QUT Digital Repository: http://eprints.qut.edu.au/

Beach, Sandra (2009) Who or what decides how stakeholders are optimally engaged by governance networks delivering public outcomes? In: 13th International Research Society for Public Management Conference (IRSPM XIII), 6–8 April 2009, Copenhagen Business School, Fredericksberg.

© Copyright 2009 [please consult the authors]

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INTERNATIONAL RESEARCH SOCIETY FOR PUBLIC

MANAGEMENT CONFERENCE 2009, COPENHAGEN

DOCTORAL PANEL

TITLE: Who or what decides how stakeholders are optimally engaged by

governance networks delivering public outcomes?

AUTHOR:

Ms Sandra Beach, Queensland University of Technology, Australia,

sandra.beach@qut.edu.au

SUPERVISORS

Professor Kerry Brown, Queensland University of Technology, Australia

Doctor Robyn Keast, Queensland University of Technology, Australia

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Abstract As the problems involving infrastructure delivery have become more complex and

contentious, there has been an acknowledgement that these problems cannot be resolved by

any one body working alone. This understanding has driven multi-sectoral collaboration and

has led to an expansion of the set of actors, including stakeholders, who are now involved in

delivery of infrastructure projects and services. However, more needs to be understood about

how to include stakeholders in these processes and the optimal ways of developing the

requisite combination of stakeholders to achieve effective outcomes.

This thesis draws on stakeholder theory and governance network theory to obtain insights

into how three networks delivering public outcomes within the Roads Alliance in Queensland

engage with stakeholders in the delivery of complex and sensitive infrastructure services and

projects. New knowledge about stakeholders will be obtained by testing a model of

Stakeholder Salience and Engagement which combines and extends the stakeholder

identification and salience theory (Mitchell, Agle, and Wood, 1997), ladder of stakeholder

management and engagement (Friedman and Miles, 2006) and the model of stakeholder

engagement and moral treatment of stakeholders (Greenwood, 2007).

By applying this model, the broad research question: “Who or what decides how stakeholders

are optimally engaged by governance networks delivering public outcomes?” will be

addressed. The case studies will test a theoretical model of stakeholder salience and

engagement which links strategic management decisions about stakeholder salience with the

quality and quantity of engagement strategies for engaging different types of stakeholders.

The outcomes of this research will contribute to and extend stakeholder theory by showing

how stakeholder salience impacts on decisions about the types of engagement processes

implemented. Governance network theory will be extended by showing how governance

networks interact with stakeholders through the concepts of stakeholder salience and

engagement. From a practical perspective this research will provide governance networks

with an indication of how to optimise engagement with different types of stakeholders.

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INTRODUCTION

Background

As communities are turning to government and industry for integrated solutions to their

issues, stakeholders have become more important in policy development and service delivery

(Clarkson, 1995) especially in situations where government and business by themselves are

considered to have failed. This heightened awareness of stakeholders has occurred within the

context of rapidly changing environmental conditions, loss of trust in government, and

shifting citizen expectations (Bloomfield, Collins, Fry, and Munton, 2001). It has also been

prompted by the co-ordination and accountability problems resulting from the privatisation

and contracting out of government functions to the not for profit and business sectors.

The resultant degradation of skills (Farazmand, 2002) and disruption of networks of

relationships (Bulder, Leeuw, and Flap, 1996) within government, between sectors and with

service users and stakeholders, has driven the need for a different form of governance which

would achieve objectives through relationships based on mutual interdependence rather than

through control by price signals or administrative authority (Larson, 1992). As a result, there

has been a growth in collaborative governance arrangements, including governance networks

which provide a framework for the horizontal co-ordination of public, corporate and

community interests and actions which are linked by resource dependencies (Provan and

Milward, 1995).

Consequently governance networks have come to the fore as a mechanism for organising

activities and bringing together a broader range of actors required to resolve contentious and

fast paced problems (Keast, Mandell, Brown, and Woolcock, 2004). However, governance

networks differ from other complex organisational forms. Firstly, three forms of governance:

hierarchical, market and network can simultaneously exist within the one governance

network creating great complexity. Secondly, governance networks convened under the

auspices of government face the challenge of managing the dominance of government in a

networked relationship. Finally the capacity of network members to relinquish

representational roles in favour of the collective network approach is also a complicating

factor. As a result, it has been acknowledged (Agranoff and McGuire, 2001; Keast and

Hampson, 2007; Mandell, 2001) that governance networks require new management

approaches because conventional management strategies may be less effective in this

relational context.

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Maintaining relationships with stakeholders has been and continues to be difficult because of

the range of actions and strategies that stakeholders employ to influence organisations and the

impact this can have on project completion and delivery of outcomes (Freeman, 1984). As a

result, organisations have had to deal with stakeholder influencing strategies that range from

hostile to conciliatory through to collaborative (Frooman, 1999; Hardy and Phillips, 1998).

However, governance networks responsible for delivering public outcomes face an additional

layer of complexity resulting from their context and in particular, managing stakeholder

expectations in a political environment.

This also raises the question of whether or not current models of stakeholder engagement

used within collaborative governance settings are flexible enough to incorporate the overtly

political context in which these networks operate. Therefore it could be argued that models

of stakeholder engagement which have been derived from the business context require

modification to operate effectively in networked public settings. Context is particularly

important for governance networks delivering sensitive infrastructure outcomes because

business focused models of stakeholder engagement are not calibrated for the difficulties

associated with delivering infrastructure across multiple jurisdictions, sectors and geographic

locations and different political circumstances. Further adding to the complexity,

infrastructure development has recently become an urgent national priority as the Australian

government accelerates major infrastructure construction to dampen the effects of the global

financial crisis (Minister for Infrastructure Transport Regional Development and Local

Government, 2008).

However, despite the criticality of infrastructure services to consumers and the scale and

sensitivity of the infrastructure being developed, the focus of stakeholder involvement by

infrastructure networks has been largely project focused (Atkin, 2008). Given the time

pressures currently being applied by the Australian government to drive economic security

through development of infrastructure, a broader approach to stakeholder engagement is

required to ensure that a range of perspectives are captured in delivering this infrastructure.

There is evidence that a broader perspective on stakeholder engagement is beginning to

emerge. For example, the inclusion of stakeholders in transport research and development

was studied by Switzer and McNeil (2004). More recently, Koppenjan, Charles and Ryan

(2008), conceptualised a stakeholder approach to public values in infrastructure projects.

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However, what is still lacking is a robust model for understanding the importance of various

types of stakeholders to governance networks and the appropriate strategies for engaging with

these stakeholders to create public value.

This study will fill the gap in knowledge about successful strategies for identifying and

managing stakeholders of governance networks delivering public outcomes and as a result,

offer insights and provide a rationale for strategic decision making about stakeholders.

However, while the context for this study is infrastructure governance networks, the

theoretical framework to be developed will not be dependent upon or limited to this context.

DEFINITIONS

Within the literature on stakeholders and governance networks, a number of terms and

constructs are used to discuss the inclusion of actors involved in governance and decision

making processes. As some of these terms are used interchangeably confusion can arise.

