A core tenet of
stakeholder strategy is that a single-minded focus on shareholders alone exposes a firm
to undue risks that can undermine economic performance and can even threaten the very
survival of the enterprise. The strategist’s job, therefore, is to understand the complex
web of exchange relationships among different stakeholders. By doing so, the firm can
proactively shape the various relationships in order to maximize the joint value created,
and manage the distribution of this larger pie in a fair and transparent manner. Effective
stakeholder management is an example of the actions managers can take in order to
improve firm performance, thereby enhancing its competitive advantage and the likelihood
of the continued survival of the firm