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Abstract of research paper on Agriculture, forestry, and fisheries, author of scientific article — Kon Shing Kenneth Chung, Lynn Crawford

Abstract Stakeholder management is a key area in the management of projects. Correctly identifying key players, managing them and influencing them is crucial for the success of projects and programs. Often though, social networks and management literature has demonstrated that the process of work and ideas do not necessarily flow through organisational hierarchy, but rather through informal networks. In this paper, we discuss an overview of the stakeholder management approaches used and some of its limitations. We propose the use of social network theory and methodology is suggested as a viable perspective for stakeholder identification, analysis and management because of its theoretical and methodological rigour and its ability to provide insightful visualisations and useful network metrics to identify key influencers, bottlenecks, informal groups and so on.

Academic research paper on topic "The Role of Social Networks Theory and Methodology for Project Stakeholder Management"

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Procedía - Social and Behavioral Sciences 226 (2016) 372 - 380

29th World Congress International Project Management Association (IPMA) 2015, IPMA WC 2015, 28-30 September - 1 October 2015, Westin Playa Bonita, Panama

The role of social networks theory and methodology for project

stakeholder management

Kon Shing Kenneth Chung*, Lynn Crawford

Project Management Program & Centre for Complex Systems, Faculty of Engineering & Information Technologies, The University of Sydney,

NSW 2006, Australia

Abstract

Stakeholder management is a key area in the management of projects. Correctly identifying key players, managing them and influencing them is crucial for the success of projects and programs. Often though, social networks and management literature has demonstrated that the process of work and ideas do not necessarily flow through organisational hierarchy, but rather through informal networks. In this paper, we discuss an overview of the stakeholder management approaches used and some of its limitations. We propose the use of social network theory and methodology is suggested as a viable perspective for stakeholder identification, analysis and management because of its theoretical and methodological rigour and its ability to provide insightful visualisations and useful network metrics to identify key influencers, bottlenecks, informal groups and so on.

© 2016 The Authors.Publishedby ElsevierLtd. This is an open access article under the CC BY-NC-ND license (http://creativecommons.Org/licenses/by-nc-nd/4.0/).

Peer-review under responsibility of the organizing committee of IPMA WC 2015.

Keywords: social network analysis; stakeholder management; stakeholder identification; stakeholder analysis

1. Introduction

There are numerous definitions of the term 'stakeholder'. Friedman and Miles (2006) present a summary of at least 55 definitions of the term 'stakeholder', demonstrating the profusion of perspectives and contexts the term can take. Despite much debate, the generally accepted definition of 'stakeholder' is 'any group or individual who can affect or is affected by the achievement of the organization's objectives' (Freeman, 1984, p. 46). In project

* Corresponding author. Tel.: 61 2 90367517; fax: +61 2 9351 3343. E-mail address: ken.chung@sydney.edu.au

1877-0428 © 2016 The Authors. Published by Elsevier Ltd. This is an open access article under the CC BY-NC-ND license (http://creativecommons.Org/licenses/by-nc-nd/4.0/).

Peer-review under responsibility of the organizing committee of IPMA WC 2015. doi:10.1016/j.sbspro.2016.06.201

management, project stakeholders are "individuals, groups or organizations who may affect, be affected by, or perceive themselves to be affected by a decision, activity, or outcome of a project" (PMI, 2013). As at 2013, the Project Management Institute (PMI) has added stakeholder management as its tenth knowledge area in its fifth edition of the Project Management Body of Knowledge (PMBOK) Guide. This signifies the growing importance of this knowledge area - both from a practitioner and academic perspective. It documents the concept of stakeholder management as "including processes required to identify the people, groups or organizations that could impact or be impacted by the project, to analyze stakeholder expectations and their impact on the project, and to develop appropriate management strategies for effectively engaging stakeholders in project decisions and execution" (PMI, 2013, p. 391). It also adds "while some stakeholders may have a limited ability to influence the project, others may have significant influence on the project and its expected outcomes. The ability of the project manager to correctly identify and manage these stakeholders in an appropriate manner can mean the different between success and failure". Thus, the notion of stakeholder management is crucial to the extent that it can make projects go - or stop. In the following sections, we discuss extant stakeholder management approaches, its limitations, social network theories and how its metrics and concepts can be applied for better stakeholder management.

