Stakeholder Management – Does Size Matter?

Abstract

Stakeholder Management addresses the legal, ethical, commercial and other expectations of society on business, in making decisions that fairly balance the claims of all key stakeholders. Organizations need to inspire their stakeholders, by developing relationship and creating communities where everyone strives to give their best to deliver the promised value. Organizations have to rely upon healthy relations with the stakeholders for their survival and growth. Organizations providing good returns for shareholders are not enough, as shareholders are also customers, employees and other stakeholders as well. They need to be providing good jobs for employees, reliable products for consumers, responsible relations with the community and a clean environment. Organizations are now expected to shoulder a greater responsibility for the integrity, use and consequences of their products and services. CSR thus appears to be well on its way to becoming a necessary ingredient in today’s global competitiveness formula. CSR has traditionally been associated with large corporation due to their high profile and the media attention they attract, as they are more concerned to keep their reputation intact and enhance it, with public as well as key stakeholders. Many also believe that CSR require huge resources. Small firms contribute significantly to the economy and are important to the economy and to society as a whole. Their adoption of CSR and ethical practices are crucial for a balanced development in a country like India, where they are spread widely geographically. There are diverging opinions over the firm size and its relation with the quantum of CSR and it is still not clear whether a small firm is better at CSR or whether larger firms fare well in being socially responsible. Many studies have suggested Company size as a correlate for the level of CSR activity. Due to more visibility, and the impact on their reputation, larger companies face the pressure of various stakeholders groups for improving their CSR performance. Small firms do not have formal processes for CSR reporting and implementations like larger corporations. Reporting is not proof of superior ethical behaviour and does not constitute the validation for real CSR. Several studies indicate that Small firms to be better positioned and equipped for socially responsible behaviour than large firms as they are closer to the community and are socially responsible by nature. Global economy expects responsible business practices among all firms, their suppliers including the small business who form part of the supply/value chain. Global corporations are thus on the lookout for smaller business as solution providers. However, such opportunities will come to small firms only when they are known to be responsible firms. Small businesses clearly have the human element at the core of their work that decides their approach to stakeholder management. Regardless of the size of the company, values cannot be separated from day to day issues. Values are equally important for small companies also. Small business has relatively few employees. Most of these employees are from the same community and are known to the managers and owners, leading to a more tangible concern for their well-being. Hence, it should be natural for these firms to be concerned with the local environmental and social issues and community development. World over, there is increasing emphasis on the reasons why firms must manage their relationships with stakeholders in an ethically efficient manner. In large businesses, it seems easier to separate personal ethics from businesses ethics. In small businesses, the relationship with one’s coworkers is more like family relationship making it even harder to make “ethical” decision. Small business must adopt stakeholder management to reap the benefit of improved products and processes that can result in better satisfaction of customers and loyalty. It will also lead to higher motivation and loyalty of employees that could result to greater innovation that is essential for survival and growth. *****************************