The other question to consider is the influence of stakeholder orientation or corporate sustainability on the profitable growth of the firm. So, imagine that there is a link between growth and profitability, economic profitability of a company, of any organization, and of course you would expect that there is some speed of growth which would maximize profitability. So an optimal speed of growth, because if it's too low, there might be not enough resources accumulated, and if it's too high, speed might actually involve excessive amounts of risk. The question is, to what extent the investment in stakeholder orientation, investment in sustainability related practices, would influence the capacity of the enterprise to grow in a profitable way? Now, there has been some very recent research on this question. We have found in a recent study with Professor Peter Snoeren that actually the stakeholder orientation of a firm, the degree to which they make these investments, does have a strong influence on the capacity of a firm to grow profitably, but it's not as obvious as it might seem. So here's my question to you. What would you say, is stakeholder orientation facilitating profitable growth because, of course, the stakeholders, the favor, the support of stakeholders would make growth opportunities more available, more visible, and the implementation of growth initiative more easy, or is it that the fact of having to deal with so many interests and different points of view of stakeholders, actually hindrance, might actually be problematic to identify appropriate opportunities for growth and even more, to implement on those opportunities? Which one would you think is the appropriate, is the real influence? Take a moment to think about this question and reflect and come up with your own answer, and we'll see you pretty soon. So, I trust you gave a bit of your time and attention to this question. It is a non-trivial question, and in fact, in our research we found that neither of the two extremes, neither the low level of stakeholder engagement nor the extremely high level of stakeholder engagement are actually supportive of the quest, the objective, to identify and maximize the profitable growth of the organization. What is important is actually an intermediate level of stakeholder orientation. So firms that actually engage maybe selectively, different forms, different audiences, different types of stakeholders, or they engage a broader set of stakeholders but not to an extreme level. They will be capable, on average, to grow with higher profitability rates, or they will be able to maximize growth at the same profitability level. So, in other words, they will be able to optimize their profitable growth. Let us consider now the relationship between corporate sustainability and acquisitive growth, so, growing through mergers and acquisitions. We have seen before that sustainable growth, sustainable strategies, stakeholder oriented strategy, are best matched with organic growth. But what if your company, your organization wants to grow or is aiming to grow through acquisitions? Would the investments in stakeholder orientation be fruitful, would that be worth the effort? Well, we have studied this question quite at length, and actually we have some interesting results. In a recent article that is forthcoming in Strategic Management Journal, we are actually showing that for the acquiring company, the degree to which they have invested in stakeholder engagement and integration of sustainability in their practices actually increases significantly the likelihood of success in their mergers and acquisitions. This is actually quite interesting and is particularly important in a certain type of sectors. For example, those that are more involved with consumer goods like food or detergents, and those that are more involved with natural resources. But fundamentally, the point is is actually quite useful and fruitful to make these type of investments if your company is aiming to grow through acquisitions. Now, on the other side, if actually your company has been acquired, and if you have invested significantly in sustainable practices and stakeholder orientation, we find that the value of your organization typically increases, the premium paid for acquiring stakeholder oriented organizations is higher. But the odds of creating additional value when they're created, when they're acquired, is actually not necessarily high. They become fragile, they’re precious, and in that sense, the acquirers that have not made these investments, when they acquire a sustainable oriented, stakeholder oriented target, they might face significant hurdles, precisely because of the value and sensitivity of their practices and of their relationships that they have built with their stakeholders. So, let us consider now the relationship between sustainability strategy, the degree to which an organization wants to engage stakeholders in the governance, the growth, in all the various aspects of the firm and the partnership strategy. So essentially the degree to which the organization intends to utilize alliances during ventures and any other form of partnership in managing the development growth that they intend to pursue. Now, ask yourself the question. These two types of strategic choices could influence each other in different ways. Do they help each other’s goals? Or they might be a hindrance, they might actually not. The assumption that we have made in the emerging research efforts tackling this question is actually in the assumption that it's a positive influence, positive interaction between these two forms of strategy. There is no, you know, large-scale empirical evidence yet, but what we have seen so far, even based on anecdotal evidence and some empirical evidence, as well, is that not only, on one hand, the stakeholder orientation influence and enhances the capacity of the firm to create value through their partnerships, but it might actually very well be that the opposite is true, that essentially having developed capabilities specific to the management of partnership might position the company in a much better way to develop stakeholder oriented and sustainability related practices. Why? Well, in a way you can think about stakeholder orientation and sustainability as a specific type of partnership strategy. It requires that the company learns how to manage their relationships with customers, suppliers, even communities. And so the more they learn how to manage collaborative relationships, the more they would be able to transfer that capability, even though they might not be conscious of that, but they still, would still transfer their capability in their management of stakeholders, in their capacity to involve them in a fruitful way for the success of the organization and for the creation of value, remember, economic as well as social value for all the stakeholders.
