Crises conducting stakeholder salience: shifts in the evolution of private universities’ governance in Latin America

• DOI: https://doi.org/10.1108/CG-09-2020-0397
• Published date: 18 May 2021
• Date: 18 May 2021
• Pages: 1194-1214
• Subject Matter: Strategy,Corporate governance
• Author: Maria Alejandra Gonzalez-Perez,Miguel Cordova,Michel Hermans,Karla Maria Nava-Aguirre,Fabiola Monje-Cueto,Santiago Mingo,Santiago Tobon,Carlos Adrian Rodriguez,Erica Helena Salvaj,Dinorá Eliete Floriani

Crises conducting stakeholder salience:

shifts in the evolution of private

universities’governance in Latin America

Maria Alejandra Gonzalez-Perez, Miguel Cordova, Michel Hermans,

Karla Maria Nava-Aguirre, Fabiola Monje-Cueto, Santiago Mingo, Santiago Tobon,

Carlos Adrian Rodriguez, Erica Helena Salvaj and Dinorá Eliete Floriani

Abstract

Purpose –This study aims to build on embedded approaches to stakeholder management and

examines how organizational decision-makers consider social responsibility toward proximal

stakeholdersin crises that encompass an entire systemof stakeholderrelationships.

Design/methodology/approach –Within a criterion-based sample of eight Latin American private

universities, this paper develops in-depth exploratory case studies to examine the prioritization of stakeholders in

higher education institutions’ decision-making during the outbreak of the COVID-19 crisis.

Findings –Contrary to the notion that during crises organizations prioritize stakeholders that provide

resourcesthat are critical to survival, this study findsthat in contextual crises stakeholder managementis

informed by social responsibility. In addition, the findingssuggest that crises may be tipping points for

changestoward mission-driven approachesto governance.

Practical implications –Acknowledging the roles of social responsibility and proximity in stakeholder

management during contextual crises allows for more informed governance of organizations that face

disruptionsin their system of stakeholder relations.

Originality/value –This study contributes unique insights into the decision-maker’s prioritization of

stakeholders during the COVID-19 crisis. The uncertainty associated with the emerging ‘‘new normal’’ allowed for

an extreme test of socially embedded versus resource-oriented approaches to stakeholder management.

Keywords Stakeholder management, Stakeholder salience, Crisis management, COVID-19,

‘‘New normal’’, University social responsibility (USR), Civic engagement, Corporate governance,

History of HEIs, Higher education institutions (HEIs)

Paper type Research paper

1. Introduction

Major crises are natural disablers of the relational system that connects an organization to

its stakeholders (Khan et al., 2013). Crises may cause production discontinuities, paralysis

of organizational processes and even organizational stakeholders’ disappearance (Simchi-

Levi et al., 2014). They force organizations to make quick decisions under conditions of

insufficient information and high uncertainty levels, changing the usual way they prioritize

their stakeholders. Research on stakeholder salience (Eesley and Lenox, 2006;Magness,

2008;Mitchell and Agle, 1997;Nevilleet al.,2011) has yielded meaningful insights into why

organizational decision-makerspay more attention to some stakeholders rather than others.

However, a focus on managerial perceptions has caused scholars to pay less attention to

the contextual factors that condition interactions between organizations and their

stakeholders (Laplume et al.,2008;Tashman and Raelin, 2013). This shortcoming is

Received 11 September 2020

Revised 29 January 2021

19 February 2021

1 March 2021

Accepted 3 March 2021

The authors would like to thank

Professor Eweje and the

anonymous reviewers of their

manuscript for their

constructive feedback.

Moreover, authors are grateful

to their Universities’ Authorities,

faculty and staff for sharing

information and accepting their

requests for interviews at a time

when they needed to focus on

other stakeholders.

PAGE 1194 jCORPORATE GOVERNANCE jVOL. 21 NO. 6 2021, pp. 1194-1214, ©Emerald Publishing Limited, ISSN 1472-0701 DOI 10.1108/CG-09-2020-0397

especially relevant in crises when each stakeholder is affected differently and will react

according to how they perceive theirinterests to be conditioned (Mitroff et al.,2004).

This study provides insight into the process of organizations’ reprioritization of stakeholders

during a crisis. Within the COVID-19 pandemic context, we explore how privately-owned

Higher Education Institutions (HEIs) reoriented their decision-making and actions to attend

to proximal stakeholders’ needs. Not long ago, HEIs’ decision-makers faced intense

pressure to demonstrate the relevance and pertinence of their institutions in the context of

global education, focusing on international rankings, publications, patents and

internationalization of programs. The COVID-19 pandemic implied a decisive shift in HEIs’

stakeholder expectations. Because of their domestic relevance and connections with local

communities, expectations to assist more proximal stakeholders (Atanga, 2019;El-Kassar

et al.,2019

) and redefine how science contributes to society (Gibbons, 1999) suddenly

gained relevance in HEIs’ decision-making and organizational outcomes. For example,

HEIs that comprise epidemiology centers or traceability data centers, suddenly increased

the visibility of these units, while responding to the COVID-19 pandemic (Wagstaff et al.,

2020).

To illustrate our theoretical arguments, we present case studies of eight Latin American

private non-profit HEIs, firmly embedded within their local contexts. Also, while Latin

America is a region characterized bya high frequency of crises of different kinds (Azevedo

et al.,2020

), the COVID-19 pandemic represented a significant challenge. It affected all

actors within the stakeholder relations system of higher education, reducing short-term

resource availability and increasing uncertainty in the long run (THE, 2020). Our

examination of HEIs’ reprioritization of stakeholders in response to COVID-19 contributes to

recent advances toward more contextually embedded perspectives on stakeholder

salience (Ali, 2017;La

¨hdesma

¨ki et al.,2019;Tashman and Raelin, 2013) and stakeholder

consideration in decision-making (Foo, 2007;Larner and Mason, 2014). Specifically, we

highlight how the traditional focus on securing resources necessary for strategy

implementation (Agle et al., 1999;Jawahar and McLaughlin, 2001) is insufficient for

explaining organizational behavior all-encompassing contextual crises. We propose that in

crisis situations, stakeholders’ reprioritization is informed by social proximity. Additionally,

we contribute to the literature on University Social Responsibility (USR), echoing recent

claims for HEIs to pay more attention to their closer stakeholders (Atanga, 2019;El-Kassar

et al.,2019

) and mirroring insights from the Corporate Social Responsibility literature

regarding the use of capabilities to make innovative contributions to society (Kourula and

Halme, 2008).

2. Theoretical background

2.1 Stakeholder management

Stakeholder theory rests on the premise that organizations are open systems in which

managers are required to reconcile the interests of the organization with those of its

stakeholders for it to be successful (Freeman, 1984). More specifically, it suggests that

organizations not only have responsibilities toward shareholders but increasingly also

toward other stakeholders (Freeman et al.,2004;Pedrini and Ferri, 2018). This notion has

sparked considerable debate among researchers concerning how to accurately identify

legitimate stakeholders (Ali,2017;Neville et al.,2011). Stakeholder identification is essential

to managers as dynamism in the business context may cause organizational stakeholders

to lose relevance or disappear altogether, while new stakeholders may need to be

considered (Kaler, 2002).

Once stakeholders are identified, the next question refers totheir respective salience. While

it is grounding in ethics is a distinguishing aspect of stakeholder theory (Jones et al., 2017)

and notwithstanding growing scholarly agreement on the intrinsic importance of all of an

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