This study derives a model of stakeholder management in small and medium-sized enterprises which describes the process from the owner-managers' personal ethics to the firm's eventual engagement with its stakeholders. Following a thorough review of literature published on stakeholder theory, ethical behaviour in organizations, and small and medium-sized companies, five hypotheses are put forward on which the model is based. The results of three case studies on owner-managed micro-enterprises from the Belgian beer producing industry are used to test the validity of the model and the hypotheses.
The results of the case studies on Belgian micro-breweries support the major part of the proposed SME stakeholder management model and the hypotheses it is based on. The perception of legitimate stakeholders is based on the personal ethics of the owner-manager. These are determined by the owner-manager's preference for a certain normative core and his stage of cognitive moral development. Perceived stakeholders will possess power over the company and/or have a legitimate moral or legal claim on the firm. Individual and situational moderators exist which can influence the transition from the owner-manager's personal ethic to his perception of important stakeholders. Relevant individual factors are the owner-manager's type and length of education and employment, family background, culture and nationality, as well as his locus of control. Situational influences found to be important are the views of relevant peers, (psychological) sanctions and rewards, moral intensity, and moral framing. The company's actual stakeholder management depends on whom the owner-manager perceives to be legitimate stakeholders. It may be instrumentally driven or normatively and can occur in a cooperative or competitive manner. The transition from stakeholder perception to actual stakeholder management can be affected by internal characteristics of the firm and by external environmental circumstances. Capital constraints and the need for the owner-manager to engage into 'fire-fighting' activities are discovered as influential internal characteristics. External environmental circumstances that exert an influence on the process are the specific characteristics of the brewing industry, power balances between the firms and their stakeholders, and social legislation as part of the PESTEL factors.
Table of Contents
1. INTRODUCTION
2. METHODOLOGY
2.1 Literature Review
2.2 Qualitative Research
3. STAKEHOLDER THEORY
3.1 Background and Related Fields of Study
3.1.1 History of Stakeholder Theory
3.1.2 Alternative Theories
3.1.3 Stakeholder Definitions
3.2 Stockholder-Stakeholder Theory Continuum
3.3 Internal Debate: Foundation and Justification
3.3.1 Descriptive Stakeholder Theory
3.3.2 Instrumental Stakeholder Theory
3.3.3 Normative Stakeholder Theory
3.3.4 Managerial Stakeholder Theory
3.3.5 Convergent Stakeholder Theory
3.3.6 Divergent Stakeholder Theory
3.4 Criticisms of Stakeholder Theory
3.5 Response: An Optimally Viable Version of Stakeholder Theory?
3.6 Stakeholder Identification and Assessment of their Claims
3.6.1 Power/Interest Stakeholder Map
3.6.2 Power/Legitimacy/Urgency Stakeholder Classification
3.7 Conclusion
4. ETHICAL BEHAVIOUR IN ORGANIZATIONS
4.1 Ethical Decision Making
4.1.1 Ethical Decision Making by Individuals in Organizations
4.1.2 Interactionist Model of Ethical Decision Making in Organisations
4.2 Stakeholder Management Model for Ethical Decision Making
4.3 Conclusion
5. SMALL AND MEDIUM-SIZED ENTERPRISES
5.1 SME Characteristics
5.2 Existing Research
5.3 Conclusion
6. STAKEHOLDER MANAGEMENT IN SMEs
6.1 The Model
6.2 Conclusion
7. THE CASE STUDIES
7.1 The Belgian Beer Brewing Industry
7.2 Company Analyses
7.2.1 Case Study I: Brussels Brewery
7.2.2 Case Study II: Flanders Brewery
7.2.3 Case Study III: Wallonia Brewery
7.3 Discussion
7.4 Conclusion
8. CONCLUSION
Research Objectives and Themes
The primary objective of this thesis is to develop a conceptual model of stakeholder management specifically tailored for small and medium-sized enterprises (SMEs). The research addresses how owner-managers' personal ethics transition into the actual engagement strategies a firm uses to interact with its stakeholders, acknowledging the unique constraints and informal nature of owner-managed small businesses.
- Theoretical foundation of stakeholder management and ethical decision-making.
- Characteristics of SME owner-managed firms and their departure from corporate models.
- Empirical analysis of the Belgian beer brewing industry as a test case for the proposed model.
- Examination of individual and situational moderators affecting stakeholder perception.
- Integration of personal ethics, cognitive moral development, and business objectives.
