Preferences, Structure, and Influence: The Engineering of Consent

• Date: 01 November 2013
• Author: Witold J. Henisz
• Published date: 01 November 2013
• DOI: http://doi.org/10.1111/j.2042-5805.2013.01064.x

PREFERENCES, STRUCTURE, AND INFLUENCE:

THE ENGINEERING OF CONSENT

WITOLD J. HENISZ1*

1The Wharton School, University of Pennsylvania, Philadelphia, Pennsylvania,

U.S.A.

I present a decision process framework that informs the design and implementation of stake-

holder influence strategy. This process combines insights fromagent-based dynamic utility and

dynamic network processes. Stakeholders strategically seek an outcome as close as possible to

their preferred point but also wish to be on the winning side and not to pursue positions

divergent from stakeholders with whom they have strong affective ties. Simulation analysis

highlights important effects from embedding stakeholders within such an interdependent

policymaking network. The resulting decision process framework can be used by firms to assess

the likely dynamics within such a stakeholder network as well as to compare alternative

treatments to that network for their efficacy in securing a favorable policy outcome, collective

decision, or shift in group opinion. Copyright © 2013 Strategic Management Society.

‘Any person or organization depends ultimately on

public approval, and is therefore faced with the

problem of engineering the public’s consent to a

program or goal . . . When the public is convinced of

the soundness of an idea, it will proceed to action.

What do [the people] know? What are their

present attitudes? . . . What group leaders or opinion

molders effectively influence the thought process of

what followers? What is the flow of ideas—from

whom to whom? To what extent do authority, factual

evidence, precision, reason, tradition, and emotion

play a part in the acceptance of these ideas? . . . If

the engineer of consent is to plan effectively, he must

also know the group formations with which he is to

deal . . .’ (Bernays,1947: 114, 120)

INTRODUCTION

Stakeholder influence strategies involve strategic

behavior by stakeholders embedded in a network of

economic, political, and social relationships who

seek to alter the positions or beliefs of peer stake-

holders or the network structure in which they are

jointly embedded in order to secure a favorable

policy outcome, collective decision, or shift in group

opinion. Such strategies are ubiquitous elements of

the interaction of individuals, groups, organizations,

coalitions, and societies. They are used by individu-

als seeking to influence team decision making and

organizational politics as well as by individuals and

organizations in lobbying, marketing, sales, political

campaigns, and corporate, national, or multilateral

projections of soft power.

Elements of such strategies have been subject to

analysis, but the process as a whole remains more art

than science hindering the development of positive

theoretical and empirical analysis (Schuler, 2001) to

complement the largely normative body of work on

Keywords: stakeholder; agent-based model; social network;

coalition politics; decision process

*Correspondence to: Witold J. Henisz, The Wharton School,

University of Pennsylvania, 3107 Steinberg Hall-Dietrich Hall,

3620 Locust Walk, Philadelphia, PA 19104-6370, U.S.A.

E-mail: henisz@wharton.upenn.edu

Global Strategy Journal

Global Strat. J., 3: 338–359 (2013)

Published online in Wiley Online Library (wileyonlinelibrary.com). DOI: 10.1111/j.2042-5805.2013.01064.x

Copyright © 2013 Strategic Management Society

instrumental stakeholder theory (Clarkson, 1995;

Donaldson and Preston, 1995; Jones, 1995). In this

article, I draw from political economy and social

network analysis to offer an interdisciplinary deci-

sion process framework that informs the design and

implementation of stakeholder influence strategy. I

analyze the environmental and strategic determi-

nants of the efficacy of various stakeholder influence

strategies using agent-based simulation. The frame-

work offers the potential for large sample empirical

analysis of stakeholder influence strategies, which

has heretofore largely been confined to case studies

and unique contexts in which typical problems of

data availability are overcome due to regulation or

other particular circumstances.1

To illustrate the strategic relevance of such a tool

for managers seeking to assess stakeholder dynamics

or design and implement stakeholder strategies I will

present several concrete examples.

Gabriel Resources is a publicly listed gold mining

company seeking to develop a $15 billion mine in

the hills of Transylvania in Romania. They collabo-

rate with their state-owned mining company joint

venture partner, the miners’ union, and allies sup-

portive of the direct and indirect jobs that could be

created. However, they face concerted opposition

from a number of local and global stakeholders.

These include property owners reluctant to relocate;

the Romanian Academy of Sciences, which opposed

the destruction of a 2,500-year-old Romanian

mining tunnels; Hungarian and international envi-

ronmental groups and citizens fearful of a possible

cyanide spill; and the Open Society Institute of

Romania, funded by George Soros, which focused

on potential corruption and a lack of transparency.

These two coalitions vied for the support of youth

groups suspicious of the miners who had a thuggish

history in the post-communist transition, multiple

political parties, and the broader electorate. Both

coalitions must decide which stakeholders to reach

out to with what proposals or concessions in order to

insure the government and regulatory apparatus

reaches the decision that they favor on the permitting

of the mine. Instead of just compiling lists of sup-

porters and opponents and the issues that are impor-

tant to them, a decision support tool such as outlined

here would enable Gabriel Resources or its oppo-

nents to model the likely evolution of stakeholder

opinion in the absence of any additional strategic

action. Furthermore, they could compare that

outcome to various scenarios in which they approach

one stakeholder group or another with a concession

or a new piece of information designed to shift their

position or alter the structure of their relationships

with their peers. An academic could, ex post, evalu-

ate the efficacy of their stakeholder influence

strategy and that of their opponents.

A hotel manager in the village of Ubud on the

island of Bali struggles with a conflict between

villagers across the river. The pristine view from his

hotel of the hillside across the river is a key driver of

demand of potential guests. Yet his agreements with

local villagers regarding the distribution of jobs,

payments to the local temples, and temple ceremo-

nies and other social causes focus primarily on the

more proximate villages to the hotel. These are

wealthier and already benefit directly in the form of

jobs and indirectly from tourist expenditures. By

contrast, the villages on the opposite bank are less

developed, constrained from development by zoning

regulations, and face a long and difficult commute

should they wish to work in Ubud. Transferring jobs

and payments across the river could placate growing

hostility that frequently results in the setting of fires

to blow smoke onto the hotel or the shining of

mirrors to blind guests at the pool. It could, however,

engender opposition from the villagers closer to the

hotel who could engage in additional work stop-

pages or the dumping of garbage on hotel grounds to

more directly and proximately negatively impact the

experience of guests. The manager in (or the aca-

demic studying) the case has a wealth of information

on each stakeholder group and their positions, but

is unsure on what basis to compare the risks of

accommodation with the villagers across the river to

the risks of inaction. In particular, how effective

will each coalition be in swaying undecided local

government officials and travel agents regarding the

relative merits of their grievances?

Creditors in the bankruptcy of Thai Petrochemical

Industries in 1998 sought to build a coalition of

domestic and foreign banks, government officials,

and senior managers to isolate former CEO Prachai

Leophairatana, who relied, in turn, on a coalition of

union workers, peer Thai executives, senators, and

populist supporters. Prachai reached out to a nation-

alist populist coalition against the neocolonial usurp-

ers who had removed him from power. By contrast,

1The broader literature on the financial impact of corporate

social responsibility, while related typically abstracts away

from the complexity of stakeholder interactions that are the

focus of my analysis. See (Margolis, Elfenbein, and Walsh,

2007), for a recent summary.

The Engineering of Consent 339

Copyright © 2013 Strategic Management Society Global Strat. J., 3: 338–359 (2013)

DOI: 10.1111/j.2042-5805.2013.01064.x