Intra‐stakeholder alliances in plant‐closing decisions: A stakeholder theory approach

• Author: R. Edward Freeman,Yves Fassin,Simone de Colle
• Published date: 01 April 2017
• DOI: http://doi.org/10.1111/beer.12136
• Date: 01 April 2017

ORIGINAL ARTICLE

Intra-stakeholder alliances in plant-closing decisions:

A stakeholder theory approach

Yves Fassin

1

|

Simone de Colle

2

|

R. Edward Freeman

3

1

Ghent University, Ghent, Belgium

2

I

ESEG School of Management (LEM-CNRS

9221), Paris La D

efense cedex, France

3

Darden Graduate School of Business

Administration, University of Virginia,

Charlottesville, Virginia, USA

Correspondence

Simone de Colle, PhD, Associate Professor

of Business Ethics & Strategy, IESEG

School of Management (LEM-CNRS), Socle

de la Grande Arche 1, Parvis de La

D

efense, F-92044 Paris La D

efense cedex,

France.

Email: s.decolle@ieseg.fr

Abstract

This article discusses plant-closingdecisions by multinational enterprises (MNEs) applyinga stake-

holder theory approach. In particular, we focus on the emergence of “intra-stakeholder alliances,”

that is, alliances among the various stakeholder groups of a specific corporation. We analyze the

emergence of stakeholder alliances in reactionto MNEs’decisions to terminate production locally

and discuss their influence on the outcomes of such decisions. Our research is inspired by two

exceptional case studies of two multinational breweries that announced their decisions to close

niche breweries in small towns in Italy and Belgium. In both cases, the initial decision was ulti-

mately reversed through the actions of intra-stakeholder alliances. We combine insights from

stakeholder theory and the social movement literature to analyze the action and influence of

intra-stakeholder alliances in seven cases of plant-closing decisions. We conclude by formulating

four general propositions that can provide guidance to MNE management in plant-closing deci-

sions. Our findings extend managerial stakeholder theory, show how this approach can improve

strategic management analysis, emphasize the importanceof the relationships among (local)stake-

holders in the (global) value-creationprocess, and shed light on the collective action and influence

of intra-stakeholder alliances.

1

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INTRODUCTION

In a globalized economy, plant closures are widespread throughout the

world. They affect all industries, all sectors, and companies of all sizes. A

plant closing is defined as the shutdown of a facility or operating unit

within a single production site and the layoff(voluntary or not) of more

than 50% of the employees at work on this site (Stafford, 1991).

Research on plant closures has focused on two major streams of

research: strategy and impact analyses. That is, scholars have investigated

the strategic motivations behind plant closures, as well as their organiza-

tional and social consequences. In the strategic management research

perspective, plant closures have been analyzed as normal rationalization

processes, that is, consequences of the search for efficiency in global

production (Labib & Appelbaum, 1994; McLachlan, 1992; McMahon,

1999; Watts & Kirkham, 1999). A number of management studies

(Kirkham & Watts, 1997, 1998; Raturi, Bichescu, Ferrand, & Apana,

2009; Rubenstein, 1987; Sutton, 1987) have investigated the antece-

dents of downsizing and plant-closing announcements. These include

external factors, such as the globalization of the economy, demand shifts

or declining sales volumes, the availability of labor resources, and changes

in political incentives. Internal strategic factors include production ration-

alization, investments in new technology, cost-cutting measures, and

technological obsolescence. The stream of research focusing on impact

analysis has discussed the organizational consequences of a typical

announcement of downsizing and plant closure (Illes, 1995), as well as

the social and psychological impacts of plant closures on employees, the

local community, and industry-labor relations (Freeman, 2009; Schrag,

2001). Organizational studies have pointed out the importance of the

perceived fairness of the process of downsizing (Brockner, Chen, Mannix,

Leung, & Skarlicki, 2000). In the field of psychology, studies have shown

the effects of downsizings and layoffs on personnel (Rousseau & Aquino,

1993). In contrast with the huge press attention at the time of a plant-

closing, the academic literature specifically investigating the ethics of

plant-closing decisions has been rather scarce (exceptions include

Hoffman, Frederick, & Petry, 1989; Lansing & Van Buren, 1993; Watson,

Shepard, & Stephens, 1999), while corporate responsibility in the process

of downsizing (Hopkins & Hopkins, 1999; Orlando, 1999) and the ethical

aspects of personnel dismissals (Collett, 2004; Garrett & Klonoski, 1986;

Jaffe & Pasternak, 2006; Lamsa & Takala, 2000; Rhodes, Pullen, & Clegg,

2010) have received more attention.

In this article, we discuss plant-closing decisions from a stake-

holder theory perspective (Donaldson & Preston, 1995; Fassin, 2009;

BusinessEthics: A Eur Rev. 2017;26:97–111 wileyonlinelibrary.com/journal/beer V

C2016 JohnWiley & Sons Ltd

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97

Received:2 November 2015

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Revised: 10 October2016

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Accepted:23 October 2016

DOI 10.1111/beer.12136