The concept of networks is becoming increasingly important across different fields. It has been used in areas such as genetics, neuroscience, physics, biology, computer sciences, or sociology. Likewise, in the field of public relations this concept is becoming increasingly central.
Network analysis allows one to uncover the relevant actors of a given system and the relationship infrastructure between them as a lasting pattern for interactions. Applied to the organizational context, this approach tends to portray organizations as complex sets of interdependent relationships between a variety of stakeholders, with whom the organization has legitimate shared interests (i.e. investors, employees, customers, suppliers, and members of the communities in which the organisation operates among others).
The Stakeholder theory, as set up by Freeman and his colleagues (Phillips, Freeman, & Wicks, 2003), introduced the idea that such ecosystems should not be governed with the aim of maximizing the welfare of a single stakeholder (typically shareholder wealth) but should take into consideration the interests and well-being of [the network of] all “those who can assist or hinder the achievement of the organization’s objectives” (p. 481) – the stakeholders.
From an organizational point of view, this requires a series of management practices which reflect an understanding and a reply to legitimate concerns of the organizations’ multiple constituencies. Empirical tools for analysis and engagement of such constituencies have been developed in many fields of study, among which Freeman et al (2010, p. 190) include finance, accounting, management and marketing or particular disciplines such as law, public policy, health care and environment.
Public Relations, understood as the management function responsible for coordinating –- and sometimes directly in charge of –- relationships with stakeholders, has often been left out of the “stakeholder management” mainstream literature and Muzi Falconi’s recent book (Muzi Falconi, Grunig, Galli Zugaro, & Duarte, 2014) is a very important element for this debate.
For the purpose of our discussion, we prefer to focus on “relationship management” rather than on “stakeholder management” because it designates the management of organizational behavior with the aim of developing, improving or maintaining relationships.
Governing such types of relationships systems, using communication (understood as communication + action) to establish develop and maintain relationships certainly is one of the main challenges for a PR professional.
Publics and communicative networks
Even if the most transversal element in defining stakeholders seems to be the mutual affection (bidirectional but not necessarily symmetrical affection) between the stakeholder and the focal organization (Freeman & Reed, 1983)(Freeman R. , 1984), the concept has often been characterized without any relevant communicative dimension. In communication theory we find relevant ideas which provide different accounts of the communicative dimension of stakeholders. In short, different stakeholder categories (employees, shareholders, community, etc) can host segments of communicatively active people which, at a certain point, decide to act to address some issue/ opportunity. In a nutshell, the equivalent of stakeholders with a relevant communicative dimension is what we call “publics”.
As Grunig and his colleagues explained (Grunig & Repper, 1992)(Kim & Gunig, 2011) Publics are characterized by their communicative action and, in particular, by their behaviour in terms of information acquisition, information selection and information transmission (Situational Theory of Problem Solving).
Following Dewey (1927 ), we should conceive “Publics” first of all as a set of conscious and aware people who are affected by public consequences, i.e., consequences emerging from actions in which they didn’t necessarily take part. These people try to control and regulate these consequences, thus giving rise to government, or governmental systems. This is the kind of systems that organizations and their publics develop through their interaction and scrutiny and the kind of process which is at the core of communicative networks.
Publics usually form around issues, and the network reality also impacts our traditional beliefs on issues management. Although we can concur with Freeman’s argument that “Groups and Individuals behave, not issues” and that “Issues emerge through the behaviour and interaction of stakeholders, therefore ‘stakeholders’ is a more fundamental and useful unit of analysis”, we must at least consider the concept of “issues” and the communicative nature of stakeholders with some detail (Freeman, Harrison, Wicks, Parmar, & De Colle, 2010, p. 60).