Table 1 outlines a set of key definitions drawn from the literature which will provide a

foundation for this thesis.

Table 1 Definition of Terms

TERM DESCRIPTION Governance networks

“Public policy making and implementation through a web of relationships between government, business and civil society” (Klijn and Skelcher, 2007, p. 587)

Stakeholder Groups or individuals who can actually or potentially affect or be affected by the achievement of governance network outcomes (Mitchell et al., 1997, p. 869)

Stakeholder engagement

The practices undertaken by organisations to positively involve stakeholders in organisational activities (Greenwood, 2007)

Quantity of engagement

The number of engagement opportunities made available to stakeholders (Leach, Lowndes, Cowell, and Downe, 2005)

Quality of engagement

Types of contact between governance networks and stakeholders ranging from one way communication to dialogical processes (Crane and Livesey, 2003; Voci and Hewstone, 2003)

Stakeholder salience

Stakeholders become salient as a result of the perception of managers that stakeholders possess the power to influence an organisation and the legitimacy, temporality and criticality of their claims to the organisation (Mitchell et al., 1997)

Having delimited the study through these definitions, the overall research approach is

outlined next.

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LITERATURE REVIEW

Stakeholder Approach

Although originating in the private sector, the stakeholder concept has increasingly become

more prominent in the public management literature over the past 25 years (Bryson, 2004).

Within the public domain, stakeholders have been studied in a number of contexts:

identification of stakeholders (Gomes, 2003, 2004), performance management (Bovaird and

Halachmi, 2001; Lawton, McKevitt, and Millar, 2000), strategic management (Moore, 1997),

ethical conduct (Martin, 2003), service delivery (Bryson, Cunningham, and Lokkesmoe,

2002; Bryson, Koegel, Koegel, Openden, Smith, and Nefdt, 2007) and to test administrative

responsiveness in citizen involvement (Yang and Callahan, 2007).

While these studies acknowledge that the successful delivery of public outcomes depends

increasingly on the need to work effectively with external stakeholders, optimal ways for

governance networks to develop the requisite combination of stakeholders to achieve

successful outcomes have yet to be identified Therefore, it remains a continuing challenge

for governance networks to identify appropriate stakeholders, to determine when and how to

engage with them and to effectively manage these relationships to achieve results and derive

benefits. Given that these relationships provide the form, create constraints and present

opportunities for the way public outcomes are achieved (Feldman and Khademian, 2002), it

is important that governance networks find effective ways to engage with stakeholders as a

means of improving the quality of those outcomes. However, dealing effectively with

stakeholders is not a straight forward matter because they can employ a range of influencing

strategies from problem solving to threatening (Frooman, 1999). The resultant complexities

and uncertainties are magnified by the political context within which governance networks

operate.

To understand how current stakeholder models may be applied in the context of networks

delivering public outcomes, the following components of the stakeholder approach will be

considered: definition, identification and classification of stakeholders. The salience of

stakeholders and how various combinations of salience are linked to stakeholder engagement

activities will also be examined. These concepts are discussed next.

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Identifying and Classifying Stakeholders

Despite the theoretical development that has occurred since Freeman (1984) introduced the

notion of strategic management of stakeholders, the concept of stakeholding remains

notoriously vague (Jones and Wicks, 1999). The resultant ambiguity has a flow on effect

because it impacts on which stakeholders will be included in the work of governance

networks and the level and type of participation stakeholders are afforded.

Stakeholders have generally been defined from two perspectives: broad and narrow (Freeman

and Reed, 1983). From the broad perspective stakeholders are considered to be groups or

individuals who can actually or potentially affect or be affected by the achievement of organisational

outcomes (Freeman, 1984). More inclusive definitions expand the scope of the stakeholder

group significantly and it could be argued that the broad approach tends to be adopted by

public organisations because they have historically engaged with a broad range of clients,

including the nominally powerless, interest and pressure groups in delivering services. More

recently, it has been acknowledged (Bone, Crockett, and Hodge, 2006) that the resolution of

contentious, complex social issues requires participation from a number of different publics

including stakeholders situated outside of the norm to bring in new perspectives.

Irrespective of the context in which it is applied, the stakeholder approach continues to be

contested in terms of its theoretical completeness (Agle, Donaldson, Freeman, Jensen,

Mitchell, and Wood, 2008). According to Friedman and Miles (2006), over thirty strands of

stakeholder theory exist, resulting in contestation and confusion in the literature and limiting

the development of the stakeholder theory. To try and simplify the confusion, stakeholder

theory has been distilled into three categories: descriptive, instrumental, and normative

(Friedman and Miles, 2006). Table 2 outlines the definitional differences between the three

categories (Reed, 2002).

Table 2: Definitional Differences of Stakeholder Theories

TYPE OF THEORY DEFINITIONS Descriptive Groups or individuals who can actually or potentially affect or

be affected by the achievement of organisational outcomes e.g. (Freeman, 1984)

Instrumental Stakeholders which the organisation considers could be taken into account from the following perspectives: organisational (Freeman, 1984; Mitchell et al., 1997) stakeholder-focal group (Friedman and Miles, 2006) stakeholder-network (Rowley, 1997)

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Normative Stakeholders who are considered to have a valid claim on the organisation e.g. property rights (Donaldson and Preston, 1995) common good (Freeman, 2004)

Table 2 illustrates that stakeholders can be defined in three fundamentally different ways. The

first category, descriptive approaches, tends to define stakeholders based on the perceived

influence that they can have on an organisation or the extent to which stakeholders are

impacted by organisational action. In the second category, instrumental models narrow the

focus by concentrating on the extent to which an organisation perceives that stakeholders

should be involved. The final category: normative theories, more narrowly define

stakeholders based on the organisation’s moral or contractual obligations to stakeholders.

While broad descriptive definitions have the potential to bring large numbers of stakeholders

to the fore, normative definitions may have the opposite impact by narrowing stakeholder

groups excessively, which could result in important stakeholders being overlooked.

Instrumental definitions, however, strike a balance between the broad and narrow approaches

by focusing on which stakeholders the organisation considers need to be taken into account to

achieve specific organisational outcomes.

Therefore, as baseline for this research, stakeholders are defined as groups or individuals who

can have either an actual or potential affect on governance network outcomes (Mitchell et al.,

1997, p. 869). This definition bounds the study by restricting the stakeholder pool to actors

who can impact or may be impacted by the activities undertaken by governance networks to

achieve results.

Leading from stakeholder definition, the classification of stakeholders has been undertaken in

a variety of ways in an effort to prioritise stakeholders (Achterkamp and Vos, 2007). Table 3

outlines the major approaches.

