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cation:
Stakeholder Truste
d
Theories
Now that we’ve reflected on the contested nature of what might be considered a stakeholder, let’s
dig a little deeper. There are some helpful theories about stakeholders to guide our thinking,
including normative stakeholder theory, managerial stakeholder theory and political stakeholder
theory.

Remember that our guiding question for part one was “can a river be a stakeholder?” Now I’d like
you to consider “should an organisation consider a river as a stakeholder?” Just keep this in the back
of your mind as we proceed.

To help position your approach to this question, I’d like you to just skim through the part of the
Global Reporting Initiative which outlines the idea of ‘Materiality’. This is just to give you an idea
about how organisations engage with their stakeholders, and how they work out whether a
particular issue warrants their attention, so no need to spend too much time on that reading.

The other article I’d like you to read is another Guardian article, which will give you some
background on a particular incident involving Rio Tinto and its Indigenous stakeholders in Australia.

Okay, so we’re going to talk about theories – what is a theory? There are some useful metaphors to
help us understand what a theory is. Two of my favourites are theory as a scaffold, and theory as a
lens.

First: theory as a scaffold. When you see a new building being constructed (especially large buildings
like high rises), you’ll notice the scaffolding going up first – it helps the builders to reach higher as
they build. Building a high rise is a very complicated process, and the scaffold helps with this.
Metaphorically, theories can be considered as scaffolding for our thinking. We are also constructing
complex thoughts and ideas, and we need a kind of guide for doing so – that’s a theory. Different
theories will help us ‘build’ different ideas, and help us to extend our thinking beyond what we might
ordinarily be able to ‘reach’.

OR: we can think of theory as a kind of lens. There are always a lot of different ways to examine
complex problems, and its helpful to examine from a few different perspectives, if we want our
thinking to be robust. For this, we can look through different ‘lenses’, or theories, to see different
aspects of a topic. Just like if you put on rose tinted glasses, or sunglasses, you’ll see things
differently to if you use a set of binoculars, or your reading glasses. In the same way, if you examine
an issue through a particular theoretical lens, different aspects will become visible.

Some more conventional ways of understanding theory include:

• a set of principles on which the practice of an activity is based.

• an idea used to account for a situation or justify a course of action.
• A guide for exploring new ideas

Since we’re examining the issue of stakeholders, we’ll need some theories (scaffolds) that will help
us to shape and extend our thinking about stakeholders. There are quite a few theories that we can
use to consider this issue, but we’ll be looking at three of the most important, or seminal
stakeholder theories: Normative, Managerial and Political stakeholder theories. Just like putting on
different sets of glasses, each of these theoretical frameworks brings to light different ways of
considering stakeholders.
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Remember in part one, we read through some cation: definitions of stakeholders which we equated
with a ‘broad’ or ‘systems’ view? The theory Truste which is most aligned with the broad view is
Normative Stakeholder Theory. This theory is d also known as ethical stakeholder theory, and
if you remember some of the implications of the broad view, which we discussed, you’ll see why.

Looking through the lens of Normative stakeholder theory, we will see that an organisation should
be accountable to all stakeholders, not just those who have a high level of salience. When we look
through this lens, the boundaries of any organisation become a little blurry, and if managers are
responsible for the impacts of their decisions on every stakeholder, then its hard to see where the
boundary of an organisation ends, and everything else begins. For example, if ExxonMobil is
responsible for the emissions associated with their petroleum products, then is the climate part of
the organisation? This might be a radical thought, but lets bring it back to our guiding question:
should a river be considered a stakeholder? If we ask this question while we’re looking through the
lens of normative stakeholder theory, then our answer is likely to be a resounding yes.

If we ask that same question through the lens of managerial stakeholder theory though, we will get a
different answer. Managerial stakeholder theory aligns with the narrow view of a stakeholder – so
that the more ‘salient’ stakeholders are, the more their concerns need to be addressed.

Consider one of the implications of this theoretical lens: when only stakeholders who hold a financial
stake in the business are considered (for example, shareholders), then the interests of other, non-
financial stakeholders (for example, an Indigenous community, or a river) are likely to be ignored.
Taking this scenario one step further, what if it is in the financial interest of salient stakeholders (let’s
say shareholders again) to cause injury to the non-financial, less salient stakeholders (let’s say an
Indigenous community or a river)? Through the lens of managerial stakeholder theory (or the narrow
view), this action would be justified. Does that sound a bit too villainous to be real? Let me draw
your attention to the Juukan Gorge case (in the Guardian article you’ve read), where the managers
of Riot Tinto did exactly that. Luckily society is evolving, and there was such public outrage (ie the
stakeholders became very salient) that several of the senior managers involved in that decision lost
their jobs, and Rio Tinto is changing their policy to avoid similar outcomes in the future.

One stakeholder theory that takes such power relations into account is political stakeholder theory.
Political stakeholder theory also aligns with the broad view we discussed in part 1, however it takes
different levels of salience into consideration – not to say that stakeholders with less salience
shouldn’t be considered (as managerial stakeholder theory does), but that salience is an important
factor which actually does play an important role. Being cognisant of the power dynamics (different
levels of salience) between stakeholders helps us to better understand the ways organisations
engage with less salient stakeholders. For example, the political disadvantage of the Puutu Kunti
Kurrama and Pinikura people helps us to understand perhaps why Rio Tinto overlooked the harm
that was being caused by their actions, or at least how they might have justified the decision to
cause such harm.

If we are thinking in terms of non-human stakeholders, we could also use political stakeholder
theory to highlight the lack of public visibility the Juukan Gorge had, at least prior to this
controversy. Most Australians may not have even heard of this Gorge, indicating a very low level of
salience for the Gorge itself. If we use the lens of political stakeholder theory, this helps us to see
how the imbalance of political power may have played a role in the Rio Tinto managers decision
making.
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Recall our guiding question: Should an cation: organisation consider a river as a
stakeholder? Has your answer changed? Some Truste important points you might like to consider as
you reflect on your answer to this question d include:

• How can the managers of an organisation know the interests of Nature?

• In the case of the Juukan Gorge, is it a stakeholder itself, or are the Traditional Owners the
stakeholders?

• What are some of the challenges in considering a river (or another part of the natural world)
as a stakeholder? What are some of the benefits?

• Having viewed the materials, how do you feel differently about whether a river (or other
non-human actors) should be considered as organisational stakeholders?