Incumbent Stakeholder Management Performance and New Entry
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ORIGINAL PAPER
Incumbent Stakeholder Management Performance and New Entry André Laplume1 · Kent Walker2 · Zhou Zhang3 · Xin Yu4 Received: 7 August 2019 / Accepted: 24 September 2020 © The Author(s) 2020
Abstract Instrumental stakeholder theory seeks to explain how managing stakeholders effectively can yield competitive advantage for incumbent firms. We extend instrumental stakeholder theory to explain and predict future competition operationalized as new entrepreneurial entries. Our study is among the first to empirically examine the relationships between aggregate stakeholder management performance and the entrepreneurial entries of individuals. Using a combined U.S. dataset from 2003 to 2013 from the Kinder, Lydenberg and Domini (KLD) Index, Compustat, and Kauffman’s Entrepreneurship Survey, we find support for three hypotheses. First, higher levels of stakeholder management performance are related to lower rates of entrepreneurial entry. Second, a curvilinear relationship exists between stakeholder management performance and entrepreneurial entry, where both low and very high stakeholder management performance increase entrepreneurial entry. Third, the greater the variance in stakeholder management performance across stakeholders, the more entrepreneurial entry. Our findings suggest that managing for stakeholders can help to avoid future competition. We add an entrepreneurship lens to the business ethics of stakeholder theory showing how incumbent stakeholder management performance shapes opportunities for entrepreneurs, a largely neglected stakeholder group. Keywords Business ethics · Entrepreneurial entry · Instrumental stakeholder theory · Stakeholder management performance · Curvilinear · Overinvestment · Balancing stakeholder interests
Introduction
* André Laplume [email protected] Kent Walker [email protected] Zhou Zhang [email protected] Xin Yu [email protected] 1
Ted Rogers School of Management, Ryerson University, TRS‑058, 575 Bay Street, Toronto, ON M5G 2C5, Canada
2
Odette School of Business, University of Windsor, Odette Building, Room 432, 401 Sunset Avenue, Windsor, ON N9B 3P4, Canada
3
Faculty of Business Administration, University of Regina, 3737 Wascana Pkwy, ED 524.3, Regina, SK S4S 0A2, Canada
4
UQ Business School, University of Queensland, Room 407, Colin Clark Building 4072, St Lucia, QLD, Australia
Stakeholder theory has been widely debated in the business ethics literature because “by substituting ‘stake’ for ‘share’, the very idea of non-shareholders having a ‘stake’ does normative work” (Parmar et al. 2010, p. 9). The normative character of the theory has led to greater attention and adoption over time with business ethicists mostly finding fluidity between stakeholder theory a variety of ethical frameworks (Laplume et al. 2008). Meanwhile, in parallel, strategy scholars developed instrumental stakeholder theories (Jones 1995; Jones et al. 2018), where the value of stakeholder relationships is assessed against corporate variables like financial pe
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