https://doi.org/10.1371/journal.pone.0288839
• Reader Comments

Although stakeholder collaboration is key for sustainable development of tourism in small islands, research on its determinants is only emerging. The lack of empirical studies hampers an understanding of how effective stakeholder partnerships for sustainability in small tourism islands can be formed and sustained. To partially address this knowledge gap, this study explores stakeholder collaboration for solid waste management in the island of Koh Phayam, Thailand, from the perspective of stakeholder theory, social capital and proximity effect. Semi-structured interviews (n = 26) reveal a lack of understanding of collaboration benefits alongside leadership and reciprocity among stakeholders. However, due to geographical proximity, the level of stakeholder trust in each other is significant, thus indicating potential for future successful partnerships. For these partnerships to become effective, a system of financial incentives for stakeholders to separate and recycle solid waste in situ should be designed. To improve stakeholder communication and reciprocity, capacity building workshops and round tables can be organised. Municipal authorities should lead on solid waste management, and a steering committee comprising the representatives of all other stakeholders needs to be established to oversee the work of municipal authorities. Lastly, the feasibility of setting private public partnerships for solid waste management in Koh Phayam should be considered given the significant extent of knowledge and trust among local stakeholders. External stakeholders, such as farmers, can be involved in management of organic waste, thus extending the scope of partnerships for sustainability beyond the island.

Citation: Koiwanit J, Filimonau V (2023) Stakeholder collaboration for solid waste management in a small tourism island. PLoS ONE 18(7): e0288839. https://doi.org/10.1371/journal.pone.0288839

Editor: Wei-Ta Fang, National Taiwan Normal University - Gongguan Campus, TAIWAN

Received: January 29, 2023; Accepted: July 5, 2023; Published: July 26, 2023

Copyright: © 2023 Koiwanit, Filimonau. This is an open access article distributed under the terms of the Creative Commons Attribution License , which permits unrestricted use, distribution, and reproduction in any medium, provided the original author and source are credited.

Data Availability: All relevant data are within the paper and its Supporting Information files.

Funding: This study was supported financially by the School of Engineering, King Mongkut’s Institute of Technology Ladkrabang (Bangkok, Thailand), Research Project [2565-02-01-015]. Grant recipient - Dr Jarotwan Koiwanit. The funder had no role in study design, data collection and analysis, decision to publish, or preparation of the manuscript.

Competing interests: The authors have declared that no competing interests exist.

Introduction

Tourism has significant environmental externalities that should be mitigated towards sustainable development goals [ 1 ]. Without mitigation, by 2050, global tourism will consume 154% more energy and 152% more water, and generate 251% more solid waste [ 2 ]. Empirical research is required to mitigate the environmental externalities of tourism [ 3 ]. This research should measure the scale of environmental impacts associated with tourist activities in different destinations to identify priority areas for mitigative interventions [ 4 ]. Research should also understand how tourism stakeholders can be engaged in mitigation [ 5 ].

The figures from UNEP [ 2 ] highlight solid waste as the key challenge for sustainable tourism development. Tourism enterprises conserve energy and water as this conservation is financially beneficial [ 6 ]. For example, by controlling in-room temperature, hotels can save up to 58% in energy cost [ 7 ]. In contrast, tourism enterprises do not always associate solid waste management with direct financial benefits [ 8 ]. Payment for solid waste is usually based on collection frequency or volume and weight; this payment is however considered affordable [ 9 ]. For sustainable development, tourism enterprises should manage solid waste more effectively [ 10 ].

The challenge of solid waste management in tourism is pronounced in small islands [ 11 ] as remoteness and size hamper their ability to conserve the environment [ 12 ]. For example, Wang and colleagues [ 13 ] suggest that tourists in small islands generate up to 3.9 kg of solid waste per day. This is almost three times more than the amount of solid waste produced by an average EU resident i.e., 1.4 kg per day [ 14 ]. Concurrently, small island destinations have fragile ecosystems with limited carrying capacity [ 15 ]. Ineffective management of solid waste damages the natural environment of small islands, thus not only endangering tourism, but also threatening local livelihoods [ 16 ].

Research on solid waste management in small island destinations is evolving but significant knowledge gaps persist [ 13 ]. One is attributed to the insufficient understanding of the determinants of stakeholder collaboration for environmental conservation [ 17 ]. Remoteness and small size of islands suggest limited resources which are prioritised by local stakeholders in line with their perceived needs [ 18 ]. Solid waste management is not always considered a priority, especially in developing countries [ 19 ]. Here, tourism drives economic development, and resources are allocated to foster tourist demand rather than reduce its environmental consequences [ 20 ].

However, remoteness and size also suggest that tourism stakeholders in small islands know each other better, thus increasing the likelihood of collaboration, especially in critical situations, such as under a threat of environmental degradation. This is explained by the concept of social capital [ 21 ] suggesting that individuals and organisations collaborate for survival. This collaboration can be stronger in small and remote areas, such as islands, where social capital is limited and therefore better valued [ 22 ]. This is further aligned with the proximity principle in social psychology suggesting that people closer together in a physical environment are more likely to form partnerships than those further away [ 23 ]. No empirical research has however been undertaken to understand how/if the concept of social capital and the proximity principle apply to stakeholders in small island destinations where environmental conservation is key to sustain tourism and support resident livelihoods.

This study explores the determinants of stakeholder collaboration for solid waste management in a small island destination through the prism of stakeholder theory, social capital and proximity. Koh Phayam, a small tourism island in Thailand, is used as a case study. Prior to COVID-19, Koh Phayam has been growing in popularity with tourists. This has intensified the challenge of solid waste management calling for urgent mitigative interventions. Stakeholder collaboration is key for the success of these interventions in small tourism islands [ 16 , 17 , 24 ] and needs to be better understood. The next section provides further theoretical background to the study.

Literature review

Stakeholder theory, stakeholder collaboration and social capital.

