The theory of interested parties

For sport to reach its maximum potential, the resources available to the sector must be used efficiently, effectively and fairly (Geeraert, Jack 2022, p. 115). Unfortunately, historical conflicts, lack of trust, inequalities in financial resources, divergent priorities and stagnant governance structures make the implementation of collaborative governance difficult (Boyle, Shilbury 2018, p. 333).

Sport organizations involve a variety of stakeholders – athletes, coaches, nutritionists, psychologists, agents, sponsors, government bodies, media and the public. Each party has its own interests and demands on the sport organization and these differences are referred to as stakeholder heterogeneity (Wolfe and Putler, 2002). Reichart (2003) has identified five main types of stakeholder interests: affiliative, informational, material, political and symbolic (Cunningham, et.al. in Parent 2016, pp. 96-97). Only by considering the interests of all stakeholders is a sport organization able to develop a coherent and successful strategy, act effectively and achieve its goals (Shilbury, Ferkins, & Naraine, Parent 2020, p. 265).

Stakeholder theory provides organizations with a theoretical rationale for why it is important to understand the interests and expectations of different stakeholders. This theory helps to improve an organization’s strategic decision-making by calling for monitoring this stakeholder environment and acting proactively. It allows competing interests to be balanced and resources to be allocated equitably, thereby meeting the needs of all stakeholders and maintaining their support (Freeman 1984, Deck 1994, Clarkson 1995, Parent et.al., 2004, pp. 29-30). Stakeholder theory is a general conceptual framework or set of ideas from which other theories of organizations can be derived (Parmar et.al., 2010, p. 406, Cunningham et.al., Parent 2016, p. 99).

Stakeholder engagement is essential for democratic governance, as an organisation can both benefit and harm stakeholders (Parent et al., 2004), p.1). According to Donaldson and Preston (1995), a corporation is an organizational unit in which different stakeholders pursue objectives that are not always aligned and even divergent. In order to achieve these goals, the organization and its members engage in a contractual relationship in which compromises are made in the interests of all parties (Freeman & Evan, 1990; Wartick, 1994; Parent et. al., 2004) pp. 7).

Huml conducted a study of Division II coaches’ reactions to legislative changes in the National Collegiate Athletic Association. The study revealed the main problems that coaches perceived with the changes: in 72 cases coaches felt that the policies put in place were inadequate and would not help achieve their goals, and in 75 cases coaches were skeptical about whether the changes would achieve the goals for which they were put in place. The results of the study suggest that it is important to carefully consider the views of stakeholders before making significant changes (Huml, et. al., 2018, p. 250).

Freeman (1984) identified internal (directly related to management) and external (indirectly related) stakeholders in an organization. Members’ associations can support or reject board decisions, while external stakeholders play an important role in the legitimacy of the organization. Clarkson (1995) classified stakeholders as primary (without whom the organisation cannot exist) or secondary (can influence or be influenced but are not directly involved) (Ferreira et. al., p. 656).

The literature identifies four main characteristics of stakeholders: 1) links to the organization (direct or indirect), 2) representation of specific interests, 3) existence in the organization’s environment, and the ability to become stakeholders even if the organization does not want to recognise them. For example, community groups or certain clubs may be ignored by the lead organization, but if they are seen as legitimate by other stakeholders, they become important stakeholders whether the lead organization wants them to be or not (Shilbury, Ferkins, Naraine, Parent 2020, p. 266). 4) Different configurations, both individually and in groups. Effective stakeholder management must answer four key questions: 1) what constitutes the organization’s external environment, 2) what are the stakeholders’ interests, 3) which stakeholders are prioritised, and 4) how can the organization satisfy the most important stakeholders.

The primary objective of managers in an organization is usually profit maximisation (Hillman and Keim, 2001). However, focusing solely on maximising economic value is not sufficient to address social problems in a sport context (Bendickson et al., 2016; Foreman et al., 2020, Pitz et. al., 2020). Conflict theory provides an important framework for understanding how organisations operate. It helps managers to identify and resolve conflicts of interest, facilitating effective communication and collaboration within the organization. According to Bigelow, Fahey and Mahon (1993), conflict is a circumstance that affects the performance of an organization and its ability to achieve its goals. It develops out of differences between the expectations of the stakeholders of an organization. Thus, conflict reflects beliefs rather than objective circumstances and is subject to interpretation by the parties. Reichart (2003) argues that these interpretations may be based on material, political or symbolic interests. Wartick and Mahon (1994) identified the main reasons for corporate disagreements as (a) different expectations about the work to be done, (b) conflicting ideas about the use of costs and revenues, (c) differing views about organizational performance, and (d) strategic decisions with significant implications for the future of the organization (Cunningham et.al., 2016, pp. 96-97).

There are three stages in the conflict management process. The first stage involves an analysis of the internal and external environment to identify stakeholders’ expectations and needs, as well as possible trends that might affect them (Parent et.al., 2004, p. 22). The next stage involves an in-depth analysis of the problem. It examines its historical development, current status, assesses its impact and identifies possible solutions. In the third stage, a concrete solution is developed. This involves the formulation of policies, strategies and actions to be taken, which may include changes in the way the organization operates (Parent et.al., 2004, p. 24).

