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  Stakeholder frameworks

Freeman's  characteristics for ‘stakeholder firms’
Freeman has  established a set of fundamental characteristics for ‘stakeholder firms’ that could guide the design of a stakeholder approach to strategic management. These principles include:

·     a stakeholder approach emphasizes active management of the business environment, relationships and the promotion of shared interests to  ensure the long-term success of the firm;

·     the interests of key stakeholders must be integrated into the very purpose of the firm, and stakeholder relationships must be managed in a coherent and strategic fashion. Good stakeholder management develops strategies that are viable for stakeholders over the long run so that while individual stakeholders may lose out on some individual decisions, all stakeholders remain supporters of the firm;

·     a stakeholder approach is intended to provide a single strategic framework, flexible enough to deal with environmental shifts without requiring managers to regularly adopt new strategic paradigms;

·     a stakeholder approach is a strategic management process actively plotting a new direction for the firm by considering how the firm can affect the environment as well as how the environment may affect the firm. Therefore understanding stakeholder relationships is, at least, a matter of achieving the organization’s objectives which is in turn a matter of survival;

·     the stakeholder framework does not rely on a single over-riding management objective for all decisions. As such it provides no rival to the traditional aim of “maximizing shareholder wealth”. Stakeholder management is a never-ending task of balancing and integrating multiple relationships and multiple objectives;

·     diverse collections of stakeholders can only cooperate over the long run if, despite their differences, they share a set of core values. For a stakeholder approach to be successful it must incorporate values as a key element of the strategic management process.

Freeman’s analysis framework

Freeman proposed three levels of stakeholder analysis - rational, process and transactional.

At the rational level, an understanding of ‘who are the stakeholders of the organisation’ and ‘what are their perceived stakes’ is necessary. Freeman uses a generic stakeholder map as a starting point which can be also specified for each major strategic issue. The stakes of each specific stakeholder group are identified and analysed and linked to their ‘power’ characteristics.


At the process level, the organisation either implicitly or explicitly manages its relationships with its stakeholders, and therefore processes should designed/refined to reflect the rational of the stakeholder map of the organisation. According to Freeman, existing strategic processes that work reasonably well could be enriched with requirements for multiple stakeholders. For this purpose, he uses a revised version of Lorange’s schema for strategic management processes.


At the transactional level the organisation manages stakeholder negotiations in line with the stakeholder map and the organisational processes. According to Freeman successful transactions with stakeholders require an understanding of the legitimacy of the various stakeholders and processes enabling stakeholders to routinely surface their concerns.

Stakeholder relations quality

Stakeholder engagement process

Stakeholder oriented performance management

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