As a theory of organisational management, stakeholder theory posits that organisations have interconnected relationships with different actors of their value chain known as stakeholders [ 25 ]. Stakeholders can influence, or be influenced by, organisations; for example, in tourism, stakeholders are represented by customers, employees, or communities hosting tourists [ 26 ]. Studying the inter-stakeholder relationships aids in understanding how organisations can more effectively allocate resources to satisfy stakeholders for mutual benefit [ 27 ].

Stakeholder theory emphasizes that stakeholders should first be identified and then carefully managed [ 28 ]. For example, the problem of overtourism requires tourism organisations to involve destination residents in a dialogue to understand how the problem can be resolved [ 29 ]. A successful dialogue improves destination management, which benefits tourism organisations and residents [ 30 ]. Stakeholder theory thus enables an understanding of the wider societal and environmental obligations of (tourism) organisations by reinforcing such related concepts as business ethics, corporate social responsibility, and sustainability [ 31 ].

Although stakeholder theory does not explicitly integrate the concept of stakeholder collaboration, it communicates the need for stakeholders to shape formal or informal partnerships for common goals [ 32 ]. Stakeholder theory is therefore reinforced with a network perspective [ 33 ] suggesting that stakeholders should be considered in a network of interdependent partners assisting each other as required [ 34 ]. Networks are important for organisations as they enable access to resources, such as finance, labour, and knowledge [ 35 ]. Larger and stronger networks improve organisational performance, especially in critical times [ 36 ]. For example, strong networks are critical for prompt post-disaster recovery of tourism organisations [ 37 ].

Stakeholder theory is underpinned by the concept of social capital [ 38 ]. Social capital describes the networks of relationships formed between individuals and/or organisations in a particular society or locality which enable this society or locality to perform more effectively [ 21 ]. This suggests that social capital encapsulating the networks of partners is essential for stakeholder collaboration, also in tourism [ 39 ]. For example, destinations with stronger tourism stakeholder networks benefit from more effective management and marketing [ 40 ]. Social capital, being a key to stakeholder collaboration, is also important for the global transition towards sustainability [ 41 ]. The United Nations have recognised this importance in their sustainable development goals whereby Goal 17, Partnerships for the goals, postulates that sustainable development can only be achieved when all stakeholders are involved, and strong stakeholder networks are built [ 42 ].

Stakeholder collaboration for sustainability

Stakeholder collaboration represents a common strategy of working towards sustainability [ 41 ]. For example, industrial symbiosis enables organisations to develop a network of partners to foster transition towards the circular economy [ 43 ]. Partnerships for sustainability are especially important for tourism where stakeholder collaboration is key for sustainable destination development [ 16 ].

Stakeholder collaboration for sustainability is defined as the ability of individuals and organisations, representing private and public sectors, and operating in a specific locality, to work together towards a common, pro-sustainable goal [ 44 ]. This goal can be concerned, for example, with environmental conservation, development of local economies, and improvement of residents’ wellbeing [ 11 ]. Stakeholder collaboration for sustainability is underpinned by mutual commitment, interest, and trust [ 45 ].

The benefits of stakeholder collaboration for sustainability are tangible (for example, improved profitability due to environmental savings) and intangible (for instance, enhanced organisational reputation) [ 46 ]. Stakeholders collaborate for sustainability due to personal motives, but also because of pragmatic interests, such as value cocreation [ 47 ] or strengthened networks [ 48 ]. Stakeholders learn from each other when working in partnership while collaboration contributes to product development and service improvement [ 45 ]. Reciprocity is key for successful collaboration as it indicates commitment, facilitates co-learning, and builds trust between stakeholders [ 49 ].

Stakeholder collaboration for sustainability is hindered by the lack of stakeholder interest, but also by the limited understanding of the goals and outcomes of collaboration [ 44 ]. Stakeholder conflict can occur whereby stakeholders have different visions of the goal, direction, and result of collaboration [ 50 ]. The lack and unequal distribution of resources among stakeholders represent another barrier [ 51 ]. Linked to this barrier, the imbalance of power can impede stakeholder collaboration for sustainability [ 52 ]. The imbalance is exemplified by the situation whereby one stakeholder has more resources and, therefore, more power than others. This can prompt this stakeholder to promote their vision on the extent and direction of collaboration [ 53 ]. For example, the imbalance of power has been shown detrimental to stakeholder collaboration for sustainability in former Soviet Union states [ 54 ]. Here, public organisations have historically exerted more influence in partnerships, also in the tourism context [ 55 ].

Lastly, in tourism, size of a destination plays a role. Larger destinations have more stakeholders; it can therefore be more difficult to engage them in collaboration for sustainability due to varying interests [ 56 ]. In this regard, smaller destinations, such as small islands, may be more suited for building successful stakeholder partnerships for sustainability.

Stakeholder collaboration for sustainable tourism in small islands

The proximity effect is key for inter-organisational networking [ 57 ] and successful stakeholder collaboration [ 58 ]. Geographical proximity enables stakeholders to interact more effectively which facilitates flows of knowledge, thus creating a better understanding of collaboration goals and building trust [ 59 ]. The positive effect of geographical proximity on stakeholder collaboration has been demonstrated in the context of regions where organisations and residents are located close to one another [ 60 , 61 ].

Empirical evidence on the effect of geographical proximity on stakeholder collaboration for sustainable tourism in small islands is fragmented. The study by Graci [ 16 ] showcases an example of stakeholder partnership leading to the implementation of innovative sustainability initiatives on the Gili Trawangan island, Indonesia. This study highlights the importance of outlining objectives, defining roles, communicating progress in the implementation of sustainability initiatives, and ensuring equal participation for successful stakeholder collaboration. Arbulú and colleagues [ 11 , 17 ] discuss the opportunities and challenges of stakeholder collaboration for solid waste management in Mallorca, Spain. Similar to the findings of Graci [ 16 ], Arbulú and colleagues conclude that partnerships for sustainable tourism development depend upon explicit and equal distribution of roles, costs and benefits. Lastly, Dolezal and Novelli [ 62 ] indicate the critical role of stakeholder power and empowerment in building effective partnerships for sustainable tourism development in Bali, Indonesia.

