Mediation as an Ethical Adjunct of Stakeholder Theory

Abstract

Integration of stakeholders in business decision making is very vital. The bottom line for stakeholder management has to be the set of transactions that managers in organizations have with stakeholders. When conflict arises between organizations its stakeholders, it might damage the organization. There is always a very high possibility of conflict between stakeholders and organizations. These conflicts can be often handled by mediation. Mediation is a way in which the parties in conflict with the aid of neutral third party cooperate to resolve the differences. Parties enter into mediation voluntarily. The mediator must be a neutral third-party, acceptable to all disputants, and should not have decision making power regarding the conflict as would a judge or arbitrator. The mediator assists the parties in voluntarily reaching their own mutually acceptable settlement of the issues in dispute. In this article we try to explain the answers to these two questions using resource dependence theory. We propose that the types of influence strategies can be understood in terms of resources and a determinant of the choice of strategies will be the type of resource relationship the firm and stakeholder have and where the balance of power lies within that relationship.