Table 3 Stakeholder Classification Systems

FOCUS CLASSIFICATION SYSTEM

Single attribute Fiduciary and non-fiduciary stakeholders (Goodpaster, 1991)

Assessing and managing stakeholders (Savage, Nix, Whitehead, and Blair,

1991)

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FOCUS CLASSIFICATION SYSTEM

Stakeholder agency (Hill and Jones, 1992)

Primary and secondary stakeholder (Clarkson, 1995)

Voluntary and involuntary stakeholders (Clarkson 1994 in Mitchell et al., 1997)

Stakeholder influencing strategies (Frooman, 1999; Frooman and Murrell, 2005)

Multiple attributes Relationship between organisation and stakeholders (Donaldson and Preston,

1995; Jones, Felps, and Bigley, 2007)

Managerial perceptions of stakeholder characteristics: power, urgency and

legitimacy (Mitchell et al., 1997)

Several of the classification systems described in Table 3 (Frooman, 1999; Frooman and

Murrell, 2005; Goodpaster, 1991; Hill and Jones, 1992; Clarkson 1994 in Mitchell et al.,

1997; Savage et al., 1991) use only a single dimension to classify stakeholders. The approach

of Goodpaster (1991) was to normatively classify stakeholders in accordance with fiduciary

responsibilities. However the remaining approaches to classification take on an instrumental

perspective: the extent of co-operation by stakeholders (Savage et al., 1991), the perceived

legitimacy of stakeholders (Hill and Jones, 1992), the extent to which stakeholder support is

essential to the organisation (Clarkson, 1995), the degree to which stakeholders have invested

resources in the organisation (Clarkson 1994 in Mitchell et al., 1997) and the extent to which

stakeholder wield influence through provision or withdrawal of resources (Frooman, 1999;

Frooman and Murrell, 2005). It could be argued, however, that these singly focused

approaches are too simplistic to provide a meaningful framework for classifying stakeholders

because of the complexities associated with network forms.

In contrast, two stakeholder classification systems (Donaldson and Preston, 1995; Mitchell et

al., 1997) have sought to capture the multidimensional nature of stakeholder interactions.

However, Jones et al. (2002) and Agle et al. (2008) have cast doubt on Donaldson and

Preston’s (1995) approach of categorising stakeholders as normative, instrumental or

descriptive. The criticism is in part due to the ongoing debate in the literature about the

validity of separating stakeholder theory into normative, descriptive and instrumental

classifications as advocated by Donaldson and Preston (1995). It has been argued (Agle et

al., 2008; Jones, Wicks, and Freeman, 2002) that Donaldson and Preston’s (1995)

classification of stakeholders is of limited value as a stakeholder classification system

because there is no fundamental difference between the categories. Agle et al.(2008) contend

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that Donaldson and Preston’s (1995) framework is conceptually implausible. It could also be

argued that Donaldson and Preston’s (1995) may be unworkable in practice because

interactions with stakeholders incorporate elements of all three categories. However despite

the criticisms, Donaldson and Preston’s (1995) framework continues to be supported by

theorists who contend that stakeholders have a moral right to be involved in issues that affect

them (Greenwood, 2007; Maharaj, 2008).

Moving beyond this impasse in the literature, Mitchell et al.’s (1997) model of stakeholder

identification and salience offers an alternative structure for framing and classifying

stakeholders in accordance with managerial perceptions of stakeholder characteristics. The

model theorises that managers should make decisions about stakeholder involvement based

on an assessment stakeholder salience. This assessment, it is argued, (Mitchell et al., 1997)

should be based on a consideration of the power of stakeholders and the urgency and

legitimacy of their claims. It has been acknowledged (Klijn, Koppenjan, and Termeer, 1995)

that power and legitimacy can affect who will be included in a network and therefore, the

network structure, the rules of engagement within the network and the outcomes achieved.

Consequently, it could be argued that the stakeholder salience model (Mitchell et al., 1997)

provides a highly relevant framework for theorising about how stakeholders are engaged by

governance networks.

Diagram 1 depicts the stakeholder identification and salience model (Mitchell et al., 1997),

highlighting the mixture of the stakeholder attributes: power, urgency and legitimacy, from

which are composed seven different stakeholder types. Each of these stakeholder types is

attributed with different behaviour patterns which it is argued (Mitchell et al., 1997),

influence the way that different stakeholders are perceived and approached by the

organisation.

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Diagram 1 Stakeholder Identification and Salience Model U

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The model incorporates three variables: power, urgency, legitimacy which are aggregated

into the construct of stakeholder salience. Within this model, Mitchell et al. (1997, p. 865)

have suggested that power is the ability of actors to achieve their desired outcomes and

derives from three dimensions: normative, coercive and utilitarian. While normative power is

demonstrated through the use of symbolic resources such as media attention; coercive power

is emanates from the application of physical sources including restraint or force (Friedman

and Miles, 2006). The final dimension, utilitarian power, is “the use of material means for

control purposes” (Etzioni, 1964, p. 59) and is exercised through control of resources,

particularly financial.

The second variable in the model, urgency is determined by the time sensitivity of a

stakeholder’s claim and the criticality or perceived importance of the claim to the

organisation (Mitchell et al., 1997). In this context, urgency implies a shifting power balance

in the relationship as a result of perceptions that a particular stakeholder’s claim is critical to

the organisation and that the claim warrants immediate attention by the organisation. Despite

the multi-dimensionality of urgency, Mitchell et al. (1997) go on to define as urgency

seemingly as a single dimension, “the degree to which stakeholder claims call for immediate

attention”. However it could be argued that criticality and temporality are discrete variables

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denoting importance and timeliness and therefore need to be measured in different ways. It

could also be argued that the treatment of criticality and temporality as discrete variables in

determining stakeholder salience would produce additional and different configurations of

salience to those predicted by Mitchell et al. (1997).

The third variable in the model, legitimacy, is defined as “a generalized perception or

assumption that the actions of an entity are desirable, proper, or appropriate within some

socially constructed systems of norms, values, beliefs, and definitions” (Suchman, 1995, p.

574). It has been argued that stakeholder legitimacy can be either normative: fulfilment of

legal or moral obligations (Gomes and Gomes, 2007) or derivative: resulting from

organisational acceptance of stakeholder claims due to their potential impact (Phillips, 2003).

Stakeholder salience, comprises various configurations of power, urgency and legitimacy

which determine the priority that should be given to stakeholder claims (Mitchell et al.,

1997). From the stakeholder perspective, to generate organisational action, stakeholders must

be aware of and willing to exercise their power with a sense of urgency and for the

organisation to consider their claims as legitimate (Mitchell et al., 1997). Table 4 outlines the

categories that result from the various combinations of power, urgency and legitimacy and

potential outcomes for each category.

