The Roles and Importance of Stakeholders in Business Sustainability

Introduction

Despite profit being the main objective of many businesses, there has been an increased focus on how to operate a business efficiently whilst observing the impact it has on the environment, community and economic conditions of the country. This aids in ensuring that there is the existence of harmony between the business and all stakeholders. (Ozane et al, 2016). Landrum and Edwards (2009) define sustainable business as one that operates in interest of all current and future stakeholders in a manner that takes into account, long-term health and survival of the business and its associated economic, social and environmental systems. In this regard, business managers tend to shift their focus towards developing principles and strategies that help in achieving sustainability in business (Ansell & Gash, 2007). These principles are tailored to maximize returns while minimizing the negative impact of their operations on the environment, community and economies of the countries where they operate in. In order for a business to thrive, it should be obligated to engage its stakeholders, in order to build a common ground through joint decision-making. All the concerns of the stakeholders should be considered when developing sustainability policies to avoid conflicts during operations (Sampaioet el., 2012).

a) Importance of business sustainability

Sustainability of businesses helps attract and motivate employees since it promotes best practices and policies related to working conditions, opportunities for advancement, better wages and other necessary benefits (Belkaoui, 2000). Often, businesses consider employees as integral partners and recognize the power of true employee engagement. Whilst this happens, employees realize the sense of recognition hence; increase their input, and consequently, their turnover (Ozane et al, 2016). Secondly, investors are highly attracted to sustainable businesses since these businesses focus on maximizing opportunities which translates to higher returns. According to Bryson et al. (2006), this in turn, provides the businesses with access to huge capital investments, which they can use in supporting their businesses operations. Moreover, the capital gained can be used to develop environmentally and socially friendly products through innovations and adoption of better technology. Thirdly, sustainable businesses help firms to cut down costs and wastes. Business managers focus on developing strategies that create more value and reduce wastes to operate efficiently. They come up with strategies on how to reduce costs, risks and maximize profits and to increase flexibility (Posner, 2014). Critical analysis of processes is conducted with an aim of eliminating wasteful processes and to reduce operational risks associate with such processes. The reputation of firms that practice sustainable business is always good since they follow all regulations relating to ethics and are in harmony with the community they operate in (Clarke & Fuller, 2010). Sustainable businesses ensure that they adhere to all guidelines and standards of operation. Such businesses benefit from goodwill from all stakeholders hence increasing their profitability. Businesses with good reputation have a competitive advantage and receive less opposition(Ozane et al, 2016).

Fourthly, sustainable businesses experience positive growth due to the fact that they adopt environmental, social and economical responsibility, thus aiding them to remain competitive in the market. In line with competitiveness, sustainability enables businesses to be creative, and this leads to the production of better products (Evans et al., 2006). As such, businesses tailor their products to meet customer requirements, thus attracting more sales. Fifthly, environmental conservation is enhanced since sustainable businesses consider reducing wastes emitted to the environment by going green thus reducing harmful substances which may destroy the environment. Creating a safe environment enables businesses to thrive into the future since it focuses on the wellbeing of all stakeholders (Garcia-Sanchez and Prado-Lorenzo, 2008). These businesses acknowledge the importance of environmental conservation and management. Conclusively, it is as well notable that positive economic growth arises from business sustainability. This is owing to the fact that sustainable businesses reduce wastage of natural resources while focus on maximizing opportunities leading to increased profit margins. With more profit, a country’s Gross Domestic Product improves which is an indication of positive economic growth (Jones & Nisbet, 2011).

b)Roles of stakeholders in business sustainability

Stakeholders are individuals or groups that are affected by business decisions. Effective business management enhances continued good relations with a wide range of stakeholders, owing to the fact that a business cannot succeed in societies that are failing due to social or environmental challenges (Zhu, 2011). These stakeholders include the shareholders, investors, employees, customers, community, government, creditors and suppliers, amongst others. All stakeholders concerns should be treated with care since any deviation can hinder success of the organization. Employees being valuable assets to a business, they promote business sustainability by following all standards and rules set towards achieving sustainability. They should be in a position to clearly understand what the customers want and relate them with the organizational goals. Notably, businesses regard employees as the ears of the firm as they listen to what the potential customers need and reflect them to organizational goals (Jones and Nispet, 2011). On the other hand, businesses have to ensure that they provide good working conditions and motivation to employees so that they can fully support the implementation of sustainability programs.

Investors and shareholders create a pool of funds to the businesses in support of sustainability programs. The businesses are expected to provide full disclosure of financial and key performance information (Koschmann et al., 2012). Through agency law, the board of directors should ensure high levels of transparency and develop sustainability policies and strategies. Due to increased awareness of climatic conditions, environmental bodies have initiated campaigns against environmental pollution. These bodies have developed policies aimed at conserving the environment (Ozane et al, 2016). Environmental sustainability being a key requirement in achieving business sustainability, businesses are expected to follow environmental organizations regulations, whereby, failure to comply with the guidelines may raise conflicts (Kveton et al., 2014). Significantly, sustainable businesses therefore have a mandate to ensure environmental safety through proper disposal of wastes and reducing amounts of harmful emissions to the environment. Community dictates its values based on cultural beliefs. As such, sustainable businesses have to take them into account those so as to operate in harmony. Consequently, this improves the business image and reputation to the community (Landrum et al., 2009). Notably, a sustainable business benefits from favors and encourages more interaction with community in which it operates in. Such businesses rarely face opposition since they follow community values and standards.