In a way, issues in the public sphere are also nested in networks with complex structures marked by chains of interdependence. For example, the issue of climate change is related with global warming, which in turn is related with the usage of fossil fuels and the broader issue of CO2 emissions. This, in turn, is related with population increase and with the individual choices of citizens regarding recycling, mobility, consumption habits, etc. As a result, when dealing issues management, PR Professionals must consider how developments in a specific issue (or dimension of the issue) will impact on related issues and generate subsequent positive/ negative impacts.
Governance of relationships in the network organization
Public relations professionals have been at the forefront to raise awareness on the need to develop bilateral and mutually beneficial relationships with each single stakeholder, and not just with shareholders. But somehow this notion that a good decision making process is that which creates mutual benefits for the parties involved falls short of guaranteeing the equilibrium in the complex network environment in which we live today. Although there is much value in conceiving a bidirectional approach to managing communicative exchanges (to listen is at least equally important as to speak) balanced with a symmetrical approach to decision making (searching for win-win situations between organization and its stakeholders), we need to move forward. We need to consider a shift toward a trilateral governance (understood as a synonym for multi-lateral) in which the interests of the organization, the specific stakeholders but also of general society (or if we prefer the greater network) are considered in each decision making process.
In the network organization, it doesn’t suffice to adjust or accommodate interests of two parties (being the organization and its shareholders; or the administration and the employees; or any other configuration of parties) but it is required that decisions conform to patterns and values that represent the common good or at least do not pose a threat for society as a whole, or to the greater network. The advantage of using network analysis techniques is that they allow us to materialize the broad concept of “society as a whole” in concrete and visible actors or clusters of actors.
For example, a shareholder wouldn’t perceive any returns if management did not attend to the stakes of customers or employees and would focus solely on financial performance; customers wouldn’t get products or services they need without employees and suppliers; employees wouldn’t have conditions to perform without the communities; etc.
Integrating it all: Communicative Equations
Network analysis provides PR professionals with useful tools to address the increasingly complex process of developing relationships with stakeholders. Next week, in a subsequent blog post, I will discuss how three major blocks of “communicative equation” activities can help PR managers not only to better understand the challenges presented by network society and network organizations, but to visualize each situation involving stakeholders, active publics, issues, and relationships to aid in the decision making process.
 A previous explanation of this Communicative Equation has been presented at the 14 Slovene Public Relations Conference on 2010 and further expanded (Duarte, 2011) (Muzi Falconi, Grunig, Galli Zugaro, & Duarte, 2014).
Dewey, J. (1927 ). The Public and its problems. Chicago: Swallow Press.
Freeman, R. E., Harrison, J., Wicks, A., Parmar, B., & De Colle, S. (2010). Stakeholder Theory: The state of the art. Cambridge, MA: Cambridge Universty Press.
Freeman, R. (1984). Strategic management: a stakeholder approach. Boston, MA: Pitman.
Freeman, R., & Reed, D. (1983). Stockholders and stakeholders: a new perspective on corporate Governance. California Management Review, Vol.25 Num.3 , 93-94.
Grunig, J., & Repper, F. (1992). Strategic Management, Publics and Issues. In J. E. Grunig, D. M. Dozier, W. P. Ehling, L. A. Grunig, & F. C. Repper, Excellence in Public Relations and Communications Management. London: Lawrence Erlbaum Associates.
Kim, J.-N., & Gunig, J. (2011). Problem Solving and Communicative Action: A situational theory of Problem Solving. Journal of Communication, Vol.61 Num.1 , 120-149.
Muzi Falconi (Ed.), T., Grunig, J., Galli Zugaro, E., & Duarte, J. (2014). Global Stakeholder Relationships Governance: An Infrastructure. New York: Palgrave Macmilan.
Phillips, R., Freeman, E., & Wicks, A. (2003). What Stakeholder Theory is Not. Business Ethics Quarterly, Vol.13, Issue 4 , 479-502.
Joao Duarte is Head of Iberia Communication Agency at Endesa (Enel Group), a multinational energy Group based in Rome with operations spread across the world in more than 40 countries. He is a co-author or Global Stakeholder Relationship Governance.