Stakeholder Mismanagement and Corporate Social Responsibility Crises

In the past decade, the stakeholder approach has gained much acceptance among academics and practitioners. Noticeably, there has been little consideration of the motivations and processes used by businesses to avoid or neglect stakeholder power and pressures. This is all the more remarkable in the light of recent corporate social responsibility scandals in which these mechanisms seem to have been at work. In order to shed some light on the background, organizational mechanisms and strategies underpinning stakeholder mismanagement, this paper reports two studies involving businesses that have gone through a severe integrity crisis, one that focuses on a single company (Ahold) and one on an entire industry (the Dutch building industry). While taking place in a country well-known for its stakeholder-oriented 'polder model', various stakeholders groups saw their basic interests violated in both cases. Focusing on the nature of the corporate practices that have facilitated stakeholder mismanagement, mechanisms to reduce stakeholder power and to increase management power can be discerned in both cases, although the peculiarities and dynamics differ per case. Specific to Ahold is the impact of geographical diversification and its focus on customers, using various cuing mechanisms to present itself as socially responsive. The construction industry case points at a strategy of setting up industry-wide structures to manage relationships with a variety of stakeholders and building an environment that supports continuity.