Measuring Multiple Stakeholder Costs and Benefits for Improved Decision-Making

Abstract

It is well-accepted that organizations must consider multiple stakeholders and their objectives when deciding on organizational actions. But research provides little guidance regarding how managers can identify stakeholders, measure, and use information to facilitate this type of decision-making. The broad objective of this study is to provide insights that improve decision-making. More specifically, we provide evidence on how to identify, measure, and integrate information into managerial decision-making. We do this by studying, in its natural and complex environment, a decision that involves a trade-off between energy development and protection of wildlife. We collect five types of data and present both qualitative and quantitative analyses of sustainability performance (i.e., social, environmental, and economic impacts) and stakeholder reactions. We document that the model we test provides information useful for managerial decision-making and demonstrate the applicability of existing measurement techniques to these management challenges. We advance theory by providing a critical discussion of how three primary stakeholder groups are likely to integrate sustainability information into decision-making and develop several testable research propositions. We conclude with a discussion of implications for both practice and theory.

Keywords: Performance measures, decision-facilitating information, corporate social responsibility, field study

JEL Classification: L21, M14, M41, Q01, Q56