The concept of company “stakeholder” is not new. For over two decades, companies have been thinking about, and even taking responsibility for, the concerns of a wider circle of interested groups than just management and shareholders. Traditionally, these include employees, customers and suppliers. But in recent years, a new set of “non-traditional” stakeholders has emerged, some of which are pursuing a bigger, societal or even global agenda that has forced companies to take a broader view of the impact of their operations. Alongside this has been the proliferation of the Internet and the concomitant popularity of social networking sites and blogs, which have altered the way in which companies now deal with both old and new stakeholders.

How should companies respond to these new challenges? For many, the first concern is to protect reputation and brand, but a growing group of pioneering corporations are beginning to see direct commercial advantage from taking a more strategic approach to their new stakeholders, despite the risks. It may be that in the longer term there is no sustainable alternative to taking the bigger view.

These new, non-traditional, stakeholders vary widely in nature and goals. They range from universities working on joint research projects to anti-corporate non-governmental organisations (NGOs) such as environmental or human rights activists protesting against perceived corporate abuses. Business relationships with the latter have until recently been largely adversarial rather than collaborative in nature. Today much of the hostility has receded as companies and civic groups increasingly recognise the productive value of collaboration, especially given that so many big social or environmental causes can only be solved through a multi-sectoral approach.

Equally important is the realisation that in an Internet world companies no longer control the “message” about their external affairs. They have had to be more creative in the way they engage outside parties, not least through online communities. Greater openness, if handled smartly, while exposing internal vulnerabilities, may have bigger commercial advantages—product feedback from customers and early warning of potential trouble from pressure groups, to name but two. The key to success is in managing this precarious balancing act, and is the main thrust of this study. Getting that balance right is no easy task. Cultural differences, to say nothing of divergent goals, make for a fraught relationship. But as this report suggests, progress is being made on all sides.

The key findings of this report are as follows:

Companies must tread a line between partnership and confrontation. Companies and new stakeholder groups increasingly see a future in collaboration rather than confrontation. But differences remain, especially regarding working culture and goals. Thus companies must be prepared to work closely with these groups on some initiatives, while facing attacks by those same groups over perceived abuses in other areas of operations.

Firms most fear damage to their reputation… Some 43%, the largest group of our survey respondents, see reputation damage as their main risk in dealing with online communities, and 38% say the same in reference to NGOs and civic groups. But reputation enhancement and brand building are seen by a plurality of respondents to be the main benefits of engaging with all of these groups. This is also the case when dealing with online communities. Partly as a consequence, management of these stakeholder relationships is often left to PR and marketing departments, without oversight at senior management or board level.

…but positive stakeholder experiences are helping to change the outlook. One-half of our survey respondents say that a change in sustainability strategy is a likely outcome of their relationships with non-traditional stakeholders. These have brought benefits in areas such as supporting regulatory compliance, managing suppliers, entering new markets and recruitment.

Control of information is hard to relinquish... The proliferation of the Internet has made it harder for companies to control the corporate message. “Everything will get out there in the end,” says one expert interviewed for the report. The biggest challenge for companies is to allow information to flow freely, as demanded by online channels, often against the objections of legal and marketing departments. In any case, employees, well treated, can be the company’s best ambassadors.

... but the future is with online communities. One-third (33%) of our respondents, the largest group in the survey, say that online communities will become their most important non-traditional stakeholders in the next five years; and 42% believe that online social networks will be the most effective means of communicating with these groups.

Experience of handling new stakeholders is limited. Nearly three-quarters (74%) of survey respondents agree that the staff members in their company who most often deal with nontraditional stakeholders have a good understanding of the latter’s interests and motivations. But for many, the process is alien: 36% complain of insufficient training in this area, and others confess that they do not know how to communicate effectively with such groups.

Intellectual property rights (IPR) protection poses big dilemmas. Opinion varies as to whether stakeholders should be required to sign non-disclosure agreements. While some firms worry that “the value can walk out the door every night”, others feel obliged to trust their partners. The situation is more complicated when IPR derives from the collaboration itself, as the aim of partners is often to publicise innovations as much as possible and without concern for profit.