In contrast, Canavan [ 50 ] reports an example of unsuccessful stakeholder collaboration for sustainability on the Isle of Man, the UK. Despite geographical proximity, a lack of shared vision and limited trust determine stakeholder exclusion and conflict. Likewise, Towner [ 32 ] demonstrate how, despite an enthusiasm to collaborate for sustainable tourism development, stakeholder partnership is limited or avoided in the Mentawai Islands, Indonesia. Corruption, mistrust, and a lack of leadership are identified as the main reasons for unsuccessful collaboration. Lastly, albeit not specifically dealing with failed stakeholder collaboration, Movono and Hughes [ 63 ] underline varied stakeholder interests and local culture as the determinants of (in)effective partnerships for sustainable tourism in Fiji.

Summary of the literature review and the research gap

Literature reiterates that collaboration reinforces the social capital of organisations by extending and strengthening a network of their relationships with stakeholders. The effect of geographical proximity can determine the success of stakeholder collaboration. Stakeholder collaboration is critical for sustainable development of tourism, especially in small island destinations where resources are limited. By pooling together, stakeholders can benefit from each other to enable progress of tourism islands towards sustainability. Research on stakeholder collaboration for sustainable tourism is however limited, especially in developing countries [ 64 ]. In particular, there is a paucity of studies on stakeholder collaboration in small islands for solid waste management [ 17 ]. This paper aims to partially plug this knowledge gap with a case study of Koh Phayam. The next section introduces the case study destination and explains the research design.

Materials and methods

Koh Phayam is a small island (34.7 km 2 , maximum length 10 km, maximum width 5 km, permanent population of 964) in the Andaman Sea located 33 km off the west coast of Thailand. In 2021, circa 150000 tourists visited the island; this figure was however significantly lower than in the peak year of 2019 when about 400000 tourist arrivals were registered [ 65 ]. Given that Thailand recorded a total of 40 million tourists in 2019, this indicates that Koh Phayam accounted for 1% of this volume.

Tourists visit Koh Phayam for sun and beach holidays with the majority (70–80%) arriving from Europe [ 65 ]. To reach Koh Phayam, tourists first travel to Ranong, the nearest town and the capital of province, and then by boat to the island. Tourism in Koh Phayam is seasonal: most tourists arrive during the ‘dry’ period between November and April [ 9 ]. To accommodate tourist demand, in 2021, there were 92 businesses registered as providers of accommodation and foodservices, including resorts, hotels, hostels, homestays, restaurants and take-aways [ 65 ].

Up-to-date figures on the amount of solid waste generated in Koh Phayam do not exist. In 2016, 365 tonnes of solid waste were produced in the island [ 66 ]; however, this figure has likely increased since then. Mixed and organic waste were the largest fractions of solid waste in Koh Phayam in 2016 i.e., circa 40% and 30%, respectively, with the bulk of this waste generated by tourism businesses [ 66 ]. The organic fraction was represented by food leftovers, and the mixed fraction was composed of packaging waste.

Solid waste in Koh Phayam is collected by four private companies and four non-governmental organisations (NGOs) subcontracted by municipal authorities. These organisations transport solid waste to Ranong for treatment. According to the interview participants (see Findings and discussion ), treatment of solid waste from Koh Phayam in Ranong is similar to solid waste treatment in Thailand in general. 32% of solid waste is either reused or recycled; 37% is disposed of, mostly by the methods of landfilling and incineration; and 31% is mismanaged by littering, dumping and open burning [ 67 ]. There is no in-situ recycling or recovery facilities in Koh Phayam due to its small size. The management of solid waste in the island is thus ineffective which represents a major challenge in light of anticipated growth in tourism in coastal areas of Thailand in a post-COVID-19 era [ 68 ].

Stakeholder recruitment

The research was approved by the ethics committee of the School of Engineering, King Mongkut’s Institute of Technology Ladkrabang (Bangkok, Thailand). Stakeholders were first identified. These were represented by municipal authorities responsible for environmental conservation and waste management in the island. Private companies and NGOs subcontracted by municipal authorities for solid waste collection and treatment were the other two stakeholder groups. Local communities, represented by community chiefs, were also identified as stakeholders. Lastly, tourism organisations operating in the island i.e., providers of tourist accommodation and foodservices, represented another stakeholder group.

Recruitment of these stakeholders involved multiple stages. At the first stage, contact details of all stakeholders were obtained from public databases and a letter of invitation was produced. This letter introduced the project, explained its aims, and requested a consent for interview. The letter was distributed by email, post and in person. At the second stage, telephone calls were made to all stakeholders who were first contacted by the letter. The calls aimed to confirm that the letter was received and read, reiterate the study’s purpose, and explore stakeholder interest in being interviewed. In the final stage, the stakeholders who preliminarily agreed to be interviewed at the second stage of recruitment, were visited in person. The visits aimed at reconfirming stakeholder intention to become interviewed, explain their rights as interview participants, and answer any final questions related to the study, thus ultimately building trust between prospective participants and the research team.

Following the three-stage recruitment process, 21 stakeholders provided consent to participate in interviews ( Table 1 ). The recruited sample consisted of nine tourism organisations, three representatives of municipal authorities, four environmental NGOs, three private waste collectors, and two community chiefs. It was agreed beforehand that interviews would only involve stakeholder representatives with the decision-making power in the area of interest i.e., solid waste management. For example, in the case of municipal authorities, an interview participant would be a manager directly responsible for environmental conservation. For tourism organisations, it would be a senior manager, such as a resort owner.

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https://doi.org/10.1371/journal.pone.0288839.t001

Besides domestic stakeholders, to gain an ‘external’ perspective on the challenge of solid waste and its management in Koh Phayam, interviews were also conducted with five tourists. These were recruited by convenience sampling during fieldwork. Tourists were approached in the island, explained the project’s aims and invited to partake. Similar to the other study participants, an informed consent was sought from tourists prior to interviewing. No specific requirements were applied to tourist recruitment.

