Saturday, November 19, 2011

When Engaging with Your Stakeholders Is Worth Its Weight in Gold




Wharton management professor Witold Henisz has been studying political and social risk management for 15 years, focusing mainly on strategies of avoidance -- i.e., better identification of risky places to do business, and then helping companies minimize their exposure to them. Recently, he discovered a way to distinguish the payoff in "engag[ing] with these risky environments. What strategies did firms that decided to enter these markets follow? Why did some succeed and others fail?"
The result is a research paper titled "Spinning Gold: The Financial Returns to External Stakeholder Engagement," by Henisz and Sinziana Dorobantu, a senior research fellow and lecturer at Wharton, and Lite Nartey, an assistant professor at the University of South Carolina.
The authors used data from 26 gold mines owned by 19 publicly traded firms between 1993 and 2008. By coding more than 50,000 "stakeholder events" found in media reports, Henisz and his colleagues developed an index of the degree of stakeholder cooperation or conflict for these mines.

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