The stakeholder scorecard: Evaluating the influence of stakeholder relationships on corporate performance
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In today's knowledge-driven economy, the majority of a typical firm's value comprises intangible assets ranging from its brand to the expertise of its employees. However, intangible asset valuation is inherently subjective, context dependent, and future oriented. This study addresses the empirical correlation between the quality of a firm's relationships with its stakeholders and indicators of shareholder value. Its main purpose was to develop and test a quantitative research method that would enable practitioners to identify the intrinsic value of relationship capital. This study is based on a multidisciplinary theoretical foundation that contributes to a holistic understanding of relationship capital. These theoretical contributions include Homans' social exchange theory, Freeman's stakeholder theory and Eisenberger's perceived organizational support theory. The research design used concurrent mixed methodology. The first phase incorporated a phenomenological study to verify a conceptual model that was designed to measure the value of relationship capital. Phenomenological data were used to develop a quantitative instrument and to test its validity and reliability using the data analysis technique of structural equation modeling (SEM). The second phase operationalized the variables and tested them empirically in a field-based process. The results of this study demonstrated that relationship capital is predicted by the variables of perceived reciprocity, reputation, relational duration and economic value. These results offer a significant contribution to social change by enabling a firm to correlate social investments to indicators of value creation, thereby allowing practitioners to test quantitatively the impact of these social investments on firm performance.