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Welcome!This web conference will begin at 1 pm Easterntime.
If you have not already done so, please “sync”your telephone and computer as detailed in the“voice connection” tab at the bottom right-handcorner of your screen.
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 21st Century?Madhu Viswanathan
University of Illinois, Urbana-Champaign
Overview
• Who are the stakeholders of the 21st 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
Marketing and Management in Subsistence Marketplaces
Consumption and Entrepreneurship Across Literacy and Resource Barriers
Literacy, Poverty, Cultureand Psychology
Consumer and Entrepreneurial Literacy Program
- India
Nutrition Education Materials - USA
Sustainable Prod. & Mkt. Dev. forSubsistence Marketplaces
Social Initiatives
Research
Sustainable Businesses for Subsistence Marketplaces
Teaching
Sustainable Marketing Enterprises
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)
Climate Change
Source: http://www.news.wisc.edu/11878
Source: http://watersecretsblog.com/archives/reports/index.html
Population Explosion
Source: http://phillips.blogs.com/goc/2006/02/population_expl.htmlhttp://www.geography.learnontheinternet.co.uk/topics/popn1.html
Lack of Knowledge or Expertise with
Subsistence Contexts
Lack of Personal Connection to Subsistence
Contexts
PreconceptionsAbout Subsistence
Marketplaces
Characteristics of Businesses
PRODUCTS
Betterment of Life Circumstances
Resource constraints – Lack of affordability
(Make or) buy or forgo decisions
Immediacy of basic needs
Characteristics of Subsistence Marketplaces
RELATIONSHIPS
Emphasis on the Human Dimension
Resource constraints - Interdependence among individuals
1-1 Interactions and strong word
of mouth
Development of consumer skills
MARKETS
Negotiation of the Social Milieu
Varied group influences
Resource constraints – Lack of mobility & dependence on groups
Fragmented, small and myriad
differences
Sustainable Market Orientation
Purposeful Understanding of
Subsistence Marketplaces
Addressing Customer Needs and Welfare
Implementing Business Plans through Social Good
Business Implications Fairness and trustworthiness
Emphasis on individual and community welfare
Business Implications Understanding life circumstances
Multifaceted product offerings to improve welfare (educational campaigns, etc.)
Business Implications Working with diverse groups
Social good as common denominator
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
Source: http://franklycsr.wordpress.com/2008/02/04/sustainable-supply-chain-initiatives-booming/
• Has launched a host of sustainable supply chain programs
• Implemented a new supplier packaging scorecard on February 1 that formally rates suppliers on 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 sustainable products
• Collaboration with GE to use fluorescent lights
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
• Adopt 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
Marketing in Multi-Stakeholder Environments:
Lessons from Corporate Social Responsibility
Daniel KorschunDrexel 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)
29
Tenets of Received Wisdom
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Companies form relationships with stakeholder groups by allocating resources in ways that meet the diverse interests of each group
Tenets of Received Wisdom
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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
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?
33
CSR = allocation of corporate resources to initiatives aimed at improving societal welfare
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 Social Responsibility:A Source for New Insights?
34
CSR
Strate
gy
Corporate Strategy
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)
The Received Wisdom in Practice: An Example from a CSR Report
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Stakeholder Example Metric
Investors Operating Earnings ($1.3 bln.)
Consumers Number of new low sodium soups (32 in U.S.)
Employees Number of children in day care at HQ (80-100)
Community Cumulative donation of food through “Stamp Out Hunger!” (900 M pounds)
Tenet 1:Assess Stakeholder Initiatives by Expenditures
Two routes connecting CSR and corporate performance (Margolis et al. 2008)
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Direct Route
Tenet 1:Assess Stakeholder Initiatives by Expenditures
Two routes connecting CSR and corporate performance (Margolis et al. 2008)
37
Direct Route
Tenet 1:Assess Stakeholder Initiatives by Expenditures
Two routes connecting CSR and corporate performance (Margolis et al. 2008)
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Indirect Route
Tenet 2: Stakeholders Reside in Groups
Stakeholder groups not homogeneous
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Individual Stakeholder Company
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)
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Individual Stakeholder Company
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)
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Individual Stakeholder
Consumption
Investment
Employment
Company
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
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Traditional Approach
Assess by expenditures
Analyze at group-level
Advance interests
Recommended Approach
Understand stakeholder psychology
Analyze at individual-level
Encourage expression of values
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