Stakeholder Management and Social Responsibility

Concepts, Approaches and Tools in the Covid Context

Ovidiu Nicolescu, Ciprian Nicolescu

• Publisher: Routledge
• Year: 2021
• ISBN:
  9781000511314
• Edition: 1
• Topic: Business
• Subtopic: Organisational Behaviour
• Index: Business

The main objective of this book is to provide an innovative set of concepts and tools regarding company management, internal and external stakeholders and social responsibilities, reflecting the necessities and opportunities generated by the digital transformation, the transition to a knowledge-based economy, and the COVID-19 crisis. The book, based on a holistic vision and contextual approach of business, contributes to the development of company management and stakeholder and social responsibility theories and practices, being structured in12 chapters.

The original company management vision, approaches, and tools are based on three pillars: a new "manager–relevant stakeholder" rather than "manager–subordinate" managerial paradigm; a new type of company social responsibility rather than corporate social responsibility; and a new concept of company-relevant stakeholder rather than that of salient stakeholders. The book contains two innovative managerial mechanisms: the managerial synapse and company-relevant stakeholders-based management system able to help companies and stakeholders face successfully the challenges of digital transformation and the COVID-19 crisis and to generate greater organization functionality and performance.

The book will be of interest to company managers and management specialists, management academics, consultants and researchers, and MBA students interested in a style of management with social responsibility at the forefront.

1 Instead of Introduction: Why Is Stakeholder Management Necessary and Possible in the Present Context?

DOI: 10.4324/9781003217701-1

Why Is Stakeholder Management Necessary Now, in the Present Context?