Data collection

Data were collected by the method of in-depth, semi-structured stakeholder interviews. This method was chosen because of its suitability for exploratory research topics lacking theoretical conceptualisation [ 69 ]. This is the case for the current study as the determinants of stakeholder collaboration for solid waste management in small tourism islands are insufficiently understood [ 17 ]. The method of semi-structured interviews is also suitable for studying complex social contexts where different actors may have different perspectives on the subject matter in question [ 70 ], such as in the case of the determinants of stakeholder collaboration for sustainability [ 32 ]. An advantage of semi-structured interviews is their ability to provide detailed insights into a variety of opinions and perceptions on the issues of high societal importance [ 71 ], such as solid waste management in small tourism islands, as articulated by different stakeholders [ 16 ].

An interview guide was developed based on the literature review. Specifically, the findings reported by Arbulú and colleagues [ 11 , 17 ]; Fuldauer and colleagues [ 24 ]; Graci [ 16 ]; and Peltola and colleagues [ 47 ] were used in the design of interview questions. The guide comprised introductory questions aiming to better understand the current situation with solid waste management in the island, including the amounts of solid waste generated and the logistics behind its collection and treatment. The guide incorporated questions on the roles and responsibilities of different stakeholders alongside the current extent of stakeholder collaboration. Lastly, the guide aimed to explore the desired extent of stakeholder collaboration for solid waste management in the island, covering its determinants. A copy of the interview guide is provided in Supplementary material ( S1 Appendix ).

The interview guide was developed in English and back translated to Thai. Prior to fieldwork, the interview guide was checked for face and content validity by two academics specialising in environmental conservation and sustainability. The guide was subsequently piloted with four volunteers representing two major stakeholder groups i.e., municipal authorities and tourism businesses. Post pilot, minor modifications were made to the phrasing of some interview questions for better clarity of expression.

Interviews were administered in February-May 2022 and lasted between 56 minutes and 1 hour 56 minutes ( Table 1 ). Prior to interviewing, each prospective study participant was provided with an information sheet explaining the study’s purpose and elucidating the voluntary nature of participation. Participants were subsequently asked to sign and date a consent form.

Interviews were conducted face-to-face in various locations of Koh Phayam and Ranong. Interviews were digitally recorded for transcribing. No financial incentives were provided for participation. Despite the sample of 26 stakeholders, interviews provided rich data showcasing saturation. Although sample size is considered less critical for studies underpinned by qualitative research methods, Marshall and colleagues [ 72 ] posit that interview data tend to be saturated within 10–30 datapoints. This current study fits into this recommended datapoint range.

After interviews, subject to consent of the study participants, observations were made by the research team to better understand how solid waste was managed in-situ. For example, in the case of NGOs collecting and treating solid waste, the process of collecting waste on the island, transporting it to Ranong, and treating was observed. In the case of tourism organisations, observations of waste bins were made alongside the process of their collection. This enabled the research team to triangulate the data obtained in stakeholder interviews, thus reconfirming qualitative data, and adding validity to the study’s findings. Data triangulation is considered beneficial and, therefore, highly recommended, for studies of solid waste management [ 47 , 73 , 74 ].

Data analysis

Interviews were transcribed verbatim and translated in English by a bilingual member of the research team. Transcribed data were analysed thematically following the guidance by Clarke and colleagues [ 75 ]. For trustworthiness in interpretation of meanings, as recommended by Nowell and colleagues [ 76 ], data were coded independently by two members of the research team. The outputs of data codification were then compared and any disagreements in interpretation of meanings were discussed until a consensus was achieved. For the write-up of interview findings, exemplar quotes were identified in the transcripts illustrative of the main codes. Fig 1 outlines the scheme of data codification. The next section explains the scheme in detail.

Legend (see in-text explanations for details): Red colour represents the codes with a negative meaning. Yellow colour represents the codes with a neutral meaning. Green colour represents the code with a positive meaning.

https://doi.org/10.1371/journal.pone.0288839.g001

Findings and discussion

Solid waste in koh phayam: magnitude and management.

The interviews began by establishing the magnitude of solid waste generated in the island and reconfirming the logistics behind its management. Neither solid waste collectors nor municipal authorities were able to provide accurate solid waste figures claiming these to be ‘difficult to get’ (G1). According to one participant, ‘before Corona , solid waste was so large in the island that it was simply impossible to measure’ (N2). The lack of accurate figures on solid waste in tourism is a global problem [ 2 ] which represents a major challenge from the viewpoint of management. This is because solid waste can only be managed effectively if its magnitude is measured accurately to allocate priority areas for mitigation [ 77 ].

Tourism organisations provided solid waste figures based on the weight of waste they generated. Across the sample, total solid waste generation ranged from 5 to 50 kg per day, depending on business size. Mixed waste represented by plastics and glass was the largest fraction (10–30 kg per day) followed by organic waste (5–25 kg per day). The sample average numbers were 18 kg of mixed waste and 14 kg of organic waste generated by a tourism organisation per day. By extrapolating these figures and dividing by the number of tourist arrivals in Koh Phayam in 2019 i.e., 400000, it can be concluded that an average tourist in the island produces circa 2.7 kg of solid waste.

The seminal study by Trung and Kumar [ 78 ] suggests that tourists in Vietnam generate, on average, between 2.5 and 7.2 kg of solid waste. A more recent study by Manomaivibool [ 79 ] cites the figure of 1.7 kg of solid waste generated by an average tourist in northern Thailand. Given that the current study deals with an island destination, the large amount of solid waste attributed to tourism in Koh Phayam is of major concern.

