Stakeholder Management in International Projects

OF DOCTORAL DISSERTATION AALTO UNIVERSITY SCHOOL OF SCIENCE AND TECHNOLOGY P.O. BOX 11000, FI-00076 AALTO http://www.aalto.fi Author Kirsi Maria Aaltonen (née Eloranta) Name of the dissertation Stakeholder management in international projects Manuscript submitted 12.02.2010 Manuscript revised 23.06.2010 Date of the defence 23.10.2010 Monograph Article dissertation (summary + original articles) Faculty Information and Natural Sciences Department Industrial Engineering and Management Field of research International Project-oriented Business Opponent(s) Professor Kim Wikström, Professor Kalle Pajunen Supervisor Professor Karlos Artto Instructor Professor Jaakko Kujala Abstract Today’s international projects are implemented in institutionally demanding environments and executed by coalitions of stakeholders that have differing interests, objectives and socio-cultural backgrounds. Consequently, international projects are subject to the demands and pressures presented by external stakeholders such as community groups, local residents, landowners, environmentalists, regulatory agencies, and local and national governments. Despite the acknowledged importance of stakeholder management, project research still lacks both theoretical knowledge and empirical evidence concerning various project stakeholder related phenomena. The objective of this thesis is to contribute to project research by increasing the understanding of external project stakeholder behavior and a focal project’s stakeholder management activities in international projects. The primary theoretical perspective used in this thesis is stakeholder theory, which is applied in the context of project stakeholder research.Today’s international projects are implemented in institutionally demanding environments and executed by coalitions of stakeholders that have differing interests, objectives and socio-cultural backgrounds. Consequently, international projects are subject to the demands and pressures presented by external stakeholders such as community groups, local residents, landowners, environmentalists, regulatory agencies, and local and national governments. Despite the acknowledged importance of stakeholder management, project research still lacks both theoretical knowledge and empirical evidence concerning various project stakeholder related phenomena. The objective of this thesis is to contribute to project research by increasing the understanding of external project stakeholder behavior and a focal project’s stakeholder management activities in international projects. The primary theoretical perspective used in this thesis is stakeholder theory, which is applied in the context of project stakeholder research. The thesis comprises of a summary and five publications that are based on five separate case study research settings. Publications I and II adopt the perspective of project stakeholders. Their empirical results are based on an in-depth study of a pulp mill project in Uruguay that faced extreme stakeholder related challenges. The key contribution of publication I is that it identifies and describes empirically eight different influence strategies that external project stakeholders may use to shape their salience. In publication II eight propositions concerning external project stakeholders’ potential to take action and influence the project management’s decision making during the different phases of the project lifecycle are developed. Publications III, IV and V adopt the perspective of a focal project and examine its activities with respect to external stakeholder influences. The key contribution of publication III is that it identifies and describes different response strategies that a focal project may enact as a response to external stakeholder pressures. By adopting an environmental interpretation perspective, publication IV describes the practices through which project management teams analyze and interpret the project’s external stakeholder environment in four international case projects. Publication V adopts a stakeholder network perspective and illustrates how a focal project’s local stakeholder relationships are associated with the emergence and management of unexpected events in three international case projects. The findings of this thesis highlight the importance of external stakeholder management in international projects. Through the application of the ideas of stakeholder theory, the results of this thesis provide new theoretical and empirical understanding of how external project stakeholders may influence the project management’s decision making during the project lifecycle. The results of this thesis demonstrate how a focal project may analyze its external stakeholder environment and respond to external stakeholder pressures and unexpected events in the context of international projects. Ultimately, the new knowledge of external stakeholders’ influence strategies and better understanding of how a focal project can deal with stakeholder influences, supports project managers in the development of effective project stakeholder management approaches.