Stakeholder identification and analysis in organizational contexts

Stakeholders

Is any company too big to fail? That was the question of the day facing political leaders in September 2008 as the market was rocked by a series of announcements from AIG and other companies concerning what some experts would call catastrophic losses from mortgage-backed securities. AIG happened to be the ringleader of those companies as it announced that it lost nearly $25 billion in one quarter. The U.S. government quickly discerned that the world markets would suffer great difficulties if AIG was allowed to go under and pledged billions of dollars to AIG in an effort to stabilize worldwide markets. When all was said and done, it cost the American taxpayers nearly $182 billion to save AIG from the results of its own actions.

A scenario like the one which AIG engendered leads to an interesting question; who are the stakeholders of AIG, who stood to benefit, who stood to suffer and who made the decisions that brought about such a calamity in the first place? The name at the top of the letterhead for AIG at that particular time was Robert B. Willumstad. As this paper attempts to discern who has influence as a stakeholder, his name certainly has to be listed as a primary force or focus, except for one little item; he had only been chairman for approximately three months before he was forced out by the federal government. The question remains then; who were the stakeholders then and who are the AIG stakeholders now?

Certainly one of the primary stakeholders is the government of the United States. Whereas previously the government was an external stakeholder with small influence on a publicly owned entity's day-to-day operations, it can now be described as a 92.5% owner of AIG with enough influence to terminate Willumstad as the CEO and replace him with their own director; Edward M. Liddy.

That's a lot of influence, perhaps more than was necessary to assume in this specific case, which is where the next primary stakeholder comes into play; Mr. Barack Obama and his administration. Though he was only following the same path that the previous administration had initiated concerning AIG, the impetus was all his, as was the risk of being perceived as being too heavy-handed, too big government, too socialistic even though he had not even taken office. Obama and his administration set the tone early and often as they commanded the route for AIG, and AIG obligingly followed.

Additional stakeholders, then and now, are the American people, and though they could wield influence far greater than any other group, they are relatively helpless due to their lack of concern, their state of confusion, or their total unconcern about the path which Obama and AIG are treading. The American public, though derided by liberals as being dumb as rocks, are actually pretty intelligent. In the case of AIG, the American public saw the heavy-handed measures of the current administration and decided that caution was the better part of valor. For the most part, the public stood on the sidelines with no voice.

Additional stakeholders were the shareholders who had forked over hard-earned money to purchase shares of AIG and who, over the course of a very short time frame, discovered that it did not matter. A recent study showed that "value creation for stakeholders might feature…respective and shared business models" (Bolton, Nie, 2010, p. 701) which it could be argued was exactly why these stakeholders had invested in AIG in the first place. Though shareholders can be considered internal stakeholders with a strong voice on the direction of the company, in AIG's case, this did not seem so.

The two primary political parties in America were, and continue to be, stakeholders in this situation as well. Both parties could and did exert inordinate amounts of influence on how AIG was to be managed, who would benefit from the bailouts, and who would take the blame for the catastrophe. That each party, and individuals from each party, attempted to use the disaster for their own benefits displays just how much government and business have become entwined.

Other external stakeholders also reared their ugly head(s) in the case of AIG. They were the foreign governments, political parties, and businesses that pressured the American government into guaranteeing the cushioned fall of AIG.

Finally there are the businesses and individuals who were conducting business transactions with AIG that are also considered stakeholders. Perhaps these stakeholders had the most to lose (and some did) and had the greatest influence of all the other stakeholders. No businesses or individuals enjoy facing a situation where a loss of income, revenue or profit is a stark reality. When news hit the street concerning AIG, uncertainty ruled the air. People and businesses with millions and billions of dollars at stake, knew not what the future would bring. Their stake in AIG's future was a stake in their own future. One can only imagine the pressure being placed on the other stakeholders to ensure the calamity did not take place.