The role of community in the creation of value: the contribution of Stakeholder Theory

By James Walker

The weakness of traditional business ethics

The raw power of the markets, whether under mercantilism or capitalism, has always tussled with other powerful institutions, be they churches, philanthropic movements or governments, which have attempted to bring another set of values to bear, more human, social and compassionate. Today we talk about business ethics, but this idea, though fine in the abstract, is liable to be itself marketised, in the hierarchical world of corporate life, when the intrinsically spontaneous nature of human communal life is overridden.

Let me share a couple of imaginary workplace scenarios. In the first, a company holds a competition for staff each year in which they are told they must nominate some of their colleagues for a number of awards that have been created to show staff that they are valued. One of the awards is for the employee who best embodies the ethos of the company. The staff resent being forced to nominate colleagues. There is a high turnover of staff which means it is becoming increasingly difficult to build up relationships with each other or know each other on a personal level. Lots of people have had to reapply for their jobs due to the yearly restructuring of departments, and job titles have changed so much that nobody actually knows who does what anymore. The senior management team are insistent that all staff vote and when they don’t, they become angry.

In the second, another company is independently assessed for its ‘green’ values on a yearly basis. These ratings are vital in the sector for attracting new customers. When the auditors come to the company on Monday morning, the workplace has been transformed, much to the shock of the employees. Some ‘locally sourced, fair trade’ coffee has suddenly appeared in the kitchen. Posters appear in the hallway highlighting the importance of switching off computers at the end of the day. Projectors in meeting rooms are switched off. Once the auditing has been done the posters are taken down, the lights go back on, and the ‘locally sourced, fair trade’ coffee is replaced with the more familiar mass produced variety. The company is awarded a gold rating. The bosses are very proud and inform everyone by email.

The above scenarios highlight the kind of problems that arise when staff, who constitute a real community at the heart of every business, and the wider community in which the business thrives, are undervalued. In the first case none of the employees want to vote for a colleague as embodying the ethos of the organisation because they do not believe in the values of the company. These values are deemed duplicitous and the awards feel disingenuous. Senior management feel let down by their staff when there is a poor response and this is made known. In the second case the management are not concerned with living the principles of being a green company or encouraging their employees to do so as a contribution to the wider community. They just want to gain a high ranking so that their customers perceive them to be green. In both cases ethical principles have effectively become subservient to a short-term tactical advantage.

Stakeholder Theory attempts to address these shortcomings in business ethics by recognising the intrinsic communality of human interaction within the business world and incorporating the encouragement of this communality into long-term strategy. I will give a brief overview of Stakeholder Theory and then explain how I am attempting to apply its insights in my own work with large-scale digital literature projects.

An overview of Stakeholder Theory

A stakeholder is anyone with an interest or concern in something, especially a business. Therefore, stakeholders can be individuals, groups or organisations that are affected by the activity of the business. In terms of a traditional business we could define stakeholders as having the following roles or interest:

  • Business owner – concerned about profit and in some cases appeasing shareholders. They are aware of competitors. They are responsible for key decision making.
  • Managers – concerned about salaries and putting in place processes to achieve the owner’s goals.
  • Workers – want job security and good wages.
  • Customers – expect a certain level of service.
  • Suppliers – rely on the success of the business because they need organisations to buy their products.
  • Lenders – need paying on time.
  • Local community – the business could affect them in a variety of ways.

In addition to this we could also classify stakeholders as being internal or external to the organisation.

The key thinker on this subject is R. Edward Freeman of the Darden School of Business at the University of Virginia. He argues: “You can’t look at any one stakeholder in isolation. Their interest has to go together and the job of a manager is to figure out how the interests of customers, suppliers, communities, employees and financiers go in the same direction.”

Most importantly, he emphasises that business and ethics need to work in harmony. Whereas old school industrial capitalism had a faceless approach to business whereby ‘stakeholder’ really meant ‘stockholder’, Freeman argues that Stakeholder Theory gives a ‘face’ and ‘name’ to individuals. It brings in the human element that has long been missing from the workplace. He even goes as far as to suggest:  “What makes capitalism work is our desire to create value for each other. Not our desire to compete. Capitalism is the greatest system of social collaboration ever invented. It’s about how we cooperate together to create value for each other.”

