CASE STUDY

Case Study

Case Study

Question 1: Business and Management Ideas

In understanding corporate responsiveness to those stakeholders that can influence the company's SLO, exploring the nature of companies as organisations is illuminating. Company history was examined earlier: this discussion accordingly focuses on those characteristics that might have some relevance to the manner in which companies responds to external demands of it, and is followed by a case study of Rio Tinto exploring these processes in practice.

Pertinently, individuals that make up companies and give it any discernible moral character have their own spheres of influence and objectives, and are themselves complex and erratic. Corporate behaviour, to some extent, is an aggregation of the behaviour: of individuals and sub-units of groups of individuals that comprise companies, who in turn pursue diverse and possibly contradictory goals (Jensen, 1983; Keskinen et al., 2003; Moon, 1995; O'Neill and Gibson-Graham, 1999). In addition, companies are inevitably porous - for example, each employee is influenced by external networks which shape their actions and the motivations at work they bring to their work. Furthermore, various levels of company management and decision-making have different and often conflicting audiences, objectives and identities (Thompson, 1998; Trebeck, 2005). High-level management in mining companies focus on creation of profit, for example, whereas operational managers, with their budget constraints, consider themselves tasked with production of minerals (Cragg and Greenbaum, 2002, p. 332).

Once all individual objectives are accrued and external stakeholders accounted for, companies might be seen as an assembly of relationships to respective audiences, each requiring specific, and sometimes incompatible, responses from the company. Contrasting expectations of corporate behaviour are evident in those held by the financial sector, compared to the behaviour that local communities might expect.

Which companies respond to stakeholder demands, and how they do so, is determined by the net impact of these interests, with the influence of each stakeholder reflecting the company's financial, political and cultural characteristics. Initiation of CSR depends particularly on responsive individual employees, especially senior management, who are sensitive to the demands of stakeholders, and who appreciate and subsequently advocate the necessity of CSR (as is evident in the Rio Tinto case). While corporate interests remain utmost, in practice the extent to which stakeholder demands are deemed relevant and addressed is dependent on the perceptions of key managers: how they perceive stakeholder power to impact the company; the legitimacy of any group or its claim; and the urgency of a stakeholders' demands (importance and unacceptability of delay) (Agle et al., 1999; Mitchell et al., 1997; Wartick and Wood, 1998, pp. 111-112, quoted in King, 2000). When possessing legitimacy, power and urgency simultaneously, stakeholders are most likely to achieve a positive response. This accords with managerial theories of stakeholder relations that relate responsiveness to stakeholder capacity to impact a company's operations, as earlier alluded to (see, for example, Wilmshurst, 2004).

Individuals in corporate management positions have significant bearing on a company's responsiveness. Management recognition of the legitimacy, power and urgency of stakeholder demands is often informed by personal values and ...