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REWRITTEN, SUPERIOR THINKING ON: Stakeholder Support on Organization Change

Updated on March 24, 2012
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Organization change and stakeholder support

This discourse is meant to help one to “Analyze Change” by focusing upon stakeholder

support which gives one an opportunity to think about a range of organizational capacities, including

“the capacity to react to unplanned threats.” This need to be able to “react to unplanned

threats” has been a difficult problem for large organizations and small ones alike. This paper

affords me an opportunity to contemplate a couple of large organizations as they react to

unplanned threats, while at the same time, thinking about how we react to unplanned threats

within my very own small, farm based organization called Mamushi Nature Farm Initiatives, Inc.

The first organization considered here is called Airbus. Airbus is a multinational corporation

that is a chief rival of the other multinational giant aircraft corporation the Boeing Corp. Both

Airbus (a European aircraft manufacturer) and Boeing (an American aircraft manufacturer)

dominate the aviation manufacturing industry and are truly multinational super-stars, as far as

performance goes. However, even superstars like these two companies, face unplanned

threats. Michaels, D. & Pearson, D. (2012, March 9) says that the chief executive of Airbus’

parent “the European Aeronautic Defense & Space Co. (EADS)” accused European Union

officials of picking a fight with China over aircraft emissions that threatens to cost the plane

maker $12 billion in jetliner orders. Airbus’ CEO, Louis Gallois believes that this situation, a

dispute between Beijing and Brussels is going to cause them to lose 45 un-built large planes

(Michaels, et al., 2012, March 9, WSJ, B4).

We can immediately perceive how this situation, that may cause Airbus a loss of $12 billion

dollars in orders in a serious unplanned threat to Airbus. This loss of potential orders is a

serious setback but not severe enough a threat to affect Airbus’ survival in the aviation

manufacturing industry however. Choi, Y. & Shepherd, D. (2005) notes that primary

stakeholders such as customers, employees, distributors, suppliers, and bankers, have direct

involvement in the life of the organization that is necessary for the organization to perform its

major mission of producing goods and services for customers, employees, distributors, and

bankers. The continuing support of these primary stakeholders is necessary to insure the

survival of the organization (p. 574). In the case of Airbus, we understand that this company’s

upper management (their leaders) have systematic managerial ability to hold the attention and

support of their stakeholders in a highly successful way, which is a necessary requirement as

presented above, Choi et al., 2005). (Choi et al., 2005) also suggests that, even when controlling

for size, organizational age is associated with lower mortality rates (p. 578). Airbus is a rather

old company, so is Boeing, which has allowed them to amass a power base of stakeholders.

In the case of Boeing Company we see a similar situation in terms of a large, old, well lead

organization that has the support of its primary stakeholders. Kesmodel, D. & Chowdhury A.

says Boeing Company and the Indian government clashed in a rare public dispute over whether

the jet maker had agreed to pay up to $500 million for delays in delivering its new 787

Dreamliner(WSJ, B2). Kesmodel et al., cited Jim Albaugh, the chief executive of Boeing’s

commercial-airliner unit, as saying, “We’re not writing anybody a check for$500 dollars,” (2012,

WSJ, B2). This situation is also an example of a serious unplanned threat to Boeing. Boeing

primary stakeholders will stand behind their company as they have done in the pass, for the

same reason that Airbus’ supporters, as noted above, stands behind their company. Unplanned

threats cause me concern because we, as leaders, must stand prepared to take the correct

actions to deal with these dilemmas, in timely manners, as they occur.

Mamushi Nature Farm Initiatives, Inc., a 501 (c) (3) nonprofit organization that is associated

with my farming operation in Franklin, Tennessee, in a small, young organization. It was

founded in 2003 and the first mission statement read, “We exist to provide Hunger Relief to

those who need food.” It went on to say “We make organic foods available to those who

cannot afford to purchase it, as best as we can. We help feed the poor in Tennessee, those

throughout the South, and then the needy globally.

When the recession began, Isidore, C. reports that it begin in December, 2007 (CNNMoney,

2008), it was an “unplanned threat” that adversely affected the survival of Mamushi Nature

Farm Initiative, Inc. Ritholtz, B. (2010, September 20) reports the Business Cycle Dating

Committee of the National Bureau of Economics Research made a determination that the U.S.

economic recession ended June 2009 (p. 1). During the recession period only those organization

that were truly legitimate organizations managed to survive this economic adverse situation. It

is important, at this point that I give some definition of what legitimacy is. Choi, R. & Shephard,

D. (2005) believe that moral, or sociopolitical, legitimacy is the positive normative evaluation

(i.e., perceived rightness) of the organization and its activities, given existing norms and laws of

stakeholders. They focus on cognitive rather than moral legitimacy because profit-seeking

activities are widely perceived as valid, and most new independent organizations are not

actively challenged as morally illegitimate. Choi et al., 2005 believe the cognitive legitimacy of

an organization is the extent to which stakeholders know of, and understand its activities (p.