Different stakeholders will react to conflict differently, focusing primarily on protecting their own interests (Mahon & Waddock, 1992). It should be borne in mind that the nature and impact of conflict may change over time. Mahon and Waddock (1992) identify the main conflict stances as unaccepting, indifferent and accepting. The non-accepting stance means that the stakeholder does not get involved or simply observes what is happening with indifference. It may consider that the issue is not relevant or does not require attention. In indifference, on the other hand, the stakeholder recognises that the issue may be relevant to his or her interests, but does not take an active stance, merely following the conflict as it develops. An accepting stance means that the stakeholder recognises the issue as important to him or her and takes the necessary action to protect his or her interests (Parent et.al., 2004, pp. 20-21).

A collaborative perspective is particularly important in governance as it ensures that stakeholders actively participate in decision-making (Shilbury, Ferkins 2015, p. 380). Cooperative and non-dominated management styles foster effective collaboration, and collaborative governance helps to reduce mutual mistrust and overcome the lack of unity in sport organizations (Shilbury, Ferkins 2015, p. 381). According to Rawls’ theory of justice, stakeholders should be able to challenge policy proposals if they negatively affect their interests, are unethical or unfair (Naess, 2019, p. 12).

Moving away from traditional command and control models can help to address the long-standing governance challenges faced by sport organisations, thereby strengthening their legitimacy in the eyes of stakeholders and the public (Naess, 2019, p. 8). It is equally important to consider the interests of secondary stakeholders such as sponsors, fans, media and parents of young people (Pitz, et. al. 2020, p. 3). Research confirms that the quality of relationships between sports clubs and their external stakeholders is positively related to the financial contribution of these stakeholders (Cunningham, et.al., Parent 2016, p. 104).

Involving stakeholders in the governance of a country’s sport sector can significantly improve its reputation abroad. In contrast to bureaucratic and hierarchical approaches, an inclusive approach allows sport organizations to become more internationally visible and recognised. This is particularly important for countries with relatively smaller sporting traditions in terms of popularity and influence, where greater stakeholder involvement can help to improve a country’s sporting image and international reputation (Li, Feng 2021, p. 3).

The Green Bay Packers are a professional football club in the USA that offers a unique business model called the Maximum Value Partnership (MVP) (Pitz, et.al., 2021, p. 134). The Green Bay Packers is a non-profit organisation owned by 112 158 shareholders. Share value does not increase, dividends are not paid, and transfers of ownership are limited. The most important aspect is the limitation of individual shares to prevent one person from becoming the majority owner. The Packers model focuses on the interests of the community rather than the profits of the owners. Despite the fact that shareholders have no financial interest, their demand constantly exceeds supply (Pitz, et.al., 2021, p. 140). The MVP ownership model is able to balance competition between public and private organisations, ensuring democratic governance.

World Bank research reveals that decentralisation is an important development strategy that promotes citizen participation in decision-making, democratisation, quality of services, more efficient use of financial resources and improved accountability. Decentralisation strengthens the cooperation of governing organisations with the public, contributing to fairer decision-making in the long term. The study specifically highlights the role of decentralisation in strengthening democracy through freer and more accessible elections, greater public awareness and participation in decision-making, fostering political engagement and civil society mobilisation (Mansuri, Rao 2013, p. 147).

The behaviour and attitudes of employees in organizations are guided by social learning theory and social identity theory. Employees observe and imitate the behaviour and attitudes of their leaders, learning norms of behaviour that are appropriate to the organization. By identifying with the organization and its leaders, employees take responsibility for implementing the organisation’s goals and values. Leaders have a significant impact on the members of the organization because their abilities, attitudes and methods of exercising power set an example for other stakeholders in the organization on how to behave in similar situations and what methods can achieve the desired results (Parent & Deephouse 2007, Shilbury, Ferkins, Naraine, Parent 2020, p. 266).

Thus, the leaders of sport organizations have an important role to play, not only in ensuring the effective functioning of the organization, but also in ensuring that a balance is maintained between the needs and interests of the different stakeholders. Their decisions and actions can have a significant impact on the success of the organization as well as on the engagement and motivation of individual stakeholders, especially players.

Stakeholder theory offers a broader scope for analysing an organization by including equity as an important factor in its functioning (Gibson, 2000; Verbecke, Tung 2013; Huml et al., 2018, p. 244). As the role of stakeholders changes over time, managers need to regularly reassess the external environment to identify new trends that require appropriate management strategies. Given that not all stakeholders will benefit equally from the decisions made, managers need to ensure a balanced approach between different stakeholders to mitigate potential harm (Parent et al., 2004, p. 25). An approach in which management focuses on balancing the needs of different stakeholders is crucial for the long-term sustainability and competitiveness of an organisation. Such an approach helps to avoid situations where decisions are made by ignoring a stakeholder, which can lead to conflicts and public mistrust of the organization. Fairness in the organization’s activities is both socially and strategically important.