Nomenclature

PMBOK Project Management Body of Knowledge PMI Project Management Institute SNA Social Network Analysis

2. Stakeholder Management Approaches: Identification & Analysis

Generally, to identify stakeholders, the aspect(s) of the system, problems or issues in question needs to be defined. This is because issue definition leads to stakeholder identification. As relevant issues are identified and mapped out, one can then start the stakeholder identification, prioritizing and classification process for future involvement in the project.

2.1. Stakeholder Management Approaches in Traditional Management

According to organizational studies and management literature, a number of stakeholder management approaches have been suggested for both identification and analysis of stakeholders. The classic model is proposed by Freeman (1984) which adopts a organization-centric perspective showing how the firm needs to manage relationships between primary and secondary stakeholders in the value creation process as depicted in Fig. 1.

Secondary Stakeholders

Primary Stakeholders

Fig. 1. Value Creation for Stakeholders (Freeman, 1984)

Freeman (1984, p. 24) further adds that the basic idea of creating value for stakeholders requires that business be understood "as a set of relationships among groups which have a stake in the activities that make up the business....To understand a business is to know how these relationships (via interactions and value-creation) work. And the executive's of entrepreneurs job is to manage and shape these relationships". In order to do this, a number of approaches are followed particularly in terms of identification, analysis and subsequent grouping of these stakeholders. For instance, one may utilize a subjective assessment of the stakeholder's relative power, influence and legitimacy for identification and classification (Mitchell et al., 1997), or conduct an assessment of the stakeholder's relative potential for cooperation versus potential for threat (Freeman, 1984, p. 143; Savage et al., 1991), or classify stakeholders based on power, legitimacy and urgency (Mitchell et al., 1997, p. 298), or rate whether stakeholders are proactive, accommodative, defensive or reactive (Clarkson, 1995), or whether they are strategic versus moral(Goodpaster, 1991), and generic versus specific (Carroll, 1989).

2.2. Stakeholder Management Application in Project Management

The application of the stakeholder concept in project management can be found as early as the 1990s where Jones (1990) surveyed the CEOs of aerospace companies and found that the degree of stakeholder representation in the goal structure and the level of decision making was significantly associated with the level of internal politics. Other examples include the use of stakeholder approach - for project evaluation and selection in a global context (Oral et al., 2001); for understanding stakeholder values and its influence on project management (McManus, 2002); and for stakeholder impact analysis in construction project management (Olander, 2007). In sum, the importance of effective stakeholder management to project management success cannot be overlooked, as per the findings of the meta-analysis of stakeholder notions in project management (Achterkamp et al., 2008).

While these studies utilized one or more of the stakeholder analytical approaches mentioned above, the PMBOK Guide (2013) offers the following classification models for stakeholder identification and analysis:

1. Power/interest grid - where stakeholders are classified based on their level of authority versus their concern regarding project outcomes;

2. Power/influence grid - where stakeholders are classified based on their level of authority versus their active involvement regarding project outcomes;

3. to effect changes to the project's planning or execution; and

4. Salience model - where stakeholders are classified as per Mitchell et al.'s (1997) framework based on power, urgency and legitimacy.

The PMBOK Guide also provides the tools for analyzing stakeholder engagement, again through the use of a classification matrix. Using this matrix tool, each stakeholder can be mapped as engaging at one or more of these levels:

1. Unaware: Unaware of project and potential impacts.

2. Resistant: Aware of project and potential impacts and resistant to change.

3. Neutral: Aware of project yet neither supportive nor resistant.

4. Supportive: Aware of project and potential impacts and supportive to change.

5. Leading: Aware of project and potential impacts and actively engaged in ensuring the project is a success.

The analytic approaches documented so far are commonly used as they are useful for categorizing stakeholder identification and engagement. However, they are limited in that it does not account for the role of social networks (such as communication networks), which constitute the very fabric of ties and relations that develop, facilitate and influence human interaction and behavior. For instance, while the model postulated by Mitchell et al. (1997) (Salience model) is increasingly popular, it has been criticized for often prioritizing high level or top-ranked stakeholders (who are often more powerful in the organizational hierarchy sense) resulting in under-representation of lower-ranked stakeholder groups. This results in inaccuracy of stakeholder mapping as it may turn out that those

considered 'nonlegitimate' are after all one of the most important stakeholder groups for the project to proceed (MacArthur, 1997). In short, the approaches discussed so far have often overlooked the role of social networks can play in categorizing, analyzing and understanding stakeholder relationships. Social network theories and the analysis of stakeholder networks offer a promising alternative to these stakeholder analytic approaches.

