Leadership, decision making and internal stakeholder engagement

The debate on the relationship between stakeholder engagement, leadership and organisational performance is marked by a dearth of empirical studies testing the various propositions put forward. This paper attempts to address two aspects of this relationship. First, it presents the results from an empirical study designed to establish the impact of internal stakeholder engagement on a range of organisational performance objectives and, second, it attempts to ascertain what specific leadership style, if any, is associated with higher levels of internal stakeholder engagement. Internal stakeholders are defined as those people whose activities are a part of, or influence, the internal value chain of the firm. For the purposes of this study, these were confined to all employees, including those lower levels of management traditionally excluded from the strategic decision-making processes. The study used seven attributes of internal stakeholder engagement and four styles of leadership. The results indicate a strong correlation between a number of internal stakeholder attributes and long-term performance objectives such as innovation and customer retention.