Stakeholder engagement is not a new concept but increasingly companies have come to recognize its value. Studies have shown that stakeholder oriented companies outperform their competitors (Kotter and Heskett, 1992; CICA 2006; Svendson, 2002). As companies face growing complexities of managing various social and environmental challenges, stakeholder engagement provides an opportunity for companies to align their business practices with societal expectations.
Benefits of engaging with stakeholders include:
- Establishing trust and credibility; acquiring a “social license to operate”;
- Avoiding and/or resolving conflicts; reducing the possibility of negative actions (protests, shareholder activism, etc.); and
- Gaining community support and fostering continuous improvement (i.e. it provides another avenue for companies to learn and innovate).