2.3. Social Network Thinking in Stakeholder Management

A social network is comprised of one or more actors that are bound together by a tie (Scott, 2000). The actors may be an individual, a group or an organization (or even a project) and the tie may constitute of one or more relations such as "seeking advice from" or "works together with", "depends on" and so on (Chung, 2011). The raison d'être of the social network paradigm is that the structure of ties amongst actors and the position of individual actors in the network have important behavioral, perceptual, and attitudinal consequences for both the individual units and for the system as a whole (Knoke et al., 1992).

The notion of social network thinking in project management is not new and has been applied in various ways. For instance, Killen and Kjaer (2012) argue that the use of visual portfolio maps (where projects within the portfolio are mapped by their interdependencies on each other) is correlated with the highest levels of decision quality. Using 264 experiments, they demonstrate that visualizing how projects within a portfolio are linked to one another is crucial in the decision making process because even though a project may be projected to have low net present value, it could in fact be a key project that needs to be executed successfully, the failure of which other projects with a higher NPV return may not be able to proceed. Closer to the notion of stakeholder management, Chung and Hossain (2009, 2010) demonstrate how it is possible to develop social network-based theoretical models and conduct analysis of the social networks of knowledge-intensive work professionals for understanding its impact on performance attitudes and uptake of information and communication technologies at work. Prell and colleagues (2009) contribute to the area of stakeholder management (although in natural resource management) by suggesting that social network analysis is useful in delineating the communication network of stakeholders in combination with stakeholder analysis. In the following section, we discuss several theories and concepts in social networks that are useful for stakeholder identification, analysis and management at the network level, actor level and tie-level, followed by a summary in Table 1.

Network level: At the network level, Bavelas (1950) led a seminal study that demonstrated the importance of the structure of communication networks and its impact on communication flow and performance. In this experimental study, dubbed the "MIT experiment", he set up four communication network structures using cubicles and pipe-like structures through which messages could be physically transmitted. This is shown in Figure 2.

Fig. 2. The Y, Star, Wheel (or Circle) and Line Structures

The experiment constituted of five individuals (unknown to each other) in each cubicle who had to communicate with each other in order to solve a puzzle. Individuals were free to communicate the message as often as they wanted within the communication structure. There was a set of six symbols and each subject was given five unique symbols. However, there was one symbol from each group of five that was common to all the groups. When all were able to agree on what the common symbol was, then the puzzle was considered to be solved.

After trialing 15 times, it was concluded that structures that were highly centralized were conducive to solving the puzzle faster as well as making fewer errors. Thus, from a stakeholder management perspective, the extent to which the network is centralized can facilitate or inhibit information flow and this information is useful to know for stakeholder analysis and management.

Closely related to the notion of centralization is the idea of density. Density is defined as the ratio of existing ties to the theoretical maximum (Wasserman et al., 1994). In other words, it measures the extent to which everyone is connected. A highly dense network, such as a clique structure, is where every actor is connected to one another where as an extremely isolated network would consist of actors not connected to anyone. More importantly, a highly dense network connotes a sense of homophily (McPherson et al., 1987) - characterized by how tightly bound individuals are and suggests shared values such as membership, interests and belonging (Reagans et al., 2003). Thus, a highly connected network of stakeholders here can mean that they collaborate or share information closely, or that they could be a coalition that could be influential for advocating or resisting change, for instance.