This idea of ‘value creation’ is vitally important, particularly in that all stakeholders need to create value through their respective roles. This suggests equality, as well as an interconnectedness in the workplace. Value is not something that can be imposed or, as per my opening examples, fabricated. Through respect for each other and an awareness of how value is created, I believe the insights of Stakeholder Theory have the potential to turn any negative into a positive.

Applying Stakeholder Theory to a digital literature project

I am currently creating an interactive memory theatre (or cabinet of curiosity) that celebrates the life of a controversial writer from Nottingham. It will include artefacts in each drawer that tell the writer’s story. The writer in question lived a nomadic life, travelling the world in search of a community of like-minded people. Therefore, our memory theatre will retrace his journey, stopping off in the same cities and countries he visited. Audiences will be able to engage with the memory theatre through digital screens, adding their own memories and reactions to the selected artefacts, thereby enabling the memory theatre to gain in provenance as it journeys along.

The writer in question was born in a town northwest of Nottingham towards the end of the 19th century. During this period the area was highly prosperous due to growing industries and the development of the Midland Railway Company that enabled goods, such as coal, to be transferred across the country. Many people flocked to the area for work and the population soon began to expand.

Nowadays, local people resent the success of this author because he turned his back on his community and was highly critical of what he perceived to be the dehumanising effects of industrialisation: The mining industries at the time were the main employer. His novels contain many references to real people and real situations, many of which he barely attempts to disguise. This personal betrayal continues to anger generations of those affected.

Despite this, locals cannot escape him. A pub, café, community centre, school and roads bear reference to his name, as does the surrounding area. Given that his birthplace town is now a relatively deprived area, his success is constantly thrust at people and consequently he is resented by many. By applying stakeholder theory we have the opportunity to rectify this.

In October 2016 I got a call from a funding body saying that a local MP was interested in further commemorating the writer by putting a statue up of him in his home town and asking what I thought. I admitted I couldn’t see the point, as there were already two statues of the author located in Nottinghamshire. I am also sceptical of the gesture as the local Council has recently sold off a property associated with the writer. One more statue creates no additional value as far as I am concerned and would most likely involve commissioning a sculptor who does not live in the local area.

Stakeholder Theory positions ‘community’ as having equal say in how meaning is produced and value is created for all. The memory theatre project has the potential to repair damage in the affected community by employing a local joiner to help build the memory theatre as well as sourcing materials from local suppliers. In doing this, we open up the conversation from a different perspective. When we work with trades people we have the opportunity to explain why the memory theatre needs to be built in a particular way. We can discuss elements of the writer’s life that need to be drawn out in the design in a way that is not prescriptive but via consultation. We will put money in their pockets, something I am sure locals will be more pleased about than a random statue imposed on their town. They in turn will talk about the project with friends, in the pub. Culture, as Raymond Williams and many others have shown us, comes from below, not from above.

The writer at the heart of my project lived an incredible life. He suffered persecution and censorship for nearly everything he wrote. He lived large parts of his life in absolute poverty, often being put up by friends. He consistently defied authority and was highly critical of those in power. Post-2008 working conditions have produced a new class of worker – ‘the precariat’ – for whom every area of life lacks security (Standing, 2011), the writer’s message bears even more relevance. Consulting, listening and empowering the local community on my project is one way of getting this message across. Thrusting a static statue on them will only do more damage.

References

R. Edward Freeman (2009), Stakeholder Theory Youtube lecture https://www.youtube.com/watch?v=Ih5IBe1cnQw

Guy Standing (May 24, 2011). “The Precariat – The new dangerous class”. Policy Network.

 

James Walker is a lecturer in Digital Humanities at Nottingham Trent University. He specialises in digital literary criticism. He is the editor of The Sillitoe Trail, which explores the enduring relevance of Alan Sillitoe’s Saturday Night and Sunday Morning and more recently Dawn of the Unread, a graphic novel serial exploring Nottingham’s literary history. www.dawnoftheunread.com

 

 

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