Stakeholder engagement in emerging economies: considering the strategic benefits of stakeholder management in a cross‐cultural and geopolitical context

Abstract

Purpose

This paper aims to examine the strategic implications of stakeholder engagement in emerging economies.

Design/methodology/approach

The author examines a range of current theories that address the question of “why corporate morality pays”, most notably instrumental stakeholder theory. The focus is not on theoretical validity but the institutional assumptions that underpin the theory. It then compares these assumptions with the reality in emerging economies to challenge the universality of the theory.

Findings

Existing interpretations of stakeholder theory and corporate social responsibility (CSR) are heavily influenced by the west and developed countries. Only when firm‐stakeholder interactions are overwhelmingly rule‐governed will developing a trustworthy and cooperative relationship with stakeholders result in competitiveness.

Practical implications

A warning to CSR managers and multinational corporations that pursue competitive advantages in emerging economies such as China and India.

Originality/value

A new, critical approach to rethink stakeholder management in a cross‐border/cultural context.

Citation

Min Foo, L. (2007), "Stakeholder engagement in emerging economies: considering the strategic benefits of stakeholder management in a cross‐cultural and geopolitical context", Corporate Governance, Vol. 7 No. 4, pp. 379-387. https://doi.org/10.1108/14720700710820461