Stakeholder Competing Goals And Experimental Strategy

Abstract

Recent work in experimental strategy suggests that incorporating stakeholders can improve experimental decision-making by mitigating some of the frictions associated with business experimentation. However, this work maintains a crucial implicit assumption-that all actors share a common goal of maximizing profits-despite a vast literature showing that actors often have goals that go beyond pure profit maximization. This paper introduces the possibility of stakeholder competing goals and analyzes how goal conflict between stakeholders impacts an actor's experimental strategy. Using a model that considers various degrees of goal alignment and misalignment, we show that although involving stakeholders in experimental decision-making may sometimes improve outcomes, this potential remedy comes at a cost, as the presence of conflicting goals introduces new decision-making errors. More broadly, our results suggest that actors will accept the input of other stakeholders in strategic decision-making only when the costs of goal misalignment are small relative to the benefits of improved outcomes.

Keywords: New Stakeholder Theory, Experimental Strategy, Competing Goals, Entrepreneurship JEL Codes: L20, L26, L29, D21, D23

JEL Classification: L20, L26, L29, D21, D23