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Does Primary Stakeholder Management Positively Affect The Bottom Line? Some Evidence From Australia

J. Galbreath
Published 2006 · Business

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– The purpose of this research is to explore the strategic benefits of a stakeholder management approach. More specifically, to see if there is an association between primary stakeholder management and firm performance., – The method included a purpose‐designed, secondary database for assessing primary stakeholder management. To explore the relationship between primary stakeholder management and performance, the results were merged with company performance data and regression analysis was used as the statistical technique., – The results suggest that some primary stakeholder groups, but not all, positively affect firm performance. More specifically, corporate governance and employee management were significantly and positively associated with performance. On the other hand, environmental performance and social impact, while significant, had a negative association with performance., – The study, to a degree, confirms stakeholder theory. However, rather than offering equal attention to all primary stakeholders, the implications of this research suggest that firms might favour those stakeholder groups that can most positively affect their performance., – Corporate strategists face tough decisions with respect to allocating scarce resources that will positively affect the bottom line. This study suggests that investments in corporate governance mechanisms and employee management might be a means of gaining competitive advantage., – The value of the paper rests in its offering of empirical evidence with respect to the association between primary stakeholder management and firm performance. While this association is theorized in the management literature, the current study puts forth statistical results for the testing of the theoretical postulates.
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