578).They went on to say that the highest form of cognitive legitimacy is achieved when a

product or service becomes taken for granted. They want us to see how, with less cognitive

legitimacy, managers may have difficulty gaining and maintaining the support of stakeholders,

because a lack of knowledge increases uncertainty about decisions, and, as stated earlier,

people are typically uncertainty averse. Their research reports that “from a consumer’s point of

view, cognitive legitimation means that people are knowledgeable users of the product or

service. The unplanned threat of the “Recession of 2007” proved to be a critical period of “zero

growth” for Mamushi Nature Farm Initiatives, Inc., as the organization faced the possibility of

mortality.

Organization such as General Motors Corp. and Chrysler Corp. survived the unplanned threat of

Recession of 2007 because they were legitimate, as defined above, and their stakeholders

stood by them to help them to avoid mortality. For example, a report from perspectives.com

(2010) read “as the American auto industry teetered on the brink of collapse in December

2008, Vice President Dick Cheney beseeched his GOP allies in Congress to back an aid package,

warning, “If we don’t do this, we will be known as the party of Herbert Hoover forever.” Which

is exactly right. Because while Republican leaders were warning of the “bridge loan to

nowhere” and the “road to socialisy,” President Obama was saving the American auto industry

and with it hundreds of thousands of jobs” (p. 1). It is interesting to note that in this instance,

GMC and Chrysler had key, major stakeholders in their corner, which included President Obama

and Dick Cheney, who was able to remind Congress of their responsibilities for insuring the

survival of the auto industry.

My paper on Analyzing Change has focused on one aspect of stakeholder support in helping

organizations to survive unplanned threats. Mortality of an organization can result if unplanned

threats are dealt with, head on, by leaders.

References

Kesmodel, David & Chowdhury, A. (2012, March 15). India clashes with Boeing: Compensation

for delayed delivery of new Dreamliner arcraft sparks discord. The Wall Street Journal, p.

B2.

Isidore, C. (2008). It’s official: Recession since Dec. ’07. Retrieved from

http://www.money.cnn.com/2008/12/01/news/economy/recession/index.htm

Kesmodel, D. (2012, February 7). Boeing teams speed up 737 output: Jet maker’s innovation

crews search for ways to boost efficiency, reduce costs as demand soars. The Wall Street

Journal, p. B10.

Obama saves U.S. auto industry from the party of Hoover. Retrieved from

http://www.perspectives.com/blog/archives/002027.htm

Ritholtz, B. (2010, September 20). It’s official: Recession ended June 2009. Retrieved from

http://www.cclog/2010/09/its-official-recession-ended-june-2009/

Michaels, D & Pearson, D. (2012, March 9). EU—China battle stalls sales of Airbus jets. The Wall

Street Journal, p. B4.

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    • Dr. Haddox profile imageAUTHOR

      Dr Freddie Haddox 

      6 years ago from a Franklin, Tennessee native, who travels globally.

      You comments on change are remarkable and helpful for any leaders or learners who want to become effective leaders. I do appreciate you, for taking the time to share valuable insights on HubPages. Thank you.

      Dr. Haddox

    • Dr. Haddox profile imageAUTHOR

      Dr Freddie Haddox 

      6 years ago from a Franklin, Tennessee native, who travels globally.

      Dear jpcmc, Your comments on change are remarkable and helpful for any leaders or learners who want to become effective leaders. I do appreciate you, for taking the time to share valuable insights on HubPages. Thank you.

      Dr. Haddox

    • jpcmc profile image

      JP Carlos 

      6 years ago from Quezon CIty, Phlippines

      Lots of interesting nuggets here. I've noticed many companies try to change without having the right people, technology etc. Although there is a desire to change, it is imperative that the necessities for the change are present. Whether it's competencies, skills, technology, change will remain dream without the necessities. Furthermore, everyone must contribute to this change. When half-hearted actions are present, change may not even push thorugh. Instead, the desire to change becomes an illussion and at times a source of frustration.

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