Actor level: At the actor level, we are concerned with the location of actors with respect to others within the network. The most common and perhaps most useful social network concept here is the idea of centrality. Linton Freeman (1978) is often credited with his work on the centrality concept. According to him, the three most common forms of centrality are as follows:

• Degree centrality: Measured as the number of ties to or from a particular actor, it indicates an actor's communication activity;

• Closeness centrality: Measured as the extent to which an actor is close to all others within the network, it indicates the independence of the actor in terms of his/her ability to reach all others within the network. It is also a proxy for minimum cost of time and efficiency for communicating with others within the network.

• Betweenness centrality: Measured as the extent to which an actor lies in the shortest path to all others within the network, it also indicates the actor's potential to control communication.

Burt (1992) builds further on the notion of betweenness centrality and argues that those having high betweenness centrality also play a crucial role in brokering information and control benefits particularly where there are two or more groups (which are internally closely connected) that are not connected. Referring to this as a hole in the network structure, Burt suggests that those occupying this 'structural hole' (i.e. providing the brokering connection to the disconnected groups) stand to gain from information benefits and others including creativity, good ideas, job promotions and so on. Thus, from a stakeholder management perspective, with structural holes theory together, "these kinds of centrality imply three competing 'theories' of how centrality might affect group processes" (Freeman, 1978).

Tie level: At the tie-level, the most relevant theory is the "strength of weak tie" theory postulated by Mark Granovetter (1973) whose work here was seminal in terms of its application to information theory, communication studies, economics and management. Granovetter reasoned that as networks become denser, the rate of novelty of information being diffused becomes lower. This is because information becomes quickly redundant such that everyone in the network knows that the others know. New or novel information must hence come from weak ties (to those or groups outside the closely-knit group). This is crucial in terms of innovation and generating new ideas, and therefore the 'strength of weak ties'. More recently, it has been demonstrated that while weak ties are important for facilitating new and novel information transfer, the strong ties are instrumental for solving complex problems (Pentland, 2012; Montjoye et al., 2014). From a stakeholder management perspective, this means that the strength of

relations or ties need to be accounted for in terms of understanding the potential for information transfer, innovation, and collaborative complex problem solving.

It can thus be inferred that at the network, actor and tie levels that there are relevant theories and concepts in social networks, which may be pragmatically applied in the process of stakeholder identification, analysis, intervention and management (see following table).

Table 1. Summary of Relevant Theory and Concepts useful for Stakeholder Management

Levels in Network Relevant Social Network Social Network Construct Relevance to Stakeholder Management

Thinking Theory

Network-level Bavelas' MIT Experiment • Centralization Allows assessment of how closely-knit or

• Network Density sparse the connections of stakeholders are,

and the degree to which these connections focus around a central stakeholder

Actor-level Freeman's Centrality • Degree Allows identification of stakeholders who

Concept • Betweenness have high information flow, brokerage

Burt's Structural Hole • Closeness potential, independence, and lack of reach

Theory • Constraint respectively.

Tie-level Granovetter's Strength of • Tie strength Allows assessment of how influential or

Weak Tie theory close or how strong or weak a connection is of one stakeholder to others.

3. Towards a Social Network Perspective for Project Stakeholder Management

The first, and perhaps only, study that suggested the use of a network approach as an alternative analytic stakeholder management approach is by Timothy Rowley (1997). Rowley suggests the need for moving beyond the dyadic ties analysis that was recurrent in most of the contemporary stakeholder management approaches (as discussed in sections 2.1 and 2.2). In essence, he mapped multiple and interdependent interactions that simultaneously exist in stakeholder environments, thus holistically capturing the complex nature of stakeholder interactions for both the focal organization and its stakeholders, and its stakeholders' stakeholders. He theorized that how stakeholders affect the focal organization and how the focal organization responds to these influences depends on the network of stakeholders surrounding the relationship. In order to do this, he used the notion of density and (betweenness) centrality as key factors for stakeholder analysis. While stakeholder network density indicates the nature of coalitions or shared behavior thus increasing the power of stakeholders to pressure or govern expectations of the focal organization, centrality of the focal organization confers power, in its ability to resist stakeholder pressures. In effect, Rowley (1997) proposes a 4-way structural classification of stakeholder influences accounting for organizational responses to stakeholder pressures, shown in Table 2:

Table 2. Structural Classification of Stakeholder Influence (Rowley, 1997)

Density of the Centrality of the Focal Organization (CFO)

stakeholder High Low

network High Compromiser Subordinate

(DSM) Low Commander Solitarian

• Compromiser: When density of the stakeholder network (DSM) and the centrality of the focal organization (CFO) is high, it means that the high DSM facilitates stakeholder communication and coordination for form an influential collective force. However, because the CFO is also high, it can influence the formation of expectations. Therefore, the strategy here would be to pacify and balance expectations with a view to create win-win situations.