Table 4 Categories of Stakeholder Salience

PRIORITY CATEGORIES COMBINATIONS OF ATTRIBUTES

OUTCOMES

None Non-stakeholder No power, urgency or legitimacy or immediacy

Irrelevant to the organisation

Low Dormant

Power but no interaction with organisation

Actors have no awareness of an issue or are unwilling to become involved

Discretionary

Legitimacy but no power and claims are not urgent

Actors seen as legitimate by the organisation but not afforded attention

Demanding Claims are urgent but no power or legitimacy

Actors strongly believe they have a claim but this is not acted on by the organisation

Moderate Dominant

Possess power and legitimacy but not currently pressing their claims on the organisation

Actors have a high expectation of support and receive significant attention

Dangerous

Hold urgency and power but insufficient legitimacy to cause the organisation act

Conflictual relationship with the organisation in which actors directly apply coercive, financial or normative power to achieve objectives

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PRIORITY CATEGORIES COMBINATIONS OF ATTRIBUTES

OUTCOMES

Dependent

Have urgent and legitimate claims but lack power

Actors collaborate with other stakeholders to achieve objectives and pressure the organisation

High Definitive Possess power, urgency and legitimacy

Organisation quickly responds to demands

Source: Mitchell et al., 1997

Table 4 indicates that stakeholders can be perceived from eight different perspectives ranging

from irrelevant, requiring no action to definitive, where managers have a clear and specific

requirement to act on the stakeholder’s claims immediately (Mitchell et al., 1997). However,

stakeholder salience is not a static concept because stakeholders can acquire or relinquish the

characteristics of power, urgency and legitimacy thus changing their categorisation (Preble,

2005). Given that the categories in Mitchell et al.’s (1997) model are a device for identifying

combinations of stakeholder salience, it could be argued that the categories cloud the intent of

the model which is to identify stakeholders and suggest appropriate managerial responses to

stakeholders based on various configurations of power, urgency and legitimacy. As a result,

the classification of stakeholders into rigid categories adds an unnecessary layer of

complexity to decision making about stakeholders.

In the first empirical test of the stakeholder salience model, Agle et al. (1999) examined the

relationship between power, legitimacy, urgency and salience in the context of CEO values

and corporate performance. Urgency was assessed from an organisational perspective and

both temporality and criticality were required to be present to indicate urgency. This study

found that CEO’s perceived that power, urgency and legitimacy were individually and

cumulatively related to stakeholder salience. However the study was limited in that it was

situated in a normative context i.e. CEO values and the findings were specifically related to

normative stakeholder theory (Agle, Mitchell, and Sonnenfeld, 1999).

In 2004, Friedman and Mason studied stakeholder salience in government subsidisation

decisions relating to construction of major sporting facilities. In assessing urgency, only

criticality was tested. The role of temporality in the determination of urgency was unclear. In

testing configurations of stakeholder salience, the authors found that only five out of the

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seven stakeholder categories as proposed by Mitchell et al. (1997) were evident in the case of

subsidisation of major sporting facilities. In a further empirical study which examined

stakeholder salience in the context of the Nashville Coliseum stadium, Friedman and Mason

(2005) found that a dormant stakeholder, the public, changed its status to the dangerous

stakeholder category by forcing a referendum about the development of the stadium.

However, like the previous study Friedman and Mason, (2005) criticality became the proxy

for urgency.

In 2007, Parent and Deephouse tested the stakeholder salience framework with the organising

committees of two large-scale sporting events. In this study, urgency was considered to

include either time sensitivity or criticality, departing from the extant literature in which both

time sensitivity and criticality are required components of urgency. Despite this issue, the

case studies found that the categories of stakeholders were more limited than theorised by

Mitchell et al. (1997), in that stakeholders tended to move between dormant, dominant and

definitive classifications (Parent and Deephouse, 2007). The study called into question the

relevance of four of the seven stakeholder categories identified by Mitchell et al. (1997) by

suggesting that the dormant, dominant and definitive classifications might be more applicable

in practice. This result supported Friedman and Mason’s (2005) findings that the dormant

stakeholder grouping is important.

In drawing these studies together, two aspects are important. Firstly, the preceding studies

have been inconsistent in their application of urgency as a variable, treating it as containing

only one element, criticality, or as including either criticality or temporality. Secondly,

despite this limitation, the finding of these studies appear to indicate that Mitchell et al.’s

(1997) conceptualisation of stakeholders into seven categories could more likely be

condensed into four categories: dormant, dominant, dangerous and definitive, beginning to

call into question the usefulness of Mitchell et al.’s (1997) classifications. Thirdly, although

the construct of urgency is considered to have two components criticality and temporality

(Mitchell et al., 1997, Agle et al., 1999), these variables have not been tested as individual

factors in stakeholder salience.

However, the application of the stakeholder salience model in more collaborative governance

settings raises a number of questions. Firstly, the stakeholder salience model has been

transplanted from the private sector context and there is limited evidence about how it

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operates in the public context (Friedman and Mason, 2004, 2005; Parent and Deephouse,

2007) and particularly in governance networks Given that none of these studies involved

testing the impact of stakeholder salience in networked arrangements this research provides

an opportunity to understand how stakeholder salience operates in governance networks.

Secondly, the stakeholder salience model perceives the organisation to be at the centre of the

nexus orchestrating stakeholder processes (Hill and Jones, 1992). However, the centre-

periphery approach overlooks the decentred nature of stakeholder interactions which was first

examined by Rowley (1997). Therefore, this study will investigate how governance networks

interact with stakeholders from a decentred perspective rather than from a centralised

approach.

Having considered stakeholder salience in some detail, stakeholder engagement, which, it

could be argued, is a mechanism for operationalising decisions about stakeholder salience, is

examined next.

Stakeholder Engagement

Stakeholder engagement describes a range of practices in which organisations take a

structured approach to connecting with stakeholders (Thomson and Bebbington, 2005) and

has been used for a range of organisational purposes: as a means to acquit organisational

accountability and responsibility to stakeholders (Gray, 2002), to elicit stakeholder

contributions (Sillanpää, 1998), manage risk (Deegan, 2002), construct organisational image

(Livesey and Kearins, 2002) and achieve managerial control (Owen, Swift, Humphrey, and

Bowerman, 2000). Within the public context, stakeholder engagement has been suggested as

a means of improving the quality of outcomes by harnessing different ideas and perspectives,

improving service delivery by exerting pressure on bureaucracies and creating more robust

communities through direct engagement in planning and delivery of services (Martin, 2003).

Over the past decade, the value of stakeholder engagement has become more apparent to

public organisations seeking to create dialogue with and between community groups and

business interests to achieve policy reform and enhanced service delivery (Fox, Ward, and

Howard, 2002). It has also been acknowledged that this type of participation “is particularly

important in developing long-lasting solutions to complex and intractable issues” (Australian

Public Service Commission, 2007, p. 263). However, to develop appropriate solutions to

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policy problems, it could be argued that governance networks need to extend the

development of relationships beyond network boundaries to include stakeholders (Innes and

Booher, 2003).

The starting point for this discussion of stakeholder engagement is Arnstein’s (1969) ladder

of citizen participation in public policy planning. Arnstein (1969) theorised that public

participation was motivated by a range of factors from manipulation to the desire to engender

citizen control. However the ladder of citizen participation was criticised for treating

participation as continuum (Bishop and Davis, 2002), being overly hierarchical and

portraying citizen control as the ultimate outcome of participation (Tritter and McCallum,

2006) thus diminishing its relevance in more collaborative environments.

