chapter  Three
24 Pages


Stakeholder relationships are personal relationships
ByWitold J. Henisz

The implementation of stakeholder engagement has received much attention from practitioners and academics. The pyramid's base is economic legitimacy–the feeling among stakeholders that a company offers a net economic benefit to them. Stakeholders, particularly in the developing world, are often poor and uneducated. The foundation for the social license to operate is a sense that stake-holders are better off thanks to the presence of the investor. One critical element in building and maintaining interactional trust is managing the expectations of stakeholders. A good example of the importance of sociopolitical legitimacy is the prominent role played by respect for local culture and tradition, including dancing, in the multi-stakeholder dialogue table at the Ambuklao-Binga hydroelectric dam in the Philippines. According to staff from NGOs that participated in the process, these personal and emotional factors helped to convince skeptics that BHP-Billiton was serious about reform. Efforts to achieve cooperation among stakeholders have been branded a partnership approach.