Measuring
the Business Value
of Stakeholder Relationships
Trust,
shared values and strong relationships aren't typical financial
indicators but perhaps they should be. A joint study by CIM
and the Schulich School of Business is examining the link between
high trust stakeholder relationships and business value creation.
The study is sponsored by the Canadian Institute of Chartered
Accountants (CICA).
The research
team is looking at how social capital can be applied to business.
The aim of this project is to better understand corporate social
capital, measure the quality of relationships, and provide the
business community with ways to improve those relationships
and in turn improve their bottom line.
Because stakeholder
relationships all have common features, direct comparisons of
the quality of relationships can be made across diverse stakeholder
groups, companies and industries.
Social
capital is “the stock of active connections among people;
the trust, mutual understanding, and shared values and behaviors
that bind the members of human networks and communities and
make cooperative action possible” (Cohen and Prusak, 2000).
So
far the research suggests that trust, a cooperative spirit and
shared understanding between a company and its stakeholders
creates greater coherence of action, better knowledge sharing,
lower transaction costs, lower turnover rates and organizational
stability. In the bigger picture, social capital appears to
minimize shareholder risk, promote innovation, enhance reputation
and deepen brand loyalty.
Preliminary
results show that high levels of social capital in a relationship
can build upon themselves. For example, as a company builds
reputation among its peers for fair dealing and reliability
in keeping promises, that reputation itself becomes a prized
asset useful for sustaining its current alliances and forming
future ones.
The first
phase of the research is now complete and the study moves into
its second phase involving detailed case studies with six companies
that have earned a competitive business advantage through their
stakeholder relationships. Click
here for a full report