The government set rules and procedures that govern businesses, and they have to be strictly followed by various businesses. In line with this, businesses have an obligation to abide by those regulations. To achieve sustainability, the government provides businesses with a conducive environment where they can operate by providing essential services. Businesses need to understand customer requirements and be able to integrate them with sustainability goals. Meeting customers’ expectations is a key success factor to organizations (Neal & Cochran, 2008). Due to advancements in technology and changing market conditions, customers have embraced green product that are safe to the environment and are economical. Businesses should set up immediate feedback mechanisms on sustainability programs, in order to counter stiff competition. Sustainable businesses must ensure full cooperation with sustainable suppliers. They should integrate their value chain systems in order to work towards reducing costs and wastes (Ozanne et al., 2013). It is significant to take note of the fact that having matching goals with suppliers enhances full and successful implementation of sustainability goals since resources can be economically pulled together and common efforts put towards achieving common goals. This can only be achieved through partnerships and long-term commitments policies with suppliers.

C)Critical evaluation of the importance of stakeholder partnerships in business sustainability

Stakeholder partnerships involve voluntary collaborations among businesses and various stakeholders in an attempt to achieve business sustainability.Neal and Cochran (2011) argue that firms operations are extended to include the involvement of stakeholder, partners and the society at large. The performance of the firm depends on the stakeholders and partners only if their needs and interest aim at a common goal. Evans et al. (2006) discovered that where dynamic governance (for instance institutional and social capacity-building from the partnering process) is high, the prospect of sustainable development policy becomes a success. Partners are able to air their views concerning sustainability during the decision-making process by clarifying their objectives, hence, providing room towards reaching a win-win solution. The decisions made focus on sustainability goals, since they are critically evaluated and they receive full support from the partners making it economical to achieve. Partnerships enable them to individually and collectively develop the sustainability and collaborative capacity required to tackle their communities’ sustainable development challenges and achieve their own organizational goals (Kveton et al., 2014).

Moreover, according to Zhu (2011), stakeholder partnerships enable the partners to conduct value chain analysis which aims at reducing wastes. This can be achieved through partnering with suppliers who have fully incorporated sustainability into their businesses. Partners are able to look into their processes and find out non-value adding processes and eliminate wastes, which would ultimately contribute to cost reduction and improved efficiency to the businesses. Bryson et al. (2006) proposes that the mechanisms for neutralizing power-asymmetries contribute to the ability of partnerships to create public value and build effective management systems, which could be put in place. Ozanne et al. (2013) supports this and notes that it enhances long-term mutual relationships that are beneficial to all the partners involved in the association.

Improved public image and reputation of sustainable businesses improves as a result of stakeholders’ partnership. This is owing to the fact that societies believe that such businesses are engaging in industry best practices. Scholars such as Worley and Mirvis (2013), advocate for more research to understand how external collaborative capabilities are developed and initiated. Social partnerships are widely used to deliver social change and implement corporate social responsibility The partners support one another to improve their brand images through working together to deliver sustainable products to the society as well as engaging in corporate social responsibility as partners to help the society (Ozanne et al., 2013).

Stakeholder partnerships promote peaceful coexistence in the industry as a result of adhering to all stakeholder requirements. Clarke and Fuller (2010) argue that partnership structures shape outcomes.Partner relationships and the purpose of the partnership is shaped by aspects such as sector roles and actors and/or conflict and power dynamics (Accountability, 2016). These authors further note that there should be proper communication amongst partners since goals are clearly clarified and every partner commits to strict adherence, hence, reducing conflicts and associated risks. This also contributes to reduction of costs that may arise from the litigation process due to non-compliance (Ansell & Gash, 2007). Tremendous growth arises from stakeholder partnerships, resulting from access to huge investment capital that promotes innovation and improvement of technology. Notably, investors and shareholders provide more capital when they are convinced that the business is focused on delivering value through sustainability and ultimately increase returns. In social partnerships, partner resources can be pooled together and the partners can learn from each other as they work together to address the social issue of mutual interest (Crane &Seitanidi, 2014). Firms are able to develop products with superior quality and features as compared to those competitors. Managers are therefore in a position to develop proper sustainability programs that can be achieved with full support from the partners.

Immediate feedback system can be enhanced through stakeholder partnerships. Partners can provide instant reviews based on their experience with the products or the sustainability programs making it easier to adjust the goals and the product features (Worley & Mirvis, 2013). The feedback systems enable easier detection of what is working and that which require adjustments. Koschmann et al. (2012) argue that communication practices play an important role in building the capacity of the partnership for collective agency. Stakeholder partnerships are therefore essential in achieving in achieving and promoting business sustainability. Overall, stakeholders dictate what they require from businesses making it beneficial to create long-term mutual partnerships geared towards sustainability. Belkaoui (2000) advised that a firm’s priority should be to settle issues and to acquire long lasting relationships with communities, and this automatically shapes a sustainable business (Worley & Mirvis, 2013).

Conclusion

Business sustainability is essential to the long-term prosperity of businesses. Businesses should emphasize on reducing the negative impacts their operations are causing to the environment and the community at large. As such, they should promote the creation of conditions that support the well-being of the communities by taking into account all concerns of the stakeholders. Sustainability makes businesses flexible since it considers social to any changes that may arise. Businesses utilize and maximize most of the opportunities in business and minimize the effects they have on the ground economically, environmentally and to the entire community they operate on. Such businesses are able to develop policies and practices that benefit the firm, thus, gaining a competitive advantage. The benefits arising from stakeholder partnership are worth venturing into by businesses which are seeking sustainability. The long-term commitments are essential to the survival of the firms in future since they are based on industry best practices and encourage flexibility of the firms, hence, being able to counter sudden changes in demand and preference. Business managers are able to develop improvements in their systems and enhance their goals that prove not to be working in line with the sustainability goals. Partners are also able to share crucial information, which is key to the success of sustainability goals and programs since their needs are easily and clearly channeled during meetings.

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