Data extrapolation also suggests that 92 tourism organisations registered in Koh Phayam generate approximately 1070 tonnes of solid waste per year. Importantly, this figure does not include solid waste produced by households. If households are added, the total amount of solid waste generated in the island will be even more significant. However, even the smaller amount attributed to tourism businesses is three-fold more than the figure of 365 tonnes of solid waste recorded for Koh Phayam in 2016 [ 66 ]. Similar to the conclusion by Arbulú and colleagues [ 11 ], this demonstrates how rapid growth of tourism in the island contributes to the increase in solid waste generation, thus calling for urgent mitigation via stakeholder collaboration.

Stakeholder collaboration for solid waste management: Current state

All stakeholders recognised the problem of solid waste in the island as significant; collaboration for its effective management was however limited. Municipal authorities worked with solid waste collectors, but this collaboration, despite being formal and contractually bound, was caused ‘by necessity rather than free will’ (G2). Solid waste collectors partnered with some tourism organisations and local communities from where they collected the mixed fraction of solid waste. However, these partnerships were not formalised. Overall, all stakeholders agreed that collaboration could be improved by showcasing its benefits to the parties involved:

‘ I don’t work with anybody [to manage solid waste] , there is little sense . I pay 30 Baht per month [0 . 9 USD] for [waste] collection . Even if I don’t pay , they [solid waste collectors] still come and collect the rubbish . I don’t think it [collaboration] is that important given the money involved is ridiculous…’ (TB2)

This quote highlights a lack of financial incentives as one of the barriers for more effective stakeholder collaboration ( Fig 1 ). Collection changes are too small for tourism organisations to become interested in separating solid waste in-situ for profit. Solid waste collectors pay between 1 to 11 Bahts [0.03–0.3 USD) per 1 kg of separated plastics. Tourism organisations, and even island residents, do not consider it worth to separate solid waste for such small payment. Concurrently, solid waste contractors either do not get paid by municipal authorities or this payment is very small. This forces solid waste collectors to only offer a small fee in return for separated plastics. Further, solid waste collectors deliver mixed waste to Ranong for extracting recyclables, such as metal, glass and plastics, for subsequent re-sale. Organic waste cannot be re-sold, and it is therefore not collected. As a result, food leftovers are either dumped by tourism organisations in the sea or disposed of by the method of land spreading. Lastly, given there are eight companies collecting solid waste in Koh Phayam, imposing a higher collection charge on tourism organisations and island residents is not considered viable because of competition.

Evidence from developed countries shows that carefully designed financial incentives can be instrumental in promoting recycling and, ultimately, stakeholder collaboration for solid waste management [ 80 ]. Even organic waste can be resold to produce compost or pet food [ 43 ]. A lack of financial incentives in Koh Phayam determines stakeholder disinterest in partnering for sustainability. To make stakeholders interested, a more effective pricing mechanism should be developed. For example, payments to solid waste collectors by municipal authorities can be increased, and a ‘pay-as-you-throw’ scheme can be introduced for mixed waste to incentivise tourism organisations for in-situ solid waste separation and recycling [ 9 ].

A lack of leadership and limited understanding of stakeholder roles and responsibilities was another barrier ( Fig 1 ). Tourism organisations and local residents blamed municipal authorities for not leading on solid waste management while municipal authorities expected tourism organisations to be more proactive and take the lead. For example, given that organic waste is primarily disposed of by dumping in the sea, municipal authorities requested, but never reinforced, in-situ separation of the organic fraction. However, they did not provide a separate bin for this purpose assuming it would be obtained by tourism organisations and local residents. Although NGOs provided such bins at a later stage, they did not explain how to use them for separation:

‘ They [municipal authorities] told us to separate food from other waste . OK , I said , but where to ? They [municipal authorities] said , oh , get your own bin . I said , why should I if I can dump it ?.. I tried to compost food waste . I got one of those composter things . It was my own idea , no one helped me , no one told me what to do and how to do it . But then I had to stop . There is no space , and the odour is horrendous…’ (TB7)

Different expectations of leadership i.e., ‘bottom up’ versus ‘top down’, and poor assignment of roles and responsibilities hinder stakeholder collaboration for sustainability [ 81 ]. To minimise this hindrance, one stakeholder should take the lead while other stakeholders need to accept this leadership and follow the roles assigned [ 64 ]. In developing and transition economies public sector organisations i.e., municipal authorities in the current study, often choose to lead on sustainability projects [ 55 ]. However, if a public sector organisation takes the lead, it is critical to ensure it follows so-called ‘responsible leadership’ in that, for example, there is no corruption and unequal treatment involved [ 82 ]. To achieve this, a leader’s decisions and activities should be overseen by other stakeholders.

Communication was another issue ( Fig 1 ). Stakeholders did not always inform each other about sustainability projects they would like to develop. For instance, municipal authorities considered an option of building an incinerator in Ranong to treat the growing amount of solid waste from the island. This option was not however communicated to solid waste collectors and tourism organisations although some of the latter were even prepared to co-finance an incinerator, subject to its adequate cost. Likewise, some tourism organisations requested solid waste collectors to take organic waste from the island for composting in Ranong. No definite answer was received and, hence, organic waste continued to be treated either by dumping or land spreading:

‘ It’s a small island but we don’t speak to each other which , in my opinion , is a key problem . For example , there was a Swiss company willing to buy waste from the island . They approached XXX [name removed for anonymity , an NGO representative] with a proposal . I don’t know what happened , but the contract was never signed . I think they should have told us about why they’d decided to turn them down’ (C1)

Communication is key for stakeholder collaboration for sustainability, especially in developing and transition economies [ 83 ] and should therefore be reinforced in Koh Phayam. Regular meetings or round tables can be organised to update stakeholders on progress in solid waste management and discuss plans and proposals. These meetings can be conducted online to save on travel time and facilitate participation.

