Predicting Stakeholder Engagement
Bauer Research Investigates Stakeholder Engagement Strategy
Published on March 10, 2023
In a world where sustainability and inclusion are increasingly important to organizations and the customers they serve, corporate strategies often take into account multiple stakeholders.
A new C. T. Bauer College of Business research paper suggests a CEO’s stakeholder engagement strategy may be predictable based on two things: Their motivational profile and how they fit into the prevailing power structure.
Assistant Professor Sana (Shih-Chi) Chiu of the Department of Management & Leadership, is the lead author of “Predicting primary and secondary Stakeholder Engagement: A CEO motivation-Means Contingency Model,” published in the Journal of Business Research.
“The key question my study intends to answer is: What drives a firm’s stakeholder engagement strategy?” Chiu said. “To answer this question, we looked into a CEO’s motivation and power to predict a firm’s engagement with primary stakeholders (customers, shareholders, and employees) and secondary stakeholders (community, environment, NGOs, etc.).”
Previous research has established two types of motivating factors for CEOs: A prevention focus (those who are sensitive to security, obligation, and loss avoidance); and promotion focus (those who look for gains and growth opportunities).
Another defining characteristic for CEOs is their power base: Those who operate from a more formal power structure (serving as a board chair or holding equity ownership) or those who operate from a more informal power structure (having firm-specific experience and social connections).
While previous research has only considered one of those factors, Chiu’s research examines the influence of both. It finds that CEOs who are higher in prevention focus and who operate from a more informal power structure are more likely to attend to primary stakeholders’ interests and demands.
In comparison, CEOs higher in promotion focus and who operate from a more formal power structure are more likely to attend to secondary stakeholders’ interests and demands.
“One key takeaway from our research is that a specific type of power can help facilitate CEOs’ influence on their firms’ engagement with a particular type of stakeholders,” Chiu said.
Additionally, while previous research has tacitly presumed that CEO power may lead to entrenchment and self-serving tendencies, the new study “offers an alternative view of CEO power, which not only reinforces the adage that ‘the sole advantage of power is that you can do more good,’ but also suggests that having the appropriate type of power is key for CEOs who wish to achieve their stakeholder management goals,” the researchers write.
Chiu is an award-winning business educator who studies the psychological and cognitive factors that guide strategic leaders' decision-making in corporate changes, stakeholder management, and sustainability issues. Her publications have appeared in various outlets, including the Academy of Management Annals, Journal of Management, Journal of Applied Psychology, Leadership Quarterly, Journal of Business Ethics, and Journal of Management Studies, among others.