Increasingly, corporations are motivated to become more socially responsible because their most important stakeholders expect them to understand and address the social and community issues that are relevant to them. Understanding what causes are important to employees is usually the first priority because of the many interrelated business benefits that can be derived from increased employee engagement (i.e. loyalty, improved recruitment, increased retention, higher productivity, and so on). Key external stakeholders include customers, consumers, investors (particularly institutional investors), communities in the areas where the corporation operates its facilities, regulators, academics, and the media .
Various Types of Stakeholders
This image shows the various internal and external stakeholders.
Branco and Rodrigues (2007) describe the stakeholder perspective of CSR (corporate social responsibility) as the inclusion of all groups or constituents (rather than just shareholders) in managerial decision making related to the organization's portfolio of socially responsible activities. This normative model implies that the CSR collaborations are positively accepted when they are in the interests of stakeholders and may have no effect or be detrimental to the organization if they are not directly related to stakeholder interests. The stakeholder perspective suffers from a wheel and spoke network metaphor that does not acknowledge the complexity of network interactions that can occur in cross-sector partnerships. It also relegates communication to a maintenance function, similar to the exchange perspective.
Stakeholder and Other Theories
Whether it is a team, small group, or a large international entity, the ability for any organization to reason, act rationally, and respond ethically is paramount. Leadership must have the ability to recognize the needs of its members (or called "stakeholders" in some theories or models), especially the very basics of a person's desire to belong and fit into the organization. It is the stakeholder theory that implies that all stakeholders (or individuals) must be treated equally regardless of the fact that some people will obviously contribute more than others to an organization.
Leadership not only has to place aside each of their individual (or personal) ambitions (along with any prejudices) in order to present the goals of the organization, but they also have to engage the stakeholder with the benefit of the organization in mind. Further, it is leadership that has to be able to influence the stakeholders by presenting the strong minority voice in order to move the organization's members toward ethical behavior. Importantly, the leadership (or stakeholder management) has to have the desire, the will, and the skills to ensure that the other stakeholders' voices are respected within the organization, and leadership has to ensure that those other voices are not expressing views that are not shared by the larger majority of the members (or stakeholders). Therefore, stakeholder management, as well as any other leadership of organizations, has to take upon themselves the arduous task of ensuring an "ethics system" for their own management styles, personalities, systems, performances, plans, policies, strategies, productivity, openness, and even risk(s) within their cultures or industries.