REWRITTEN, SUPERIOR THINKING ON: Stakeholder Support on Organization Change
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
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.
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.
Isidore, C. (2008). It’s official: Recession since Dec. ’07. Retrieved from
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
Ritholtz, B. (2010, September 20). It’s official: Recession ended June 2009. Retrieved from
Michaels, D & Pearson, D. (2012, March 9). EU—China battle stalls sales of Airbus jets. The Wall
Street Journal, p. B4.