Stakeholders are involved in organizations because they are able to create value for them. The organizations also produce outcomes that are acceptable and of benefit to the stakeholders. They are involved in conversion processes that absorb inputs transform them and produces valuable products that benefit the stakeholders of the organization.They increase specialization and division of labor, consequently have experts who are able to produce valuable products and services. Organizations are able to use large-scale technology. This means they are able to take advantage of economies of scope. Where they can effectively use underutilized resources by spreading their use among different products and resources. Economies of scale where costs are saved by producing goods and services in large volumes (Jones 2010).
Organizations are able to influence their stakeholders by managing the external environment. They are able to manage technological, economic, social, legal and political factors that would affect the value they have created for their stakeholders. Organizations are able to control people and exert power, they utilize structures that enable the members to efficiently produce goods and services ( Mullins 2002). Their ability to economize on transaction cost allows organizations to have influence on their stakeholders. They are able to increase efficiency on negotiations, improve on monitoring and governing of all people involved in production while at the same time reducing associated costs.
Entrepreneurship is important for organizations to create value and influence to their stakeholders. The organizations have the responsibility to identify potential high return ventures, source and organize required resources and be in a position to absorb any risks and rewards that will result. Embracing entrepreneurship will increase value for their stakeholders by developing new products and services. Perceiving new business opportunities and making entrepreneurial efforts to meet these needs is necessary for all organizations (Kesri 2011).
- Jones. G. (2010) Organizational Theory, Design and Change (6th Ed). Upper Saddle River, NJ. Prentice Hall.
- Kesri. A. (2011) Organizational Theory, Design and Change
- Mullins. L. (2002) Organization Structure and Design.Retrieved on December 11 2013 from http://wps.prenhall.com/wps/media/objects/126/129348/IM/IMChap15.pdf