By R. Edward Freeman
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Extra resources for Strategic Management: A Stakeholder Approach (Pitman Series in Business and Public Policy)
The real importance of the suggestion box in Japan, and Quality Circles that work, is the consistent message that they send to employees, that their ideas have some impact on the firm. If corporate managers ignore certain stakeholder groups at the rational 73 and process level, then there is little to be done at the transactional level. Encounters between corporation and stakeholder will be on the one hand brief, episodic and hostile, and on the other hand non-existent, if another firm can supply their needs.
I8 Several successful companies seem t o "overspend" on handling consumer complaints. IBM's commitment to service, P&G's consumer complaint department and the Sears philosophy of taking merchandise back with no questions asked, yield valuable lessons in understanding the nature of transactions with customers. These companies act as if consumer complaints yield an opportunity for understanding customer needs which ultimately translates into a good bottom line and satisfied stakeholders. Other sets of transactions, which often get out of line with process and rational analysis, include the firm's relationships with the media, shareholder meetings, meetings with financial analysts, encounters with government officials and day t o day interactions with employees and unions.
New England Telephone adopted a stakeholder approach to implementing a plan for charging for Directory Assistance in Massachusetts (Emshoff and Freeman, 1979). -ncnl,x. i:c a~=r;-nnjons uiLh severzl key stakeholders, most notably and ironically, its own union, as well as the State Legislature, were not successful. The union got a piece of legislation prohibiting the company's plan passed in the state legislature, and even though the company was successful in persuading the Governor of Massachusetts to veto the legislation, as there was no pubIic support, the state legislature overrode the Governor's veto, at the cost of $20 million to the customers of New England Telephone.