However, despite these shortcomings, the ladder of participation, was adapted for the

stakeholder context and ‘re-emerged’ as a tool for understanding stakeholder engagement

(Friedman and Miles, 2006). In this model, it was theorised that the types of engagement

processes undertaken by organisations are indicative of the level of power ascribed to

stakeholders, ranging from non-participation through various degrees of tokenism,

involvement and power. However Friedman and Miles’ (2006) contribution did not

explicitly address legitimacy and urgency which are integral to Mitchell et al.’s (1997)

model.

As an alternative, in 2007, Greenwood moved away from the power perspective on

stakeholder engagement and developed a model of stakeholder engagement based on the

moral treatment of stakeholders. The main focus of this theoretical model was stakeholder

agency: meeting corporate responsibilities to stakeholders. In developing this model,

Greenwood (2007) sought to explore the relationships between stakeholder engagement and

their responsible treatment by organisations. While Greenwood’s model has not been

empirically tested, it could be argued that it provides a blueprint for beginning to understand

how the relationships between stakeholder engagement and stakeholder salience may unfold.

In partial support of this approach, Thomson and Bebbington (2005) focused on one element

of stakeholder salience i.e. power, in theorising that power differentials need to be addressed

in undertaking effective stakeholder engagement activities. However strategies examining

power differentials were not advanced.

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Greenwood’s (2007) model is the first to explore organisational treatment of stakeholders as

a factor in organisational choices about the extent of stakeholder engagement. However,

Greenwood’s (2007) model treated stakeholder engagement as a single variable. This is in

contrast to Leach et al.’s (2005) approach in which stakeholder engagement was

differentiated into two constructs: quality and quantity of stakeholder engagement as a

measure of the effectiveness of engagement opportunities offered by local authorities in the

United Kingdom. While establishing that relevance of quantity and quality to the study of

stakeholder engagement, Leach et al.’s (2005) research approached quality from the

standpoint of assessing process and outcome satisfaction with stakeholder engagement

initiatives. However in this study, quality of stakeholder engagement will be an assessment of

the types of contact between governance networks and stakeholders ranging from one way

communication to genuine dialogue processes (Crane and Livesey, 2003; Voci and

Hewstone, 2003). This approach is similar to that suggested by Friedman and Miles (2006)

who theorised that stakeholder engagement could include the following mechanisms:

brochures and websites, corporate plans, workshops, feedback mechanisms such as

questionnaires, interviews, bargaining processes, establishment of strategic alliances, joint

ventures, board representation and processes controlled by stakeholders.

Friedman and Miles (2006) have proposed a power based continuum of stakeholder

engagement activities beginning with one-way static communication techniques and

concluding with multi-party dialogical processes. Moving up this continuum, it appears that

as interdependency with stakeholders increases stakeholder engagement processes become

more collaborative. However, in keeping with Arnstein’s (1969) premise that the ultimate

objective of public participation was the transfer of control to citizens, Friedman and Miles

(2006) theorise that the highest level of stakeholder engagement would involve transfer of

control to stakeholders. It could be argued that the approach of transferring control is not

applicable in governance networks where power and responsibility are shared among network

participants.

Therefore, to obtain a more fine grained view of the relationship between stakeholder

salience and stakeholder engagement, both quality and quantity aspects of stakeholder

engagement will be examined. However, the optimum levels of stakeholder engagement and

types of activities that could be applicable to different configurations of stakeholder salience

are yet to be articulated. Achieving equilibrium between stakeholder salience and

18

engagement is particularly pertinent for governance networks because stakeholders can

seriously disrupt networks through withdrawal of resources or creating reputational damage.

Following on from this, the next section considers governance forms, particularly networked

arrangements and then discusses network management to reveal gaps in current knowledge

about how governance networks manage stakeholders.

Network Governance and Management

Governance is perceived as a mechanism for solving common problems at local, national and

global levels taking account of the relationships, rights and obligations of the actors facing

the problems and how power and authority play out (Newman, 2001). The literature tends to

focus on three major and idealised governance paradigms, unicentric or hierarchical forms

(state or firm hierarchy), multicentric (market) and pluricentric (network) (Lowndes and

Skelcher, 1998; Powell, 1990; Thompson, Frances, Levacic, and Mitchell, 1991; Van

Kersbergen and Van Waarden, 2004).

Hierarchical governance is characterised as a vertical or top down co-ordinating mechanism

which is based on the bureaucratic model of organisation (Kooiman, 2005; Peters and Pierre,

1998). By contrast, market governance is a more spontaneous co-ordination mechanism

which operates in a market context and makes use of multiple economic and judicial

institutions and contractual arrangements to govern economic transactions (Powell, 1990;

Van Kersbergen and Van Waarden, 2004).

While network governance is acknowledged as the overarching form of more collaborative

styles of governance (Lowndes and Skelcher, 1998), the literature also acknowledges the

concept of governance networks (Sorensen and Torfing, 2007) which are a mechanism for

public policy making and implementation which occurs through a web of relationships

between government, business and civil society (Klijn and Skelcher, 2007, p. 587).

However, the literature has acknowledged that governance networks can simultaneously

exhibit various hierarchical, market and networked arrangements through the adoption of a

hybrid approach (Considine and Lewis, 1999; Keast, Mandell, and Brown, 2006; Powell,

1990). That is, governance networks link together a range of actors through a mix of

governance modes one of which is network governance.

19

However, a strong link running through the governance network literature is the importance

of engaging with a range of actors as a means of improving service delivery and policy

outcomes by incorporating a range diverse ideas, insights, responses and solutions (Agranoff,

2007). The literature also refers to the outcomes of public policy as public outcomes: the real

or intended effects of government programs on the community (Van der Waldt, 2004). For

governance networks, it could be argued that outcomes will be context specific and

dependent upon the charter establishing the network and available resources. Therefore, the

involvement of stakeholders will be influenced by the political and institutional environments

in which the governance network exists.

Several factors that could influence the way that governance networks may undertake the

engagement of stakeholders have been identified. Firstly, it has been acknowledged that

governance networks comprise various mixes of hierarchical, market and networked

arrangements (Considine and Lewis, 1999; Keast et al., 2006; Powell, 1990). This hybridity

creates tension for governance networks seeking to engage with stakeholders within an

environment that blends aspects of three different modes of governance. As a result,

governance networks face the complexity of dealing with stakeholders in relationships that

can be dependent, contractual or interdependent. It could be argued that these factors may

influence the salience attributed to stakeholders as a result of these differing relationships.

Secondly, while power is seldom at the forefront of theorising about governance networks

(Klijn and Skelcher, 2007, p. 602), the literature has recognised that power distribution within

networks is asymmetrical, resulting in a series of power dependence relationships (Agranoff

and McGuire 2001). Differential power distribution is particularly pertinent to governance

networks as demonstrated by a number of studies (Agranoff, 2007; Eglene, Dawes, and

Schneider, 2007; Graddy and Chen, 2006; Provan and Milward, 1995) which show that

government can be an actor in governance networks. Given its potential to dominate, it is

possible that government, as a stakeholder, would be accorded higher salience and receive

preferential treatment to similarly salient stakeholders.

