When do Stakeholder Oriented Practices Foster a Competitive Advantage? Towards a Theory of Stakeholder Management Exploration and Exploitation

Carmelo Cennamo

Carmelo Cennamo (Department of Management and Technology and CROMA) published When do Stakeholder Oriented Practices foster a competitive advantage? Towards a theory of stakeholder management exploration and exploitation (CROMA Working Paper Series, 11/017), presented at the EIASM conference on Stakeholder Theory (IESE Business School, Barcelona, June 2010).

Abstract
Despite the wealth of research on stakeholder management (SM) and its impact on firm performance, there is no general consensus among scholars on the effects of stakeholderoriented activities on firm's capacity to transform it into economic value. We argue here that SM entails two distinct processes: exploration activities, aimed at identifying stakeholder salience and needs, and experimenting new practices for managing stakeholders; and exploitation activities, which leverage on existing knowledge about stakeholders to stabilize and coordinate firm-stakeholder relational exchanges. We develop propositions on the factors, at the environment and organizational level, that affect firm's propensity towards one or the other set of activities. The interplay of these factors and the combination of the explorationexploitation dimensions of SM lead to different SM strategic orientations Adaptive, Disruptive, Straggling, and Ambidextrous which may help explain performance differentials across firms.