Stakeholders

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Asian Social Science

Vol. 8, No. 10: August 2012

Managing Stakeholders: An Integrative Perspective on the Source of Competitive Advantage Minyu Wu' ' School of Business, Curtin Universify Sarawak, Sarawak, Malaysia Correspondence: Minyu Wu, School of Business, Curtin Universify Sarawak, CDT 250, 98009 Miri, Sarawak, Malaysia. Tel: 60-8-544-3844. E-mail: minyu.wu@curtin.edu.my Received: March 19, 2012 doi:10.5539/ass.v8nl0pl60 Abstract Despite the enormous amount of academic work contributed to research on competitive advantage, a comprehensive framework that includes both intemal and extemal atü-ibutes of the firm still remains undeveloped. This paper seeks to use a stakeholder perspective to examine the source of competitive advantage. Competitive advantage can be viewed as a firm's abilify to contribute more customer value than its competitors. It endeavors to drive the largest gap between the buyer's willingness-to-pay and the supplier's opportunify cost. If stakeholders can be categorized by their relative potential on threat and cooperation, strategies for managing stakeholders are used to maximize their cooperative potential and minimize their potential threat so as to capitalize on value creation. Keywords: competitive advantage, resource-based view, stakeholder theory 1. Introduction Stakeholder interactions have recently become a critical issue for managers, as they increasingly face complex, ambiguous, and changing sun-oundings. In the past few decades, following dramatic technological advancement and intemational political refonn, the world economy has experienced an historical change. ThatJcs to infonnation technology and economic globalization, we are moving into a 'post-capitalist sociefy' where knowledge also becomes 'the means of production' and the free market plays a role as the dominant mechanism of economic integration (Drucker, 1993). Today, managers encounter many challenges that are more complicated and more difficult than before. In this networked 'new economy', firms are confronted with not only •hypercompetition' from strong competitors (D'Aveni, 1994) but also emerging economic orders and social impacts related to powerful stakeholders. Since Freeman (1984) presented his seminal work, which viewed stakeholder management as 'a stakeholder approach to strategic management', stakeholder management has progressively become a popular topic for management and business research. Stakeholder interactions offer both challenges and opportunities to an organization, as multiple stakeholders demand more meaningfril participation, while having the potential to confribute to creative solutions to complex issues (Svendsen & Laberge, 2005). In line with Freeman's (1984) argument, scholars increasingly view stakeholder management as a crucial part of strategic management, rather than just an altemative approach. For example, Kay (1993) freats corporate strategy as a response to multiple stakeholders and maintains that stakeholder relationships affect organizational sfrategic decisions and contribute to its success or failure. Wolfe and Putler (2002) argue that stakeholder management is a useful approach for successful firms to align both their strategic goals and decisions to stakeholder requirements. Halal (2001) regards stakeholders as partners who cooperate with the firm and encourage knowledge sharing to generate both economic and social values. In this view, stakeholder management plays an important role in enhancing finn competence with regard to knowledge generation. Hall and Martin (2005) highlight the significance of iimovative uncertainfy influenced by stakeholders and suggest that enterprises need to adopt different approaches according to various situations of stakeholder ambiguity and complexity. As these authors suggest, the traditional view of strategic management is insufficient for managers to achieve their sfrategic goals in a complex and dynamic environment. An...
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