This paper examines the nature and importance of stakeholder relationships in international business, tracing how the concept has evolved from the industrial age through modern globalization. Drawing on frameworks from Johnson and Scholes, Greenley, and others, the paper defines internal, marketplace, and external stakeholder categories and analyzes how influence and power operate between businesses and their stakeholders. It also addresses the ethical dimensions of managing these relationships in a global context, particularly the responsibilities of multinational companies toward foreign employees, citizens, and communities. The paper concludes that mutually beneficial stakeholder relationships are essential to sustainable global business success.
The business world has seen many evolutions over the centuries. One constant, however, remains: the central premise of business has always been to provide for a perceived need, whether that need has been somewhat artificially created or manifests itself as a genuine one. Businesses have also always had stakeholders. The way in which businesses have managed their relationships with stakeholders has, however, significantly evolved over time. During the industrial age, in particular, businesses were so focused on profit and speed of service that they tended to neglect their internal stakeholders in favor of external ones. Externally, they also tended to favor those who could directly benefit the business over those who were directly affected by its practices.
Today, business ethics are at the heart of many stakeholder relationships. One of the most significant evolutions the business world has seen since the industrial age is globalization. This phenomenon brought with it a range of new ethical issues and new types of stakeholders to consider. To survive in the competitive global business environment of today, it has become vital for businesses to define and take into account the needs of their internal and external stakeholders in terms of both influence and business ethics.
In a general definition of the concept of stakeholders, Mullins (2010, p. 714) notes that a stakeholder is any person or group of individuals with an interest in a business, or who are affected in some way by its goals, operations, or activities, or by the behavior of its members. It is therefore important for a business to clearly define the types of stakeholders that might be influenced by its existence and to determine ways in which to manage these relationships in both an influential and ethical manner.
In the global arena, this has become particularly important, since there are now more stakeholders than ever before as a result of the sheer number of individuals and groups affected by the practices and behaviors of businesses both on their home turf and internationally. Understanding stakeholder theory provides a useful foundation for any organization navigating this complexity.
In defining the importance of stakeholders, Johnson and Scholes (1993, p. 175) identified three aspects according to which the strategic manager would need to make judgments regarding stakeholder relations. The first is the likelihood of, and the level to which, each stakeholder individual or group is able to impress its expectations on the company. This relates to stakeholder influence, which may operate at a high or low level. An example of this could be a cultural group in China that objects to the manufacture of a certain product because of its perceived threat to local customs. Related to this is whether the group in question has the means of exercising that influence, and finally, the likely impact of current stakeholder expectations on future strategy. In the China situation, the company might need to consider product modification to more closely adhere to the local stakeholder requirement.
These considerations focus on the influence and power of stakeholders. According to Johnson and Scholes (1993, p. 176), influence can be derived from various sources and exerted by various parties within the business relationship, including managers and stakeholders alike. From the management viewpoint, for example, influence can emerge from the personal qualities of individual leaders. In groups, influence derives from a high level of consensus among several individuals. In this way, a manager can use personal influence to shape the consensus within the company and further its specific strategy. Companies can thus influence their stakeholders by persuading them to buy products, for example, or by maintaining a sense of goodwill that encourages others to invest in their products and services.
"Four sources through which stakeholders exert power"
"Greenley's three-category stakeholder classification system"
"Ethical obligations of multinationals toward foreign stakeholders"
Stakeholders in any business play an important part in the success of that business. At the same time, businesses should work to provide the highest possible level of benefit to their stakeholders. Globally, this relationship should be mutually beneficial. As businesses continue to expand across borders, a principled and well-structured approach to stakeholder management — one grounded in both strategic awareness and ethical responsibility — will remain essential to long-term success.
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