infonet-economy

Stakeholder theory highlights that a CEO must perform a social responsibility towards multiple stakeholders (employees, politicians, journalists, citizens, etc). These stakeholders constitute a political system and the CEO develops a political strategy to deal with the claims of the different actors. This article mobilizes social network analysis and the complex networks theory to build a dynamic theory of stakeholders’ networks. To varying degrees corporate leaders are embedded in a network of stakeholders, and this network is subject to systemic shocks that can be random or intentionally provoked by the CEO. This framework is used to analyze the evolution of the employment relationship during an industrial restructuring. The employment contract is not limited to a relationship between an employer and an employee. Rather this relationship is embedded in a network that may involve several stakeholders. The strategic decision to downsize an organization in response to a systemic shock destabilizes the network of stakeholders and leads the CEO to define a political strategy to manage the layoff crisis.