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The Stakeholder Approach in the Marketing Discipline
Speakers Madhu Viswanathan, Professor of Business Administration, College of Business, University of Illinois Daniel Korschun, Assistant Professor of Marketing, LeBow College of Business, Drexel University Moderator Mary C. Gentile, Ph.D., Giving Voice to Values and Babson College
Company, Community, and Beyond (Or Me, Us, and Beyond): A Sustainable Market(ing) Orientation for Stakeholders of the 21
st
Century?
Madhu Viswanathan University of Illinois, Urbana Champaign
Overview
• Who are the stakeholders of the 21
st
century?
• What is a sustainable market(ing) orientation to address all stakeholders?
• What are businesses doing about it?
• Qualifications
Perspectives on Poverty
Macroeconomic approaches Business strategy approaches – e.g., Bottom of Pyramid Subsistence marketplaces approach – microlevel buyer, seller, and marketplace behaviors
Research
Consumption and Entrepreneurship Across Literacy and Resource Barriers Marketing and Management in Subsistence Marketplaces Literacy, Poverty, Culture and Psychology
Social Initiatives
Consumer and Entrepreneurial Literacy Program - India Nutrition Education Materials - USA Sustainable Prod. & Mkt. Dev. for Subsistence Marketplaces Sustainable Businesses for Subsistence Marketplaces Sustainable Marketing Enterprises
Teaching
A market vendor sells mud cookies at the La Saline market in Port-au-Prince, Friday, Jan. 25, 2008. The cookies are made of dirt, salt and vegetable shortening. (AP | Ariana Cubillos)
Disappearing Lake Chad
The Sustainability of Water Bottles?
Climate Change
Source: http://www.news.wisc.edu/11878 Source: http://watersecretsblog.com/archives/reports/index.html
Some Collision Courses?
Population Explosion
Source: http://phillips.blogs.com/goc/2006/02/population_expl.html
http://www.geography.learnontheinternet.co.uk/topics/popn1.ht
ml
Characteristics of Subsistence Marketplaces
PRODUCTS
Resource constraints – Lack of affordability
Betterment of Life
Immediacy
Circumstances
(Make or) buy or forgo decisions of basic needs
RELATIONSHIPS
Resource constraints - Interdependence among individuals
Emphasis on the Human Dimension
1-1 Interactions and strong word of mouth Development of consumer skills
MARKETS
Resource constraints – Lack of mobility & dependence on groups
Negotiation of the Social Milieu
Fragmented, small and myriad Varied group influences differences
Sustainable Market Orientation
Purposeful Understanding of Subsistence Marketplaces Business Implications
Understanding life circumstances Multifaceted product offerings to improve welfare (educational campaigns, etc.)
Addressing Customer Needs and Welfare Business Implications
Fairness and trustworthiness Emphasis on individual and community welfare
Implementing Business Plans through Social Good
Characteristics of Businesses
Lack of Knowledge or Expertise with Subsistence Contexts Preconceptions About Subsistence Marketplaces Lack of Personal Connection to Subsistence Contexts Business Implications
Working with diverse groups Social good as common denominator
Business
Doing Good For Doing Well
Doing Good Doing Well
A Sustainable Marketing Orientation Beyond Subsistence Marketplaces?
• Sustainable market orientation - ingraining product-relevant
social good
– development of a deep-seated organizational understanding
of individual and community welfare as it relates to product offerings
– incorporation of the goal of enhancing such welfare into
business processes, outcomes, and assessments
– inculcation of product-relevant social good into the
organizational culture
• Why?
– Resource constraints arriving soon or already here – Connectivity – Interconnectedness and interdependencies – Interest groups • “Blessed Unrest” by Paul Hawken
Cradle to cradle?
• What is cradle to cradle?
• “This book is not a tree” – Durable, waterproof, recyclable – Technical nutrient – can be broken down and circulated infinitely in industrial cycles
Product Design Example
• My inventory – Avalon versus Prius • Because we can versus because we cannot!
– As consumers – As producers
• • •
Wal-Mart
Has launched a host of sustainable supply chain programs Implemented a new supplier packaging scorecard their progress toward developing sustainable packaging, as well as their ability to help Wal-Mart reach its company-wide sustainability goals to reduce waste, use renewable energy and sell Collaboration with GE to use fluorescent lights Source: http://franklycsr.wordpress.com/ 2008/02/04/sustainable-supply chain-initiatives-booming/
Source: http://www.unglobalcompact.org/docs/news_events/9.1_news_archives/2007_11_ 28/US_Starbucks.pdf
Source: http://www.unglobalcompact.org/docs/news_events/9.1_news_archives/2007_11_28/US _Starbucks.pdf
From Conventional to Sustainable Marketing?
• Central role of consumption in both the problems and the solutions for the twenty-first century – Consumption, overconsumption, and underconsumption • What is the role of marketing in sustainable development? • How should the marketing discipline adjust to looming opportunities and challenges related to accelerated development, poverty alleviation, and ecological disaster? – Has led to sophisticated techniques to understand consumer preferences and create valuable offerings – Can it address the deeper aspirations of vast populations?
– And in ecologically and socially sustainable ways?
Sustainable Marketing
• Marketing ideally suited?