Excerpt from the Book
3.1.1 History of Stakeholder Theory
Although the term stakeholder management is widely associated with the name R. Edward Freeman, the concept originated at the Stanford Research Institute in the Sixties. In an internal memorandum stakeholders of a firm were described as "those groups without whose support the organization would cease to exist" (Stanford Research Institute, 1963 cited in Freeman & Reed, 1983, p. 91). It was there where the legitimacy of claims based on aspects other than ownership was first recognized and an obligation of business to take into account the interests of groups such as employees, customers, suppliers or the local community was asserted (Laplume et al., 2008, p. 1156). Additionally, as Crane and Matten (2004) point out, the general idea of managing for a wider array of constituents than merely shareholders already existed in other management concepts, such as Systems Thinking (Ackoff, 1974), Organizational Theory (Goodman & Pennings, 1977), or Corporate Social Responsibility (Jones, 1980).
Nevertheless, Freeman (1984) was first to start with organized thinking about the stakeholder concept and he remains to be seen as the father of contemporary stakeholder thinking (Laplume et al., 2008, p. 1156). In his view a stakeholder is any group or individual that "can affect or is affected by the achievement of the organization's objectives" (Freeman, 1984, p. 46). Freeman identified changes in the business environment, such as increasing ambiguity, velocity and complexity which according to him required different ways of thinking. In the words of Eisenhardt and Sull (2001), once stable and predictable developments were becoming increasingly uncertain and the only thing that seemed certain was that organizations' circumstances will continuously keep changing. Complementing this view, Dent (1999, p. 13) argues that traditional management and strategy theories have failed to advance accordingly and that in an ever more complex world the search for a ‘single right answer’ through narrowly defined models and theories is becoming increasingly inappropriate.
Summary of Chapters
1. INTRODUCTION: Outlines the research heterogeneity of SMEs and the intention to derive a stakeholder management model based on owner-manager ethics.
2. METHODOLOGY: Details the approach using an extensive literature review and qualitative case study research of Belgian micro-breweries.
3. STAKEHOLDER THEORY: Provides a deep dive into the historical development, foundational debates, and various classifications of stakeholder theory.
4. ETHICAL BEHAVIOUR IN ORGANIZATIONS: Explores models of individual ethical decision-making and the influence of cognitive moral development and situational factors.
5. SMALL AND MEDIUM-SIZED ENTERPRISES: Analyzes the specific characteristics of SMEs, such as informality and resource constraints, and their relevance to stakeholder management.
6. STAKEHOLDER MANAGEMENT IN SMEs: Introduces the proposed SME stakeholder management model and its underlying hypotheses.
7. THE CASE STUDIES: Presents and discusses the empirical findings from three Belgian micro-breweries to test the model's validity.
8. CONCLUSION: Synthesizes the results, affirming that personal ethics and situational factors significantly influence how SME owners manage their stakeholder relationships.
Keywords
Stakeholder theory, stakeholder management, small and medium-sized enterprises, SME, ethical behaviour in organizations, SME stakeholder management model, breweries, Belgium, personal ethics, cognitive moral development, power-interest map, moral intensity, social responsibility, entrepreneurial ethics.
Frequently Asked Questions
What is the core focus of this thesis?
The thesis focuses on how owner-managers of small and medium-sized enterprises (SMEs) manage their stakeholders, specifically examining the path from personal ethics and moral development to actual business engagement.
What are the central thematic fields?
The work centers on stakeholder theory, ethical decision-making in organizations, and the specific socio-economic context of small and medium-sized enterprises.
What is the primary research goal?
The goal is to derive and validate a descriptive model of stakeholder management in owner-managed SMEs, testing how personal values and situational constraints dictate business behavior.
Which methodology does the author apply?
The author employs a two-fold approach: a comprehensive theoretical literature review followed by explanatory qualitative case studies of three Belgian micro-breweries.
What is the main argument regarding SME stakeholder management?
The author argues that SME management is not solely driven by profit maximization; rather, it is deeply influenced by the owner-manager’s personal moral framework and unique internal/external organizational characteristics.
Which keywords define this study?
Key terms include stakeholder theory, SME stakeholder management model, ethical behaviour in organizations, and personal moral development.
How do individual moderators impact the model?
Individual factors such as education, family background, and the owner-manager's locus of control significantly influence how they perceive and prioritize different stakeholder claims.
Why were micro-breweries in Belgium chosen for the case studies?
The brewing sector in Belgium was selected because it represents a specific category of micro-enterprises that face distinct legal, moral, and cultural responsibilities, making them an ideal testbed for the SME stakeholder management model.
What role does 'slow food' play in the discussed cases?
In the case studies, the 'slow food' philosophy serves as a practical example of how personal and business objectives can merge, influencing the owner's ethical stance and stakeholder engagement.
- Quote paper
- Jens Hillebrand (Author), 2009, Stakeholder Management in Small and Medium-Sized Enterprises, Munich, GRIN Verlag, https://www.grin.com/document/143634
