Managing and Partnering with External Stakeholders

Managing and partnering

with external stakeholders

leffrey S. Harrison and Caron H. St. lohn

Executive Overview The weakening of the traditional management hierarchy, the hollowing out of

corporations, and an increasing management emphasis on boundarylessness

have created a new mind set concerning external stakeholders. Increasingly,

organizations are moving beyong traditional stakeholder management

techniques to partnering tactics that lead to the achievement of common goals.

In spite of these trends, there has been very little effort in the management

literature to tie stakeholder management and partnering tactics. This article

demonstrates how successful partnerships with stakeholders create such valued

benefits as increased product success rates, increased manufacturing efficiency,

the development of distinctive competencies arising from partnerships with local

communities or government agencies, reduced unfavorable litigation, reduced

levels of negative publicity, and favorable regulatory policies.

Business already is moving to organize itself into virtual corporations:

fungible modules built around information networks, flexible work forces,

outsourcing and webs of strategic partnerships.'

This statement from a recent Fortune magazine cover story reflects the times we

live in. Organizational boundaries are becoming fuzzy. Traditionally

independent external stakeholder groups such as suppliers and customers are

included in product design, quality training and other formerly confidential

internal processes. Cross-ownership among organizations that have stakes in

each other has created keiretsu-type alliances not only in Japan but in most

other industrialized nations. These alliances can facilitate the flow of

information and capital and enhance planning processes.

Ford, for example, has formed an extensive keiretsu through equity holdings,

acquisitions, international alliances and research consortia. Ford has large

equity