Thirdly, power differentials may also influence the composition and representativeness of

governance networks because membership may be the result of organisational representation:

government or non-government. However, Sorensen and Torfing (2003) contend that

individual actors may be unable to discard the responsibilities of belonging to a particular

20

organisation. The inability or unwillingness of network members to set aside their

representative role (Mandell and Keast, 2008) may influence decision making about

stakeholders, particularly as the result of power domination. It could be argued that this

impact may be more pronounced if there is direct political representation within the network

as a result of tension between public managers and democratic elected representatives. It

could further be argued that this tension may be in part due to the focus of public managers

on the public interest and the role elected representatives to serve their electorates.

Fourthly, according to Provan and Milward (2001, p. 422), the objective of “network

organizers is to minimally satisfy the needs and interests of stakeholders at network and

organization levels, while emphasizing the broader needs of the community and the clients

the network must serve”. In a study of stakeholder engagement by local authorities in the

United Kingdom, Sullivan (2008, p. 16) found that “stakeholder engagement is distinct and

different from wider public engagement” resulting in tension between the claims of organised

stakeholders and the requirement of the broader community. Alternatively, it could be argued

that this distinction between community and stakeholders is a reflection of different

stakeholder types which may have different combinations of salience which in turn may

influence choices of stakeholder engagement techniques.

Finally, given that network management is the collective responsibility of network

participants (Provan and Kenis, 2005), decision making about stakeholders by governance

networks may differ from the broader organisational context because different management

techniques have been recommended for governance networks. A wide range of management

strategies to guide network interactions (Agranoff and McGuire, 2001, 2003; Koppenjan and

Klijn, 2004; Mandell, 2001) have been identified in the literature. A synthesis of the

contributions of Agranoff and McGuire (2001), Keast and Hampson (2007), Klijn and

Koppenjan (2000) and McGuire (2006) indicates that the following management functions

are undertaken by networks: activating-recruiting members and resources, framing-

establishing the vision and rules, mobilising-creating joint commitment and synthesising-

building and maintaining relationships. From this, it could be argued that engaging with and

managing actors within network processes is a fundamental aspect of network management

and this is supported by Agranoff (2007). Furthermore, Keast and Hampson (2007) in a

recent study of a Cooperative Research Centre as an interorganisational innovation network,

reinforced that relationships are a significant feature of networks and that these relationships

21

need to be strategically managed to obtain the best possible results. However despite this

strong relational focus, a gap has been identified in the literature: inclusion and engagement

of stakeholders as a specific actor group, has yet to be explicitly addressed by governance

networks.

While the stakeholder concept is evident in the governance network literature (Agranoff,

2007; Agranoff and McGuire, 2001, 2003; Edelenbos and Klijn, 2006; McGuire, 2002), it

could be argued that a more in-depth understanding of how governance networks interact

with stakeholders, the resultant combinations of stakeholder salience and the appropriate

engagement strategies for each of these combinations of stakeholders is required. To begin to

fill this gap, a model of stakeholder salience and engagement is proposed and is discussed

next.

Model of Stakeholder Salience and Engagement

This study will elaborate a model of stakeholder salience and engagement and show its

usefulness in explaining how differing combinations of stakeholder salience may be related to

the extent of stakeholder engagement, as an initial step to understanding how governance

networks engage with stakeholders. This model builds on and extends the work stakeholder

identification and salience model (Mitchell et al., 1997), the ladder of stakeholder

management and engagement (Friedman and Miles, 2006) and the model of stakeholder

engagement and moral treatment of stakeholders (Greenwood, 2007).

The theoretical framework for this study departs from Mitchell et al.’s (1997) model in two

major respects. Firstly, the construct of urgency has been divided into two individual

attributes: criticality and temporality because, it is theorised, that they represent different

concepts. The replacement of urgency with criticality and temporality thus increases the

combinations of salience from eight to sixteen as indicated in Table 5. Secondly, the

categorisations of salience established by Mitchell et al. (1997) will not be a feature of the

model of stakeholder salience and engagement so as to maintain the focus on combinations of

salience rather than categorisations.

22

Table 5 Revised Combinations of Stakeholder Salience

COMBINATIONS OF SALIENCE ORGANISATIONAL RESPONSE 1. Stakeholder possesses power; claims are considered to be

legitimate, critical and require immediate attention Attends to stakeholder demands with high priority

2. Stakeholder has power; claims are considered to be legitimate and critical but do not warrant immediate attention

Attends to stakeholder claims within in normal organisational timeframes

3. Stakeholder has power ; claims are considered to be critical and require immediate attention but are not legitimate

Manages contentious relationship in which stakeholder directly apply coercive, financial or normative power to achieve objectives

4. Stakeholder has both power; claims are legitimate and deserve immediate attention but are not critical

Closely monitors the criticality of claims and acts if they become critical

5. Stakeholder has no power; claims are considered to be legitimate and critical but not worthy of immediate attention

Manages stakeholder who may collaborate with other stakeholders to apply pressure to achieve objectives

6. Stakeholder has power and claims are considered to be critical and worthy of immediate attention but of insufficient legitimacy to cause the organisation act

Manages contentious relationship

7. Stakeholder has power; claims are legitimate and worthy of immediate attention but not critical

Monitors stakeholder and their claims

8. Stakeholder lack power; claims are legitimate but not critical or worthy of immediate attention

Monitors stakeholder and their claims for evidence of stakeholder coalition formation

9. Stakeholder lacks power; claims are both critical and worthy of immediate attention but not legitimate

Monitors stakeholder

10. Stakeholder lacks power; claims are legitimate and warrant immediate attention but are not critical

Organisation monitors stakeholder and their claims

11. Stakeholder has both power and claims would be considered legitimate but stakeholders are not interacting with the organisation

Organisation seeks to involve stakeholder who has no awareness of an issue or are unwilling to become involved

12. Stakeholder has power; claims are not critical, worthy of immediate attention or legitimate

Organisation manages contentious relationship

13. Claims are critical but not worthy of immediate attention or legitimate and stakeholder has no power

Organisation keeps stakeholder informed

14. Claims are legitimate, worthy of immediate attention but not critical; stakeholder hold no power

Organisation monitors stakeholder and their claims

15. Stakeholders has no power; claims legitimate but are neither critical nor require immediate attention

Organisation keeps stakeholder informed

16. Stakeholder has no power; claims not considered legitimate, critical or requiring immediate attention.

None

Table 5 show the various combinations of stakeholder salience and potential organisational

responses to stakeholders holding various combinations of power, legitimacy, criticality and

temporality. Analysis of the potential organisational responses raises several issues. Firstly,

the more attributes a stakeholder possesses, the greater attention their claims will be paid. For

example, combinations 1 to 4 which incorporate three or more attributes, may receive more

comprehensive and immediate attention. Secondly, it appears that power may be more likely

to motivate the organisation to react as indicated in combinations 1 to 4, 6 and 11. Thirdly,

23

stakeholders in combinations 13 to 16 which incorporate one or no attributes may be paid

minimal or no attention by the organisation. Fourthly, in combinations 5 and 11, where

stakeholders collaborate to pressure the organisation into paying greater attention to

stakeholder claims. Finally, in combination 11, the organisation may proactively seek to

involve stakeholders who have no awareness of an issue or are unwilling to become involved

because they have organisational value through resources such as funds, knowledge or

legitimacy.