Reciprocity was another barrier ( Fig 1 ). Some stakeholders committed more to solid waste management than others. For example, a restaurant owner started offering a free drink to tourists coming with refillable bottles. They proposed the idea to other restaurants, but these did not take it. Likewise, a resort owner proposed to solid waste collectors and municipal authorities an idea of constructing a facility converting organic waste into biofuel. However, the idea was rejected with no reason given. Lastly, a hotel owner suggested composting to a local community which was, however, not pursued:

‘ I went to local villagers and said , hey , how about I bring you organic waste and you compost here as you have more space than I do . But they say , oh , no , we don’t want that as it stinks . So , this is how it goes here in terms of reciprocity [laughter]’ (TB4)

Reciprocal engagement is key for success of stakeholder partnerships for sustainability [ 49 ]. In Koh Phayam it can be achieved via regular capacity building events offering the opportunity for stakeholders to discuss the ideas of more effective solid waste management and agree on the extent of their involvement in the implementation of these ideas [ 44 ]. Reciprocity can also be achieved via more effective communication which should explicitly articulate the benefits of collaboration to all involved [ 84 ].

As for enablers of stakeholder collaboration, trust was frequently mentioned ( Fig 1 ). Although the literature forewarns that mistrust can impede formation of partnerships [ 32 ], this was not the case for Koh Phayam. The study participants had no concerns over each other, referring to small size of the island as a positive factor in building social capital. The current lack of collaboration was attributed to other factors, as discussed above. Studies conducted in the context of Thailand and its sustainable tourism industry suggest that local stakeholders tend to trust each other which can be partially attributed to the national Thai culture [ 85 , 86 ]. This current study adds further evidence to this point:

‘ It’s a small island and we know each other . How can I say that I don’t trust XXX [name removed for anonymity , a representative of solid waste collectors] , if I see him every week in the market ? It’s not about trust , it’s about other things…’ (N3)

Power was discussed as an enabling factor from a neutral perspective ( Fig 1 ). There was no particular stakeholder with more power than others. Further, the study participants claimed they had enough power to manage solid waste within their own organisations. For example, organic waste was never a problem for one resort owner as they claimed to use it for in-garden composting. However, when considering the island as a whole, this was where the stakeholders felt powerless to improve solid waste management. In other words, while individual power was available, there was a lack of cumulative, multistakeholder power.

The literature emphasizes power as a determinant of stakeholder collaboration for sustainability. However, power is largely discussed from the perspective of its imbalance [ 87 ] or even abuse [ 88 ]. This current study adds to the body of knowledge by indicating a new notion of power i.e., ‘powerful as individuals but powerless when together’ (TB5). To reduce the negative effect of this ‘powerlessness in togetherness’, capacity building events and round tables are warranted. Such events can empower stakeholders by reinforcing their beliefs in that a success is achievable when working in partnerships. Such events can also strengthen perceived reciprocity i.e., another determinant of stakeholder collaboration, as highlighted earlier.

Environmental awareness was discussed as an enabler ( Fig 1 ) with the study participants claiming that it was high among tourists, but low among residents. For instance, a solid waste collector complained that local residents would often contaminate recyclables with the organic fraction although it was repeatedly emphasized to them that contamination hindered recycling and recovery. In contrast, a resort owner praised tourists for refusing to accept single-use plastic straws and cups. This was confirmed by one of the tourists:

‘ It’s a beautiful island , almost untouched , you know . But I was shocked when I saw so much garbage here . I understand this is very much from tourism , but I feel the locals don’t try to protect the environment either . The bins are provided for plastics , but it is felt that only tourists are using these bins’ (T3)

Stakeholder collaboration for sustainability should be underpinned by an understanding of why this collaboration is necessary and what it aims to achieve [ 44 ]. In Koh Phayam some stakeholders lack this understanding. To raise environmental awareness of island residents and tourists, education campaigns are necessitated. These should be designed and implemented by municipal authorities, ideally with the involvement of educational institutions, such as schools, but also by tourism organisations. A system of clear incentives should be developed to encourage environmental conservation, such as free drinks for refillable bottles, as discussed above.

Importantly, the barriers and enablers of stakeholder collaboration for sustainability are inter-related. For example, by building and reinforcing trust, stakeholders can reduce such barriers as restricted leadership and limited communication [ 89 ]. Likewise, the balance of power can strengthen reciprocal relationships and increase stakeholder interest in collaborating with one another [ 55 ]. Therefore, facilitating conditions need to be created to ensure the enablers of stakeholder collaboration for sustainability are reinforced in Koh Phayam.

When comparing the findings of the current study with the literature on stakeholder collaboration for sustainability in small tourism islands, some similarities and differences can be established. Similar to Graci [ 16 ], the current study showcases leadership and communication as key for successful stakeholder collaboration for sustainable tourism in islands. In line with the findings reported by Arbulú and colleagues [ 11 , 17 ], the current study demonstrates the importance of distributing and accepting roles and responsibilities among stakeholders for effective collaborative work towards solid waste minimization. Lastly, similar to Dolezal and Novelli [ 62 ], the current study highlights power as a critical enabler of pro-sustainability, multi-stakeholder collaborative projects. However, unlike Towner [ 32 ], Canavan [ 50 ] and Movono and Hughes [ 63 ] who all report how limited trust can alienate stakeholder collaboration in small islands, the current study shows that geographical proximity in Koh Phayam is important for building and reinforcing trust, thus improving chances for local stakeholders to work together towards more effective solid waste management. This suggests that local context plays a critical role when evaluating the potential of stakeholder collaboration for sustainability in small tourism islands, thus highlighting the need for more focal, localised studies.

Future vision

The study participants outlined three determinants of successful stakeholder collaboration for future management of solid waste in Koh Phayam ( Fig 1 ). First, leadership was considered essential, and the majority agreed that municipal authorities were best positioned to lead. However, to avoid accusations in corruption, a steering committee was proposed. The role of this committee, composed of the representatives of all stakeholder groups, would be to oversee activities of the leading stakeholder and intervene as necessary. Wondirad and colleagues [ 64 ] argue that steering committees are especially important for stakeholder collaboration in developing economies given their immature traditions of pro-environmental governance.

