Stakeholder theory and practice in Europe and North America: The key to success lies in a marketing approach Michele Jurgens a , Pierre Berthon b , Lisa Papania c, ⁎, Haseeb Ahmed Shabbir d a McCallum Graduate School of Business, Bentley University, United States b McCallum Graduate School of Business, Bentley University, United States c Segal Graduate School of Business, Simon Fraser University, Canada d University of Leeds, United Kingdom abstract article info Article history: Received 1 August 2008 Received in revised form 2 December 2008 Accepted 1 June 2009 Available online 28 March 2010 Keywords: Stakeholders CSR Stakeholder theory Corporatism Shareholder view Marketing approach to responsive management Corporate reputation in Europe and North America is increasingly seen as a function of how firms treat their stakeholders. In the United States, stakeholder theory has been touted as a paradigm of good management; yet despite enlightened stakeholder practice at home, US firms continue to run into problems in Europe. Wal-Mart, Microsoft, and GE have, in one way or another, all been caught off guard when doing business in Europe. This paper suggests that some of the stakeholder relations difficulties encountered by US corporations in Europe can be explained by fundamental cultural and philosophical differences between these regions that affect how stakeholders are viewed and how relations with those groups are managed. In this paper, we examine the historical and socio-political forces influencing stakeholder theory in the US and northern Europe and then use a business-to-business marketing approach to show how US firms might develop an approach to stakeholder relations that fits the northern European environment. © 2010 Elsevier Inc. All rights reserved. 1. Introduction 1.1. When world-views collide Wal-Mart, the largest retailer in the world, entered Germany in 1998 with great fanfare. Bringing state of the art inventory management, unrivaled product reach, excellent customer service, and great prices, the company's success was assured. Yet a mere 8 years and as many billion dollars later, the company ignominiously exited. Pundits have offered a host of reasons: but largely their failure is attributed to misunderstanding the German consumer, and to developing poor relations with the German government, the unions, and employees (Trumbull & Gay, 2004). Taken together these various themes are subsumed by the wider issue of stakeholder relations: simply Wal-Mart's stakeholder world-view crashed headlong into European de facto stakeholder practice. In the late 1990s, Monsanto thought it had found the perfect seeds for the agricultural communities of the future (MacDonald et al., 2006). They could be genetically modified to resist certain diseases and produce higher yields. However, these seeds were engineered to produce sterile crops, thereby also ensuring that the farmer would need to repurchase seeds every year. The seeds, therefore, became known as ‘terminator’ seeds, and Monsanto's products suffered from a European Union (EU)-wide media onslaught which argued that the big American firm was coming to destroy the traditional values and jobs that had defined social structure and the European way of life for centuries. Monsanto had ignored an important European practice; many European farmers continue to ‘brown-bag’ their seeds (the practice of saving and re-using seeds from the previous year's crop), a practice which Monsanto would eliminate by selling genetically modified terminator seeds. Societal rejection in this case was not based on not fulfilling the needs of shareholders as much as failing towards society at large (MacDonald et al., 2006). In recent years, coffee producers worldwide appear to be making efforts to encourage sustainable coffee production and fair trade practices. Yet, US companies have taken a different approach to that of European firms, especially with regard to collaborating with interna- tional organizations. For example, in order to ensure it meets the needs of society, Nestlé has established multilateral relations, working with over 22 fellow coffee producers in a consortium to establish worldwide coffee growing standards (www.nestle.com). However, Starbuck's Corporation's model of collaboration is unilateral, and the company has attracted scathing attacks for exploiting the coffee suppliers in developing regions of the world. Corporate Watch dismisses Starbuck's' CSR programs as “a smokescreen to create the illusion of ethics” (Robertson, 2005), adding that the company is committed only to making money for its shareholders. Industrial Marketing Management 39 (2010) 769–775 ⁎ Corresponding author. E-mail addresses: mjurgens@hbs.edu (M. Jurgens), pberthon@bentley.edu (P. Berthon), lpapania@sfu.ca (L. Papania), H.A.Shabbir@leeds.ac.uk (H.A. Shabbir). 0019-8501/$ – see front matter © 2010 Elsevier Inc. All rights reserved. doi:10.1016/j.indmarman.2010.02.016 Contents lists available at ScienceDirect Industrial Marketing Management