Having explained the impact of salience in the proposed model, the stakeholder engagement

aspects will now be explicated. The theoretical framework for this study departs from the

traditional examination of stakeholder engagement as a single variable (Greenwood, 2007)

and builds on Leach et al.’s (2005) approach of treating quality and quantity of stakeholder

engagement as discrete variables. The quantity of stakeholder engagement will be considered

as the number of engagement opportunities made available to stakeholders (Leach et al.,

2005). The quality of stakeholder engagement will be considered as contact between

governance networks and stakeholders (Voci and Hewstone, 2003), ranging from one-way

communication to dialogical processes (Crane and Livesy, 2003).

The Model of Stakeholder Salience and Engagement presented in Diagram 2 combines and

extends the work of Mitchell et al. (1997), Friedman and Miles (2006) and Greenwood

(2007). This model suggests that there may be an optimal level of engagement for the

different levels of salience assigned to stakeholders.

Diagram 2 Model of Stakeholder Salience and Engagement

24

Diagram 2 depicts the proposed quality and quantity of engagement notionally rated along a 5

point scale for each of the sixteen combinations of stakeholder salience as outlined in Table

5. The scale for quantity of engagement was drawn from the intergroup contact literature

(Tausch, Tam, Hewstone, Kenworthy, and Cairns, 2007) while the scale for quality of

engagement was derived from the ladder of stakeholder management and engagement

(Friedman and Miles). These combinations in diagram 2 represent stakeholders who range

from possessing none of the attributes of power, legitimacy, criticality and temporality

through to possession of all of these attributes. Proposed engagement strategies that may be

applicable to different combinations of stakeholder salience are outlined in Table 6.

Table 6 Proposed Stakeholder Engagement Strategies

STAKEHOLDER COMBINATION

ENGAGEMENT STRATEGIES PURPOSE

1 Moderate number of regularly scheduled two-way dialogue workshops with network as a whole

Allows stakeholder to participate with network and thus influence outcomes

2 Moderate number of regularly scheduled two-way dialogue workshops with network as a whole

Allows stakeholder to partner with network and influence outcomes

3 Moderate number of contacts between stakeholder and network members to discuss contentious issues and potentially moving to conflict resolution

Allows stakeholder to be heard and network to monitor changes in salience level

4 Frequent contact between stakeholder and network member with responsibility for the specific stakeholder

Exchange information and to identify changes in stakeholder salience

5 Moderate number of bilateral negotiation processes followed by multi-stakeholder meetings

Neutralise power of the coalition

6 Moderate number of contacts between stakeholder and network members to discuss contentious issues and potentially moving to conflict resolution

Allows stakeholder to be heard and network to monitor changes in salience level

7 Moderate number of meetings between stakeholder and network member with responsibility for the specific stakeholder

Exchange information and to identify changes in stakeholder salience

8 Moderate number of bilateral negotiation processes followed by multi-stakeholder meetings

Neutralise power of the coalition

9 Infrequent contact between stakeholder and network member with responsibility for the specific stakeholder

Exchange information and to identity changes in stakeholder salience

10 Infrequent contact between stakeholder and network member with responsibility for the specific stakeholder

Exchange information and to identity changes in stakeholder salience

11

Stakeholder invited to become a member of the network

Allows stakeholder to partner with network and thus influence outcomes

25

STAKEHOLDER COMBINATION

ENGAGEMENT STRATEGIES PURPOSE

Infrequent contact between stakeholder and network member with responsibility for the specific stakeholder

Identity changes in stakeholder salience

12 Minimal number of contacts between stakeholder and network members to discuss contentious issues

Information gathering and allowing stakeholders to be heard

13 Information infrequently published: on websites, in brochures and annual reports and other static communication channels

Keep stakeholder informed

14 Information infrequently published: on websites, in brochures and annual reports and other static communication channels

Keep stakeholder informed

15 Information infrequently published: on websites, in brochures and annual reports and other static communication channels

Keep stakeholder informed

16 None

The proposed model of stakeholder salience and engagement suggests that sixteen

stakeholder salience combinations with differing permutations of quality and quantity are

spread across seven clusters of stakeholder engagement. However, combination 11 appears

twice in the model because two different stakeholder engagement strategies may be

applicable. If it is decided that the stakeholder has resources that are important to the

network, managerial effort may be put into “courting” stakeholders in combination 11 to

become closely engaged with the network. Alternatively, if combination 11 stakeholders are

not considered to possess important resources, a more passive engagement strategy may be

selected.

At the lowest level, combination 16, no action would be taken by the networks because the

stakeholder possesses none of the attributes of stakeholder salience. Combinations 13 to 15

which incorporate only one attribute of stakeholder salience, would receive low volume and

quality of engagement. Mass one- way communication strategies such as publication of

information on website, brochures and annual reports would be cost effective ways of

providing information to these stakeholders while keeping them linked to the network in a

loose arrangement. Active relationships would not be sought as the network seeks to

maintain these stakeholders at arm’s length to avoid over servicing.

In the second cluster, combinations 9, 10, 11 and 12, stakeholder engagement would be

infrequent but moving into establishing and maintaining various levels and types of personal

contact with the network. In the case of combination 12 where the stakeholder has only one

26

attribute; power, but may seek to press their claims vigorously, a more proactive strategy

reflecting the importance of power in the stakeholder salience equation may be appropriate.

To avoid over-servicing or over committing resources to certain relations this could involve a

minimal number of structured meetings between a set of network members and the

stakeholder to discuss contentious issues and provide the opportunity for the stakeholder to

be heard with the objective of reducing the intensity with which they prosecute their claims.

For combinations 9, 10 and 11, infrequent meetings with a network member with

responsibility for the specific stakeholder would be undertaken to encourage information

exchange and allow the network to detect any changes in salience which may require an

adjusted stakeholder engagement strategy. However, it could be argued that networks would

need to carefully design engagement activities which balance the investment of time and

resources and deal directly with stakeholder expectations of influencing outcomes.

In the third cluster covering stakeholder combinations 3 and 5 to 8, the networks would offer

moderate levels of both quality and quantity of engagement. However, it is theorised that

two types of strategies may be relevant to this cluster. For combinations 5 and 8 in which

stakeholders may coalesce to achieve their objectives, strategies designed to neutralise the

power of the coalitions are suggested. This could be achieved through bilateral negotiations

with individual stakeholders prior to multi-stakeholder meetings being convened. Strategies

for combinations 3, 6 and 7 propose personal contact between the networks and stakeholders.

