Managing Disputes with Nonmarket Stakeholders

by Anne Lawrence

Fall 2010

Volume 53
Issue 1

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How do managers respond when confronted with the demands of activist stakeholders over whom they exercise no direct control? What strategies do managers adopt, and why? Which of these are most effective—and under what conditions? Increasingly, businesses today face difficult challenges in response to changing public expectations and newly emergent techniques of stakeholder influence. New communications technologies enable activists concerned about business behavior to mobilize supporters around the world in real time. Many firms conduct their work on a global stage, where damage to reputation in one location can quickly reverberate around the world. This article develops a typology of managerial strategies to respond to complex disputes with activist stakeholders. It argues that management strategies fall into four categories: wage a fight, withdraw, wait, or work it out. Which strategy is chosen is likely to vary according to: the firm’s dependence on stakeholders for critical resources, the firm’s power in the particular situation, and the urgency of the contested issue. Managers’ effectiveness is, in large part, a function of their ability to assess these three conditions correctly.

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