– Focus on consumption and exchanges – Interface with the marketplace – Understanding broader environmental trends • A dopt a long-term perspective based on a deep understanding – of cultures – of radically different contexts of poverty – of ecological challenges – and of the nature of sustainable development • Understand shortcomings of a predominant focus on consumption with seemingly endless resources. • Understand the potential to create sustainable value in the broadest sense of the word • Adopt a sustainable market orientation that enables sustainable consumer behavior through sustainable product design…. • Explicitly infuse values such as ecological and social sustainability into the core of the marketing concept
Sustainable Marketing: From Customer Wants to Human Aspirations?
Thank You!
Marketing in Multi-Stakeholder Environments: Lessons from Corporate Social Responsibility Daniel Korschun
Drexel University The Aspen Institute September 3, 2009
Stakeholder Theory and Marketing: A Lengthy Courtship
Stakeholder Theory views an organization as collection of actors with whom it interacts Stakeholders put something at risk Stakeholders have legitimate claims on organizational wealth Continued calls to incorporate stakeholder theory in marketing (e.g., Kotler 1967-2009; Morgan & Hunt 1994; Wind 2006) “More attention to stakeholder theory must be central to marketing scholarship” (Lusch 2007) Failure to acknowledge the importance of stakeholders can feed “a new form of marketing myopia” (Smith, Drumwright, & Gentile 2009)
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Tenets of Received Wisdom
Companies form relationships with
stakeholder groups
by
allocating resources
in ways that meet the
diverse interests
of each group
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Tenets of Received Wisdom
Companies form relationships with
stakeholder groups
by
allocating resources
in ways that meet the
diverse interests
of each group Three “tenets” 1.
Assess stakeholder initiatives by expenditures 2.
Stakeholders reside in groups of likeminded others 3.
Trading-off stakeholder interests paramount
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Substantial Obstacles Remain
Common challenges in stakeholder management: Wide array of corporate activities involved Diverse demands of stakeholders Varied forms of exchange between company and stakeholders Some lingering questions: What do “good” company-stakeholder relationships look like?
What drives strong and enduring relationships?
How can managers/researchers address diverse interests of stakeholders?
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Corporate Social Responsibility: A Source for New Insights?
Enacted (frequently) at corporate level (e.g., Ford Foundation) Involves wide variety of stakeholders Tied closely to corporate identity Has normative as well as instrumental elements (see Donaldson & Preston 1995)
CSR = allocation of corporate resources to initiatives aimed at improving societal welfare
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Corporate Social Responsibility: A Source for New Insights?
Enacted (frequently) at corporate level (e.g., Ford Foundation) Involves wide variety of stakeholders Tied closely to corporate identity Has normative as well as instrumental elements (see Donaldson & Preston 1995)
Corporate Strategy 34
The Received Wisdom in Practice: An Example from a CSR Report Stakeholder Example Metric Investors Consumers Employees Community
Operating Earnings ($1.3 bln.) Number of new low sodium soups (32 in U.S.) Number of children in day care at HQ (80 100) Cumulative donation of food through “
Stamp Out Hunger!
” (900 M pounds)
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Tenet 1: Assess Stakeholder Initiatives by Expenditures
Two routes connecting CSR and corporate performance (Margolis et al. 2008)
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Tenet 1: Assess Stakeholder Initiatives by Expenditures
Two routes connecting CSR and corporate performance (Margolis et al. 2008) Direct Route
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Tenet 1: Assess Stakeholder Initiatives by Expenditures
Two routes connecting CSR and corporate performance (Margolis et al. 2008) Direct Route Indirect Route
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Tenet 2: Stakeholders Reside in Groups
Stakeholder groups
not
homogeneous
Individual Stakeholder Company 39
Tenet 2: Stakeholders Reside in Groups
Stakeholder groups
not
homogeneous Stakeholder responses to CSR activity not confined to single role (Sen, Bhattacharya and Korschun 2006; Bhattacharya Korschun and Sen 2008)
Individual Stakeholder Company 40
Tenet 2: Stakeholders Reside in Groups
Stakeholder groups
not
homogeneous Stakeholder responses to CSR activity not confined to single role (Sen, Bhattacharya and Korschun 2006; Bhattacharya Korschun and Sen 2008)
Individual Stakeholder Consumption Investment Employment Company 41
Tenet 3: Trading-off Stakeholder Interests is Paramount
Central mediator of CSR-Behavior link is identification (e.g., Bhattacharya, Korschun, Sen 2009; Maignan, Ferrell and Ferrell 2004; Drumwright, Cunningham and Berger 2006) Stakeholders are drawn to companies that share their values (repelled by those with value mismatch) Corporation can serve as super-ordinate identity (Korschun 2008)
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A Shift in Thinking Traditional Approach
Assess by expenditures Analyze at group-level Advance interests
Recommended Approach
Understand stakeholder psychology Analyze at individual-level Encourage expression of values
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Thank You!
The Stakeholder Approach in the Marketing Discipline
Speakers Madhu Viswanathan, Professor of Business Administration, College of Business, University of Illinois Daniel Korschun, Assistant Professor of Marketing, LeBow College of Business, Drexel University Moderator Mary C. Gentile, Ph.D., Giving Voice to Values and Babson College