Organizational Arguments

1. Perception and understanding of organizations, including companies of course ‒ as social constructions. This means that they are artefacts created by human beings to serve their ends. They are shaped by human purposes, and they do not exist interdependently of human minds and actions. Companies are systems of human action in which means and ends are guided by intentions, strategies, and hoped-for incomes. They are in effect created by meaning with a rich tapestry of cultural rules, roles, and intentions (Coghlan, 2016).
2. Companies should – according to a recent study (Schwartz et al., 2019) – reframe the future of work, with the aim of generating more value and meaning for the customer, the workforce and other partners, and greater earnings for the company over time. In order to succeed with this vision, organizations must shift focus from company to customer, workforce, and other important stakeholders.
3. Development of a new type of company focused on knowledge – as resource, product, asset, and competitive advantage – which are quite different compared with the classical capitalist company; it is called a knowledge-based company.
4. Companies’ contextualization by amplification of the external environment influences their objectives, resources, activities, functionality, performance, and sustainability on concomitantly with the multiplication and acceleration of the companies’ inputs and outputs.
5. Awareness that financial performance should no longer be the sole pursuit of enterprises. Companies – according to Ignatius (2019) – are being pushed to consider the interests of all their stakeholders, including employees, customers, and the community, not just those of their shareholders.
6. Intellectual capital plays a decisive role in the survival, functioning, and development of modern, knowledge-based companies.
7. The resources of a large proportion of the companies have changed profoundly in recent decades through:
   • the emergence of two new categories of resources – information and knowledge;
   • the components, the structure, and the functionality of “classical” resources ‒ human, technical-material, and financial ‒ have substantially changed;
   • the human resource, very closely associated with information resource and knowledge resource, has a major role in modern organizations, much more than in classical companies.
8. Companies’ activities have changed enormously in recent decades through:
   • the formation of consistent activities focused on the creation, purchasing, use, share, valorization, etc. of knowledge; all these operations constitute the content of the new company knowledge-function; this function is a transversal company function, different from vertical company functions (research and development, commercial, production, finance and accounting, and human resources);
   • the content and dynamics of classical activities (supply, production, sales, accounting, finance, etc.) have also changed profoundly;
   • human resources training, because of its size and major impact within an organization, gradually becomes – especially in large- and medium-sized companies – a distinct company’s function fulfilled and partially externalized outside the organization.
9. Modern companies based on knowledge – this is quadro-dimensional, trying to achieve concomitantly four types of objectives:
   • economic;
   • social;
   • ecological;
   • educational.
10. A knowledge-based society is an ecosystem presenting the following features:
    • a system made up of interactive parts that act together;
    • a multidimensional community ‒ human, economic, and ecological;
    • networking endogen complex;
    • a system interconnected with other systems and with its environment.
11. The background of the performance and sustainability of a knowledge-based company is represented by the sustainability diamond based on knowledge (Figure 1.1).
12. Manifestation of the new organizational paradox was discovered by Hamel (2009) – the organization should become more adaptable, innovative, and inspirational, without being less focused and disciplined or less oriented toward performance.
13. The 2020 Future of Leadership Global Executive Study and Research Report finds that leaders may be holding on to behaviours that might have worked once but now stymie the talent of their employees. “Organizations must empower leaders to change their ways of making to succeed in a new digital economy” (Ready, Cohen, Kiron, & Pring, 2020).
14. Awareness of the fact that the success of a firm is determined by its ability to establish and maintain relationships within the entire stakeholder network (Post, Preston, & Sachs, 2002).
15. In the context of the pandemic, in the majority of companies, the connection and collaboration with many important external stakeholders, especially the customers, suppliers, bankers, and local communities, have been affected and need to be restored on a new basis taking into consideration the “new normality”.
16. Deterioration in many companies of work relationships and cooperation between internal stakeholders – particularly between managers and subordinates – because of the massive increase in work online, social distancing, and other major changes caused by the COVID-19 pandemic. In order to restore good and even more performant work relationships between shareholders, managers, and subordinates, their approach should be reconsidered and rebuilt against a new and more motivational and innovative background.
17. Frequently, the survival of companies that are mostly affected by the COVID-19 pandemic is not possible without implications for stakeholders. In many countries, even the state becomes a major stakeholder for companies, developing national strategies and policies, focused on helping them to survive and to continue to work, making products and services, and protecting jobs and maintaining their capacity to generate incomes for the state budgets in the following period. Many states ‒ and EU states are a very good example – have allocated huge amounts of money as grants and subvention credits, by subsidizing the costs for companies and the population.
18. Companies’ reinvention taking in consideration the multiple changes and challenges occurred at mondo, macro, and micro systems. A recent study suggested that it is no longer about how companies should thrive, but rather how they must reinvent themselves to survive, because that is the key issue today (Weill & Woerner, 2018).

Figure 1.1 Sustainability diamond (knowledge-based entity).

Adapted from New Approach – Quadrangle of Knowledge-Based Sustainability, by O. Nicolescu and C. Nicolescu, 2017, Proceedings of International Conference “Knowledge-Based Organization,” 23 (1), 414. Retrieved from https://www.researchgate.net/publication/318732098_New_Approach_-_Quadrangle_of_Knowledge_Based_Sustainability

Managerial Arguments

1. Awareness of the existence of a comprehensive network of stakeholders ‒ inside and outside companies – who have a major impact on their functionality, performance, and sustainability.
2. Traditional management, still predominant in the majority of companies, is based on the absolute primacy of the owner or shareholders’ interests, with the needs and expectations of other stakeholders being ignored or only sporadically taken into consideration. A partial exception to this refers relatively often to companies’ top managers.
3. In a recent study, well-known specialists Bailey, Reeves, Whitaker, and Hutchinson (2019) asked for indirect forms of management instead of command-and-control techniques.
4. It is – as Schein and Schein (2019) asserted – time for a new model, one that is built on close professional relationships, openness, and trust.
5. The potential of large number of the companies’ endogenous stakeholders – managers and especially executants – is used for sustainable organizational development only to a small extent.
6. The traditional managerial relationship, i.e. manager‒subordinate – involving two of the m...