It is envisaged that this personal contact would incorporate two way dialogical processes

which allow discussion of contentious issues and as a mechanism for networks to monitor

changes in salience, particularly an increase in power which may warrant a higher quality or

quantity of stakeholder engagement. While acknowledging that a moderate volume of

stakeholder engagement could be inevitable as a result of agitation by stakeholders, it is

theorised that the network would seek to closely control the quality of engagement.

For cluster four which contains combination 4, given that the stakeholder has both power and

legitimacy, the frequency of the contact with the network would be increased through

regularly scheduled meetings with a network member who has with responsibility for the

specific stakeholder. The purpose of these meetings would be to exchange information and

monitor changes in salience which would require a higher level of stakeholder engagement to

avoid potential created by stakeholder commentary.

27

In the fifth cluster, combinations 1 and 2 represent the highest levels of salience. It could be

argued that network resources would be expended on ensuring a high level of continuing

engagement of these types of stakeholders. While the stakeholders in this cluster would

receive the highest quality processes, it is argued that that a lower frequency would be

required because of the pre-existing trusting relationships incorporating high levels of social

capital (Andriof and Waddock, 2002) that have developed between network members and

stakeholders. As a result it could be argued that high levels of contact would not be necessary

to maintain the relationship, provided that opportunities to participate in high quality of

engagement processes are made available. Therefore, stakeholders in clusters 1 and 2 would

be invited to participate in infrequent two way dialogue processes involving the entire

network and permitting the stakeholder to influence outcomes in a collaborative arrangement.

In the sixth cluster which incorporates combination 11, high quality and quantity stakeholder

engagement processes are proposed where the network is seeking closer involvement with

this stakeholder because they hold important resources but the stakeholder does not realise

that they have a claim or they are employing a withholding strategy to force the network to

change. From a resource dependency perspective, some stakeholders in combination 11

could be assessed as being highly valuable to the network and, therefore, effort expended to

engage with these stakeholders and incorporate them closely into network processes. To

attract and retain these stakeholders may be invited to become part of the network and offered

the opportunity to influence network outcomes. However this calls into question Mitchell et

al.’s (1997) contention that stakeholders holding only power and legitimacy would be of

lower importance.

The model of stakeholder salience and engagement proposed through identification and

analysis of the gaps in the literature provides a comprehensive framework for decision

making about stakeholders by governance networks. Application of this model will show the

extent to which it predicts governance network responses to sixteen combinations of

stakeholder salience and the proposed stakeholder engagement strategies for each

combination.

The implications of this model are three fold. Firstly, this model is the first to treat

stakeholder urgency as two separate variables, resulting in additional combinations of

stakeholder salience which could potentially result in better targeting of stakeholder

28

engagement strategies. However the potential increase in stakeholder salience combinations

is at odds with the findings of Deephouse and Parent (2007) and Friedman and Mason (2004,

2005) who found that fewer categories of stakeholder existed than theorised in Mitchell et

al.’s (1997) model. It could be argued that these findings may be a result of confusion about

Mitchell et al.’s (1997) definitions of the categories, a problem which is eliminated in this

study by focusing in combinations of salience.

Secondly, the proposed model is the first to theorise a link between stakeholder salience and

stakeholder engagement. However, the model goes further in suggesting that stakeholder

engagement is composed of two variables: quality and quantity. This study will test the extent

to which decisions about stakeholder salience link to quality and quantity of engagement

strategies. Finally, the model will used a mechanism to test the how the issues that are

peculiar to governance networks; power differentials, network management practices, the

community-stakeholder dichotomy and the possibility that three modes of governance may

operate simultaneously, impact on stakeholder salience and engagement.

This investigation will be undertaken through case studies of three governance networks in

the infrastructure domain and will consider the breadth and depth of stakeholder

relationships. The research questions for this study are outlined next.

RESEARCH QUESTIONS

This research combines and presents a conceptual framework developed from examining the

mechanisms for classification and engagement of stakeholders, specifically the stakeholder

identification and salience model (Mitchell et al., 1997), the ladder of stakeholder

management and engagement (Friedman and Miles, 2006) and the model of stakeholder

engagement and moral treatment of stakeholders (Greenwood, 2007).

Consequently, the conceptual framework developed in this research will be used to answer

the following research question:

RQ1 Who or what decides how stakeholders are optimally engaged by governance

networks delivering public outcomes?

It will also answer three more specific research questions:

RQ2 What levels of power, legitimacy, temporality and criticality are attributed to

stakeholders?

29

RQ3 What features of governance networks affect attributions of power, legitimacy,

temporality and criticality?

RQ4 How do differing combinations of power, legitimacy, temporality and

criticality relate to the quality and quantity of stakeholder engagement undertaken

with stakeholders?

CONCLUSION

Research Gaps

In previous sections, the theoretical underpinnings of this research: governance networks and

stakeholders were examined and a number of gaps identified. Firstly, although the literature

has considered stakeholder salience in some depth (Mitchell et al., 1997), previous studies

have treated the construct of urgency as a single variable despite widespread

acknowledgment (Agle et al., 1999; Friedman and Miles, 2006; Mitchell et al., 1997) that it

comprises two elements: criticality and temporality. However, treating urgency as two

discrete variables: criticality and temporality, may result in different attributions of

stakeholder salience than those proposed by Mitchell et al. (1997).

Secondly, the relationship between stakeholder salience and stakeholder engagement has yet

to be examined. As a consequence, there is no clear understanding of how decisions about

stakeholder salience impact on decisions about stakeholder engagement. Furthermore, the

concept of stakeholder engagement has generally been treated as a single variable

(Greenwood, 2007), other than in Leach et al.’s 2005 study. Therefore, there has been little

theoretical development about how variations in quality and quantity of stakeholder

engagement should differ for different types of stakeholders. Studying stakeholder salience

and its relationship with stakeholder engagement as a function of quality and quantity of

engagement will extend the stakeholder literature by showing how stakeholder salience

impacts on decisions about the types of engagement processes implemented.

Finally, the literature has identified stakeholders an actor group with whom governance

networks interact (Bell and Park, 2006). However the theory of governance networks has not

developed to the point of exploring interactions with stakeholders as a specific actor group or

how these interactions may occur within an environment in which three modes of

governance: hierarchical, market and network operate simultaneously. Taking into

consideration the governance network environment, this study will provide some initial

30

indications about one aspect of interactions between governance networks and stakeholders:

the link between stakeholder salience and engagement.

Therefore, new knowledge about how stakeholder salience decisions are linked to stakeholder

engagement activities will be created through testing of the proposed model of stakeholder

salience and engagement. The following research questions will be used in a test of this

theoretical framework.

Contribution to the Literature

This research will contribute to both the stakeholder and governance network theory. Firstly,

this research will extend stakeholder theory by showing how decisions about stakeholder

salience influence the types of stakeholder engagement practices implemented. Secondly it

will extend the governance network literature by clarifying how governance networks

identify types of stakeholders based on combinations of stakeholder salience and choose

corresponding engagement strategies. Thirdly, the study will also provide a better

understanding of the linkages governance networks make between stakeholder salience and

engagement.

31

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