• Commander: When DSM is low, it means that stakeholders are rather sparse or isolated leaving them in a position where they do not communicate or collaborate with each other so as to form a coalition. Coupled against the high CFO, it means the focal organization is now in a commanding position to stipulate expectations and exercise high levels of discretion.

• Subordinate: The reverse of the "commander" scenario applies here as the CFO is low and the DSM is high. This means stakeholders enjoy a power advantage and have higher access to information flows, leaving the focal organization no choice but to accede stakeholder expectations and pressure.

• Solitarian: In this scenario, there is low CFO and low DSM. Neither the focal organization nor its stakeholders are well connected and therefore the power difference remains trivial. Information flow is impeded in such a scenario.

While Rowley's network theory on stakeholder management is indeed valuable, there are a number of issues both at the operational and pragmatic level that needs to be considered. For instance, how would one operationalize the constructs of high-low density and high-low centrality? Is it possible to conduct similar analyses at the micro-levels of the organization and stakeholder networks? Organizations comprise departments, groups, and individuals and this is similar with stakeholders (e.g. communities, local councils, suppliers, etc.) as well. Furthermore, when considering projects and project organizations, it becomes even more complicated at the micro-level. One particular project may be deemed as the focal organization in such analysis but in reality, it is actually relationships between people within those projects that constitute the unit of

analysis. Determining the centrality of these relationships, and capturing the stakeholders themselves as individuals or groups, for instance, is overlooked in Rowley's classification, as it is much more fine-grained. In order to capture the holistic and complex nature of project stakeholder interactions as intended by Rowley, but at both the meso and micro levels, we propose the use of the PMBOK classification such as the power-interest grid in conjunction with stakeholder network visualizations and network metrics at the network, actor and tie levels, as shown in the

network diagram in

Fig. 3

Team Member Kay

Fig. 3. Example Stakeholder Network Diagram with Power-Interest Grid overlaid as attributes (coloured)

Here, the power-interest grid is represented as a color coded-attribute with the shape of each node in the diagram representing the particular organization the organization belongs to (e.g. Councillor A belongs to Sydney Council). The size of the node correlates to betweenness centrality. Note that while the nodes in red mean each stakeholder is to be "managed closely", it is the team leader (who has lower power/authority than the project manager) that has holds the highest brokerage role, with crucial connections to a sub-network of customers. Note also the project manager, sponsor, team members, banker A and competitor A while classified as stakeholders to be "manage(d) closely", are only periphery players within the network. Rather, the councilor from Syd ney council, who is classified as a stakeholder to be "kept satisfied", also has high betweenness centrality, and important connections to manufacturers, through which 'competitor A' can also be accessed.

4. Discussion & Conclusion

While the example provided above is hypothetical, it is sufficient to demonstrate the usefulness and value of basing the process of stakeholder identification, visualization and analysis based on theories and methods of social networks. Combined with current stakeholder management tools offered by the PMBOK Guide and situating our framework on the network theory of stakeholder management, we suggest that the social network perspective offers invaluable insights into the identification and analysis of project stakeholders in a holistic manner.

While this paper is only conceptual in nature, further empirical research is needed to substantiate and evaluate the applicability of the framework. For instance, the application of this framework via a case study might be conducted on how a particular organization managed its stakeholders during the different phases of the project would indeed be valuable. One may also conduct a focus group study or a semi-structured interview with project/program managers to delineate the usefulness of the tool. Operational issues will include the availability of network data, the stakeholders to be included within the scope of the project, definition of what constitute a tie, whether the multiplex nature of the tie (i.e. contractual relationships, collaborations, etc.) needs to be considered.

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