Ethical Performance
inside intelligence for responsible business


listening and learning is key to making progress

May 2008

Stakeholder relations need to move on to another level if they are to be truly effective, says Jeremy Moon

Most of us are by now aware that stakeholder relations are important to companies, but sometimes we lose sight of why.

Ed Freeman’s latest book Managing for stakeholders: survival, reputation and success has some of the answers. He sees this as both the ‘right thing’ to do and the key to successful business.

His view not only represents a shift from the purely shareholder-oriented model of business but also from the management-centred stakeholder models. Freeman concludes that nothing is more important than educating managers to engage with stakeholders, but that the engagement has to be a two-way process. Too often businesses ask questions of their stakeholders but don’t really listen.

Recent corporate examples show, however, that learning from, rather than just talking to, stakeholders is becoming a priority. Marks and Spencer’s decision to adopt ‘Plan A’ – a series of ambitious social and environmental measures – was at least partly devised because of pressure from its employees and customers. Likewise, Cadbury Schweppes’s ‘Purple goes Green’ climate change campaign follows consultation with environmental think-tanks, advocacy groups and staff from site level projects.

These companies and others have realized that there is compelling evidence that stakeholder engagement provides opportunities for knowledge sharing and organizational learning. Indeed, our own studies at the Nottingham University have found that such engagement is increasingly critical to corporate community investment, as it enables businesses not only to know what is expected of them, but also to work out how their corporate responsibility aspirations can best be fulfilled.

No one is claiming that creating good stakeholder relations is easy. In some cases, companies have difficulty identifying who or which organizations actually speak for these stakeholders, and in other cases, particularly in civil society, stakeholders are so poorly represented that they need assistance in fulfilling their roles. This raises the difficult question of whether companies should help such organizations find their voice, with the risk of corporate capture that ensues.

However, win-win situations are not the result of wishful thinking: they usually require hard work, a lot of attentiveness, self-examination and review. If business is increasingly about long-term opportunities and issues, and if responsible business entails responsibility to stakeholders, then learning from stakeholders, not just listening to them, should also be central to any CSR strategy. This would lead to more collaborative, rather than hierarchical, stakeholder relations, and that can only be good for business.

Jeremy Moon is professor and director, International Centre for Corporate Social Responsibility, Nottingham University Business School


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