"First Impressions: Stakeholder Networks, Proactive Engagement & Stakeholder Opinions of Companies"

Abstract

Stakeholders receive information about a firm’s activities through the media, from other stakeholders, and from the company. We study the relative weight of four different mechanisms through which stakeholders form their opinion of corporations: (1) rational processing of media information; (2) sifting of information received through social networks; (3) following of opinion leaders; and (4) impression formation through interaction with the company. We design our analysis to assess the relative importance of the four mechanisms using data from 4,652 social, political and economic stakeholders (government representatives, communities, non-governmental organizations, unions, etc.) that have voiced a position in relation to one of 26 gold mining projects around the world. We show that stakeholders’ first impressions of companies are shaped by the media and by direct interactions initiated by the company. These results highlight that through proactive stakeholder engagement companies can go a long way in terms of managing their reputations and building positive social capital with stakeholders.