3.2b Primary and Secondary Stakeholders A useful way to categorize stakeholders is to think of them as primary and secondary as well as social and nonsocial; thus, stakeholders may be thought of as follows: Primary social stakeholders include: Secondary social stakeholders include: Shareholders and investors Government and regulators Employees and managers . Civic Institutions Customers Social pressure/activist groups Local communities . Media and academic commentators Suppliers and other business partners . Trade bodies Competitors Primary social stakeholders have a direct stake in the organization and its success and, therefore, are most influential. Secondary social stakeholders may be extremely influential as well, especially in affecting reputation and public standing, but their stake in the organization is more indirect or derived. Therefore, a firm's responsibility toward secondary stakeholders may be less but is not avoidable. These groups quite often represent legitimate public concerns or wield significant power, and this makes it impossible for them to be ignored. Primary nonsocial stakeholders also exist and these might include the natural environment, future generations, and nonhuman species. Secondary nonsocial stakeholders might include those who represent or speak for the primary nonsocial stakeholders. They might include environmental interest groups or animal welfare organizations. The secondary social and nonsocial stakeholders have also been termed nonmarket players (NMPs) by strategy experts, and they may include activists, environmentalists, and NGOs. Often they are hostile to the firm because they hold competing ideologies such as conflicting beliefs and attitudes regarding social, ecological, ethical, or political issues. This often puts them on a collision course with company managements. Primary nonsocial stakeholders include: Secondary nonsocial stakeholders include: Natural environment . Environmental interest groups (e.g., Friends of the Earth, Greenpeace, Rainforest Alliance) . Future generations Animal welfare organizations (e.g., People for the Ethical Treatment of Animals-PETA, Mercy for Animals, American Society for the Prevention of Cruelty to Animals-ASPCA. . Nonhuman species The terms primary and secondary may be defined differently depending on the situation. Secondary stakeholders can quickly become primary, for example. This often occurs through the media or special-interest groups when a claim's urgency (as in a boycott or demonstration) takes precedence over its legitimacy. In today's business environment, the media and social media have the power to instantaneously transform a stakeholder's status within minutes or hours. Thus, it may be useful to think of primary and secondary classes of stakeholders for discussion purposes, but we should understand how easily and quickly those categories can shift.3.2c Important Stakeholder Attributes: Legitimacy, Power, Urgency How do managers decide which stakeholders deserve their attention? Stakeholders have attributes such as legitimacy, power, and urgency. A typology of stakeholders has been developed based on these three attributes. " When these three attributes are superimposed, as depicted in Figure 3-4, seven stakeholder categories may be created. Figure 3-4 Stakeholder Typology: One, Two, or Three Attributes Present POWER Dormant Stakeholder 4 LEGITIMACY Dominant Stakeholder 5 7 2 Dangerous Definitive Stakeholder Stakeholder Discretionary Stakeholder 6 Dependent 3 Stakeholder Demanding Stakeholder 8 URGENCY Nonstakeholder Source: Reprinted with permission of Academy of Management, PO Box 3020, Briar Cliff Manor, NY 10510-8020. Stakeholder Typology: One, Two, or Three Attributes Present (Figure), R. K. Mitchell, B. R. Agle, and D. J. Wood, Academy of Management Review, October 1997. Reproduced by permission of the publisher via Copyright Clearance Center, Inc. The three attributes of legitimacy, power, and urgency help us see how stakeholders may be thought of and analyzed in terms of their characteristics. The stakeholders are more or less salient depending on these factors. Legitimacy refers to the perceived validity or appropriateness of a stakeholder's claim to a stake. Therefore, owners, employees, and customers represent a high degree of legitimacy due to their explicit, formal, and direct relationships with a company. Stakeholders that are more distant from the firm, such as social activist groups, NGOs, competitors, or the media, might be thought to have less legitimacy. Power refers to the ability or capacity of the stakeholder(s) to produce an effect-to get something done that otherwise may not be done. Therefore, whether one has legitimacy or not, power means that the stakeholder could affect the business. For example, with the help of the media, a large, vocal, activist group such as the People for the Ethical Treatment of Animals (PETA) could wield extraordinary power over a business firm. In recent years, PETA has been successful in influencing the practices and policies of virtually all the fast-food restaurants regarding their suppliers' treatment of chickens and cattle. Though not referring to it as power, several researchers have highlighted the importance of stakeholder "pressure" in implementing CSR in companies. They have defined stakeholder pressure as "the ability and capacity of stakeholders to affect an organization by influencing its organizational decisions.".This sounds very much like the concept of power, but they assert that the pressure they are referring to occurs regardless of the legitimacy, power, or urgency of different groups. Hence, it might be thought of as a broader concept that occurs regardless of a stakeholder's attributes. In other words, stakeholders could exert pressure whether based on legitimacy, power, or urgency.-..... Urgency refers to the degree to which the stakeholder's claim on the business calls for the business's immediate attention or response. Urgency may imply that something is critical-it really needs to get done. Or it may imply that something needs to be done immediately, or on a timely basis. A management group may perceive a union strike, a consumer boycott, a contaminated product, or a social activist group picketing outside headquarters as urgent. With social media today, the concept of urgency has taken on new meaning. Other research has suggested that at least one other criterion should be considered in addition to legitimacy, power, and urgency-proximity. " The spatial distance between the organization and its stakeholders refers to proximity, and it is a relevant consideration in evaluating stakeholders' importance and priority. Stakeholders that share the same physical space or are adjacent to the organization may affect and be affected by the organization more than those further away. In a global example, nation-states may share borders, introducing spatially related stakeholders. It is evident, therefore, that the greater the proximity, the greater the likelihood of relevant and important stakeholder interactions and relationships. An interesting example of a stakeholder action that illustrated both power and urgency occurred in several dozen Home Depot stores around the country. In each of the stores, strange announcements began blaring from the intercom systems: "Attention shoppers, on aisle seven you'll find mahogany ripped from the heart of the Amazon. " Shocked store managers raced through the aisles trying to apprehend the environmental activists behind the stunt. The activists had apparently gotten the access codes to the intercoms. After months of similar antics, Home Depot bowed to the demands of the environmental group and announced that it would stop selling wood from endangered forests and, instead, stock wood products certified by the Forest Stewardship Council (FSC). This group of environmental activists was not even on Home Depot's stakeholder radar screen and then, all of a sudden, the company was "persuaded" it had to sell only FSC-certified wood. This was an awesome display of stakeholder power. The typology of stakeholder attributes suggests that managers must attend to stakeholders on the basis of their assessment of the extent to which competing stakeholder claims reflect legitimacy, power, and urgency and are salient. Using the categories shown in Figure 3-4, the stakeholder groups represented by overlapping circles (e.g., those with two or three attributes such as Categories 4, 5, 6, and 7) are highly "salient" to the management and would likely receive priority attention. Of course, like any typology, it is important to recognize that it is a static model subject to interpretation. For example, some have argued that urgency may not be as relevant (as legitimacy and power) for identifying stakeholders, whereas "legitimacy" may be defined as "moral legitimacy." . Nevertheless, it is a helpful tool for assessing stakeholder claims