Private public partnerships (PPPs) for sustainability were discussed ( Fig 1 ). Although the study participants did not necessarily know these by name, the arrangements which they envisaged i.e., long-term agreements between public and private organisations delivering solid waste management projects, contained explicit characteristics of PPPs. Although the current structure of solid waste management in Koh Phayam is underpinned by the PPP idea, it does not function as PPP. PPPs should be based upon a strategic vision, assessment of available resources, and evaluation of required investments [ 11 ]. These PPP features can facilitate adequate market pricing for solid waste collection and treatment; they can also enable the design of effective financial incentives for in-situ separation and recycling [ 17 ]. Given that trust, as a key element of effective stakeholder collaboration, already exists in Koh Phayam, implementation of PPPs should be considered. As a start, capacity building events and round tables should be organised to mobilise prospective participants and establish their interests, aims and expectations.

Lastly, potential engagement of external stakeholders in solid waste management in Koh Phayam was discussed ( Fig 1 ). There is no large-scale agricultural production in the island, but the amount of organic waste is significant; hence, a proposal was made to engage farmers in Ranong in solid waste management. Currently, organic waste is either dumped in the sea or used for on-site composting. Instead, organic waste can be transported from the island to the hinterland and either composted on local farms or used for production of biofuel. This network of interconnected organisations is commonly known as the industrial symbiosis [ 43 ], and it can be implemented in Ranong in the form of, for example, community-scale composting. Community-scale composting can be operated with as little as 200 kg of organic waste per day, or 73 tonnes per year [ 90 ]. The amount of organic waste generated in Koh Phayam (1070 tonnes per year) is sufficient to meet this requirement. Organic waste will however need to be properly separated in-situ which underlines the importance of stakeholder commitment and emphasizes the role of financial incentives in reinforcing stakeholder participation:

‘ Ideally , I’d want my food waste collected every day . Preferably , for free but I’d even be happy to give it out for a small fee . If this waste is then delivered to a farmer , I think that is ideal . No dumping in the sea , no unpleasant smell , yeah , I’d feel good about it [laughter]’ (TB3)

This study explored the opportunities and challenges of stakeholder collaboration for solid waste management in a small tourism island, thus reinforcing the emerging body of literature on partnerships for sustainability. Through the lens of stakeholder theory, social capital and proximity principle, the study revealed such impediments of stakeholder collaboration for solid waste management in Koh Phayam as a lack of perceived benefits, leadership, communication, and reciprocity. The study indicated that geographical proximity exerted a positive effect on social capital and trust between stakeholders. It also ensured that disbalance of power, a major barrier to partnerships for sustainability in developing countries, was less pronounced in the case studied island.

This finding suggested sufficient grounds for future stakeholder collaboration for solid waste management in Koh Phayam, subject to addressing other barriers, as highlighted above. From the theoretical perspective, the study contributed to a better understanding of geographical proximity as a determinant of effective partnerships for sustainability. This finding is relevant for small tourism islands, but it can also be extended to other tourism contexts, such as remote mountain destinations, characterised by a small number of stakeholders concentrated in a single locality.

From the management perspective, the study highlighted several areas for intervention which can facilitate stakeholder collaboration for solid waste management in Koh Phayam. Financial incentives need to be designed to encourage stakeholder engagement in solid waste management. Capacity building workshops and round tables can streamline stakeholder communication and facilitate reciprocity. One stakeholder, most likely municipal authorities, should take the lead in solid waste management and a steering committee should be established to oversee a leader’s activities. The feasibility of setting PPPs for solid waste management in Koh Phayam should be considered given that local stakeholders know and trust each other. Lastly, external stakeholders can be involved in management of organic waste, thus extending partnerships for sustainability towards other localities.

The study had limitations which outlined directions for future research. First, not all stakeholders in Koh Phayam participated in interviews. Future research should aim at engaging other stakeholders and examine their opinions either by a method of interviews, or by focus groups and surveys. Second, the study did not incorporate stakeholders external to Koh Phayam and Ranong, such as farmers and national decision-makers. As these stakeholders are critical for the design of financial incentives for solid waste management alongside PPPs and industrial symbiosis networks, their opinions should be sought in future research. Third, this study established that organic waste in Koh Phayam was severely mismanaged. Future research should focus on organic waste as a key challenge in small tourism islands and examine how it can be managed more effectively. Fourth, the idea of building PPPs for solid waste management in Koh Phayam emerged during interviews. PPPs can be instrumental to progress small tourism islands towards sustainability; however, research on how they can be designed and implemented remains limited, especially in countries of the Global South. Hence, more studies are necessitated to better understand how PPPs can be most effectively developed in Koh Phayam or in other island destinations of Thailand to account for local political and socio-economic contexts. Lastly, this study was only concerned with Koh Phayam. However, Thailand has numerous small tourism islands, including the world-famous destinations of Phuket, Koh Samui and Koh Phi Phi. Future research should focus on these islands as they represent the mainstay of tourist demand.

Supporting information

S1 appendix. interview guide..

https://doi.org/10.1371/journal.pone.0288839.s001

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Stakeholder Management: A Case Study of the U.S. Brewers Association and the Container Issue

• First Online: 21 September 2023

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• James R. Emshoff 11 &
• R. Edward Freeman 11  

Part of the book series: Issues in Business Ethics ((EVBE,volume 53))

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This paper suggests an approach to the management of the external environment, and attempts to provide a description of a concrete managerial process for the implementation of “stakeholder thinking.” The process described will not help managers manipulate and control external groups. Rather, the process is based on philosophical principles of cooperation and negotiation, and on the belief that stakeholder positions can be mutually supportive of corporate objectives. The analysis is divided into three major sections: a description of the stakeholder concept and framework, an application through a case study of the stakeholder management process, and an analysis of the underlying philosophy of stakeholder management.

