Case Study about Performance Management: Stakeholder Economy
Abstract: A practical application of stakeholder theory in a case study. The context, a South African company operating in a social polity of affirmative action toward racially-disadvantaged stakeholders and investors, provides an ideal setting to examine the moral tension faced by management between profit and social responsibility. A model of performance management is proposed that overcomes the dichotomy between the prioritisation of shareholders advocated by neo-classical economics and the wider interests of stakeholders. It uses three dimensions of performance criteria, specific to each stakeholder, and a fourth, value added, as an integrating mechanism.
Introduction: This research is a response to the frustration felt by many advocates of stakeholder theory that academic debate over the moral obligations of business has inhibited pragmatic application of the concept. Both these ‘normative’ and ‘instrumental’ considerations (Donaldson & Preston, 1994) are confronted in this case study of a para-statal company operating in South Africa subject to targets across a number of stakeholder groups because of government policy initiatives on black economic empowerment [BEE]. The normative dimension lies in whether management owe a duty to shareholders alone or to a wider group of stakeholders and, if the latter, whether interest is teleological or solely a means to generate shareholder wealth.
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