Stakeholder attributes and attitudes during privatisation: a New Zealand case study

• DOI: https://doi.org/10.1108/IJPSM-09-2017-0258
• Date: 04 March 2019
• Published date: 04 March 2019
• Pages: 157-174
• Author: Hafsa Ahmed,David A. Cohen
• Subject Matter: Public policy & environmental management,Politics,Public adminstration & management

Stakeholder attributes and

attitudes during privatisation:

a New Zealand case study

Hafsa Ahmed

Department of Business, Ara Institute of Canterbury,

Christchurch, New Zealand, and

David A. Cohen

Faculty of Agribusiness and Commerce, Lincoln University,

Christchurch, New Zealand

Abstract

Purpose –The purpose of this paper is to focus on understanding of stakeholder attributes and attitudes

towards privatisation. It examines the stakeholder attributes through the framework provided by Mitchell

et al. (1997). By combining it with the concept of issue salience proposed by Bundy et al. (2013), it addresses

the current gap in research on how stakeholders influence the process of privatisation.

Design/methodology/approach –This research uses a process research approach to examine the

privatisation process in New Zealand’s electricity industry in order to explore contexts, content and process of

change. By collecting real-time data during the period of privatisation, utilising a process approach provided

the authors a view of the historical path and associated events which lead to identification of stakeholder

attributes and attitudes towards privatisation.

Findings –The research offers a unique insight into stakeholder attributes exhibited by different groups

during privatisation. The authors identified that during privatisation the government is the ultimate

stakeholder who sets the rules of the game of privatisation by exhibiting the attributes of power,legitimacy

and urgency. The attributes exhibited by other stakeholders were transitory and were impacted by issue

salience. The authors also identified that stakeholders exhibiting all three attributes (the government) chose a

non-response approach to deal with any conflicting issues raised by other stakeholders.

Originality/value –The research examined the new public management emphasis on the privatisation of

state-owned enterprises (SOEs) vis-à-vis stakeholder groups, utilising the complementary concepts of

stakeholdersalience and issue salience. This researchmakes a contribution to stakeholdermanagement theory

in the public sectorby identifying how various stakeholders influence the process of privatisationof SOEs.

Keywords New Zealand, Privatization, Stakeholder analysis, New public management, Publicsector reform,

Electricity industry

Paper type Research paper

Introduction

Since the early 1980s, privatisation of public enterprises has been a significant part of the

political agenda for many nations, both developing and developed (Arocena and Oliveros,

2012). Often included as a component of the new public management (NPM) orientation

towards governance, privatisation of state-owned enterprises (SOEs) has been put into

practice in many nations across the industrialised West, including the UK, Europe, the USA,

Canada, Australia and New Zealand (Diefenbach, 2009). The motivation for governments to

undertake privatisation have varied, but these tend to emphasise economic, political and

financial goals (Arocena and Oliveros, 2012; Megginson and Netter, 2001). However, the

approach is controversial, with argument between proponents and detractors now a

common feature of public discourse in those countries attempting to privatise its SOEs.

As a reflection of its controversial nature, researchers have extensively examined

privatisation to assess the financial and efficiency gains or losses that may result from it.

However, improvement in the efficiency of SOEs that presumably results from privatisation

may not be the ultimate goal of these efforts. It is becoming clear that “it is less about the

International Journal of Public

Sector Management

Vol. 32 No. 2, 2019

pp. 157-174

© Emerald PublishingLimited

0951-3558

DOI 10.1108/IJPSM-09-2017-0258

Received 3 October 2017

Revised 24 March 2018

Accepted 17 June 2018

The current issue and full text archive of this journal is available on Emerald Insight at:

www.emeraldinsight.com/0951-3558.htm

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Stakeholder

attributes and

attitudes

genuine application of the economic theory of efficiency, [and] more about winning a

political and ideological struggle”(Letza et al., 2004, p. 160). Other important questions

generated over the years about privatisation relate to the management of stakeholders; who

are the key stakeholders for a government to consider when they decide to privatise an

SOE? Is the general public the principal owner of SOEs? Which stakeholder groups are

critical to engage with in order to ensure the success of privatisation?

Our research makes a contribution towards the concept of stakeholder engagement and

management during the process of privatisation of SOEs. We concur with researchers who

have suggested that management’s acknowledgement of its responsibilities towards these

stakeholders is essential to develop appropriate responses in order to maximise outputs with

minimal disruption (Freeman, 1984; Preston et al., 1991; Mitchell et al.,1997;Oudmanet al., 1998;

Wheeler and Sillanpää, 1997). This mandates the need to incorporate a view of how different

stakeholders might influence the process and contribute to an organisation’s activities. It also

raises the question of who the stakeholders might be for SOEs, and which of these stakeholders

are more critical to consider in making divestment decisions. The circumstance of governments

operating SOEs, what are essentially businesses, is unique because the government also

determines the institutional context for SOEs. Through our review of the literature, w e note that

Mitchell et al.’s (1997) argument to examine three stakeholder attributes—power, legitimacy

and urgency helps determine stakeholder salience. Additionally, the notion of issue salience

suggested by Bundy et al. (2013) also have great bearing on the question of privatisation and

the role stakeholders play in the process. Hence, this paper aims to understand how these three

attributes influence attitudes towards privatisation alongside issue salience.

Our research examined the partial privatisation of the SOEs comprising New Zealand’s

electricity industry. This industryhas undergone dramatic change sincethe advent of NPM,

and most significantly so in the past few years due to the government prioritisation of

pursuing a Mixed-Ownership Model (MOM). The process of partial privatisation of three

SOEs began in 2011 (see Ahmedet al., 2014, 2015 for details). This research focuses on events

from 2013 onwardsto the end of 2014, a period marked by substantial activity dueto pursuit

of the MOM whichhelped us address our research question (Yin, 2009).By focussing on these

key events during the privatisation process, we were able to identify the key stakeholder

groups, their attributes and attitudes towards the government bid to privatise the electricity

industry. As suggested by Poole et al. (2000), we collected real time data during periods of

change to allow researchers to experience the process with key actors, gauge its emotional

tenor and what impact change has on participants. We used a process-based research

approach as it provided a view of the historical path and the associated incidents or events

leading to change in the industry (Poole et al., 2000; Van de Ven and Poole, 1995).

With an explicit focus on stakeholder management in the public sector, this research

makes a contribution by presenting an understanding of how government responds to

competing and conflicting stakeholder needs and claims (Bundy et al., 2013). We also

contribute to a better understanding of the link between strategic decisions related to SOEs

vs policy preferences, as our research examines the institutional context and identifies who

sets the rules of the game during the privatisation of SOEs.

Our paper continues in the next section with an outline of the literature focusing on NPM

which leads to an argument for retaining SOEs. As the key aspects of our paper are

stakeholders, we offer a summary of the stakeholder literature and provide an argument for

further investigation of stakeholder management during the privatisation of SOEs. We

follow this with a case for using the process research method and summarise our findings

from the data analysis by way of a narrative. Our discussion section points out how far we

have gone in our exploration of stakeholder management by identifying stakeholder

attributes and attitudes during the privatisation of SOEs in New Zealand, and then provide

directions for future research and indicate the limitations of our research.

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