Originally published in: Applications of Management Science , 1, 57–90 © Emerald Publishing Limited, 1981

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See K. Andrews, The Concept of Corporate Strategy (Homewood, III.: Dow Jones-Irwin, 1971), Chap. 3; C. R. Christensen et al., Business Policy. (Homewood, III.: Irwin, 1973) pp. 229–431; Arnold Cooper et al., “Strategic Responses to Technological Threats.” In Business Policy, W. Glueck, ed. (New York: McGraw-Hill. 1976); pp. 75–85: 1. Ansoff. Corporate Strategy (New York; McGraw-Hill, 1965), Chaps. 6–7, pp. 103–138; and C. W, Hofer and D. Schendel Strategy Formulation: Analytical Concepts (St. Paul, Minn.: West Pub., 1978), Chaps. 4–5, pp. 69–157.

See R. Ackoff, A Concept of Corporate Planning (New York; Wiley, 1970); and F. Paine and W. Naumes, Organizational Strategy and Policy (Philadelphia; Saunders, 1978). Most of the literature referred to in note I treats stakeholder concerns as static, against which the corporation must respond. We believe that stakeholders views may be susceptible to change, i.e., that there are “win-win” strategies for stakeholders and the firm. For a summary of another approach to stakeholder strategy, see I. MacMillan, Strategy Formulation: Political Concepts (St. Paul, Minn.: West Pub., 1978).

Ackoff, in Redesigning the Future (New York: Wiley, 1974), credits Ansoff, op. cit., with the concept. A referee has informed us that the concept was coined in a Stanford Research Institute internal memorandum. Other purveyors of the term include F. E. Emery and E. L. Trist, Towards a Social Ecology (New York: Plenum, 1973), and their more recent work on sociotechnical systems; W. Dill, “Strategic Management in a Kibitzer’s World,” in I, Ansoff, R. Declerck. and R. Hayes, eds., From Strategic Planning to Strategic Management (New York: Wiley, 1976; and W. Rothschild, Putting It All Together (New York: AMACOM, 1976),

See J, R. Emshoff and R. E. Freeman, “Managing the External Environment,” New Jersey Bell Journal 2(1): 12–18 (Spring 1979): and R. E. Freeman, A. Finnel, and J: R. Emshoff, “The USBA and the Container Issue,” Wharton ARC Working Paper No. 23–78 (Philadelphia: 1978); and Emshoff and Freeman, “Stakeholder Management,” The Wharton Magazine (Fall 1979). For an early view of the concept, see A. Berle and G. Means, The Modern Corporation and Private Property (New York: Harcourt Brace Jovanovich, 1932; rev. ed., 1968.

For a summary of this debate see Fred Sturdivant, Business and Society (Homewood, III.: Irwin, 1977). For a stakeholder approach to the problem see R. E. Freeman, “Corporate Social Responsibility: A Stakeholder Approach,” Wharton ARC. Working paper No. 26–79 (Philadelphia: 1979).

Processes for dealing with the external environment have their roots in the modern theories of organization and social psychology, viz., the collection edited by W. M. Evan, interorganizational Relations (Philadelphia: Univ. of Pennsylvania Press; 1978). Our own approach has some roots in the theory of games and the belief that there are few, “real-world” zero-sum games. The interested reader may see especially D. Luce and H. Raiffa, Games and Decisions (New York: Wiley, 1957); and J. F. Nash, “Two Person Cooperative Games,” Econometrica 21(1953): 128–140.

The analysis performed here is by the authors and not members or representatives of the USBA. The analysis is only illustrative of stakeholder management techniques and does not reflect either effective or ineffective handling of an administrative situation.

The material in this and subsequent sections is adopted from Freeman, Finnel, and Emshoff. op. cit.; and from: W. Adams, The Structure of American Industry (New York; Macmillan, 1977); A History of Packaged Beer and Its Market in the U.S. (American Cap Co., 1966); The National Impact of a Ban on Non-refillable Beverage Containers (Midwest Research Institute, 1971); Energy and Economic Impacts of Mandatory Deposits (Research Triangle Institute, 1976); J. Steinman, Beer Marketer’s Insights (West Nyack, N. Y., Feb. 2. 1977); Brewers’ Almanac (Washington, D.C.: United States Brewers Association, 1975); R. S. Weinberg, The Effects-of Convenience Packaging on the Malt Beverage Industry, 1947–1969 (1972). A Study of the Impacts on the USBA of a Ban on One-Way Beverage Containers (Philadelphia: Wharton School, University of Pennsylvania. 1976).

J . R. Emshoff and T. L. Saaty. “Prioritized Hierarchies as a Vehicle for Long Range Planning,” Wharton ARC Working Paper No. 11–78 (Philadelphia: 1978).

One possible addition is to build in a set of likelihoods or probabilities of stakeholders playing their cooperative or competitive strategies. Yet the flavor of stakeholder management would make these probabilities conditional on the final strategy adopted by the firm, since the stakeholder environment is not assumed to be static: Such a conditional probability step in the process is omitted here for the sake of simplicity.

J. Steinman, Beer Marketer’s Insights (West Nyack, N.Y., Feb. 2. 1977).

J. R. Emshoff, The Analysis of Behavioral Systems (New York; Macmillan, 1974).

Acknowledgments

James R. Emshoff is Vice President of Marketing and Development—Swanson Division, Campbell Soup Company, Camden, N.J. R. Edward Freeman is Senior Project Manager, The Wharton Applied Research Center, and Lecturer, Department of Management; The Wharton School, Philadelphia. Pa. We wish to acknowledge the support, comments, and ideas of the members of the Wharton ARC “Stakeholder Project,” especially Arthur Finnel, Gordon Sollars, and David Reed.

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Emshoff, J.R., Freeman, R.E. (2023). Stakeholder Management: A Case Study of the U.S. Brewers Association and the Container Issue. In: Dmytriyev, S.D., Freeman, R.E. (eds) R. Edward Freeman’s Selected Works on Stakeholder Theory and Business Ethics. Issues in Business Ethics(), vol 53. Springer, Cham. https://doi.org/10.1007/978-3-031-04564-6_2

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