Journal of Business Ethics (2006) 69:195–205
Springer 2006
DOI 10.1007/s10551-006-9085-6
The Role of Strategic Conversations
with Stakeholders in the Formation
of Corporate Social Responsibility
Strategy
ABSTRACT. This paper explores the role of strategic
conversations in corporate social responsibility (CSR)
strategy formation. The authors suggest that explicitly
engaging stakeholders in the CSR strategy-making pro-
cess, through the mechanism of strategic conversations,
will minimize future stakeholder concerns and enhance
CSR strategy making. In addition, suggestions for future
research are offered to enable a better understanding of
effective strategic conversation processes in CSR strategy
making and the resulting performance outcomes.
KEY WORDS: boundary spanning employees, corpo-
rate social responsibility strategy, stakeholders, strategic
conversations
Morgan P. Miles is professor of marketing at Georgia Southern
University. His research interests include the interface between
marketing, ethics, and corporate entrepreneurship. He has
been a Senior Research Associate for the Judge Institute of
Management, Cambridge University, a visiting Professor of
Marketing, at the University of Stockholm, a visiting pro-
fessor of entrepreneurship at the University of Otago, and
most recently a visiting professor of entrepreneurship at
Massey University.
Linda S. Munilla is professor of marketing, Georgia Southern
University. Her research interests include marketing and
environmental ethics.
Jenny Darroch is an assistant professor of marketing at the Peter
Drucker and Masatoshi Ito Graduate School of Management
at Claremont Graduate University. Her current research
focuses on the interface between marketing and entrepreneur-
ship, in particular the comparison between market driven and
driving markets firm behavior. Earlier research looked at the
antecedents of innovation within firms. Prior to joining
Claremont Graduate University, Jenny was the Director of
Entrepreneurship and Senior Lecturer in Marketing at the
University of Otago in New Zealand.
!
Morgan P. Miles
Linda S. Munilla
Jenny Darroch
‘‘The stakeholders in a firm are individuals and
constituencies that contribute, either voluntarily
or involuntarily, to its wealth-creating capacity
and activities, and who are therefore its potential
beneficiaries and/or risk bearers’’ (Post et al.,
2002: 8).
In order to improve competitive positioning, many
corporations worldwide have, over the past few
decades, redesigned corporate policies to include
some type of guidelines for appropriate responses to
corporate social responsibility (CSR) issues. As part
of this transformation, some attention has been
focused on the inclusion of corporate stakeholders in
the development of strategies related to social con-
cerns. This philosophy is partly based on the premise
that companies that ‘‘create and implement sustain-
ability plans not only benefit their bottom line, they
benefit the air we breathe, the water we drink, and
our standard of living’’ (Alcan, 2005). It is good
business then to actively engage all stakeholders –
investors (current and future), customers, suppliers,
pro-environmental/special interest groups, employ-
ees, community members, etc. – in the development
of sustainable strategies that reflect both economic
and socially responsible outcomes (see Maignam
et al. (2005) for an excellent illustration of relevant
corporate stakeholders).
Corporate social responsibility
The basic belief that ‘‘...organizations are account-
able to a larger society’’ (Kerin et al., 2003: 22) has
evolved into debate about the accountability of
196 Morgan P. Miles et al.
corporations to a myriad of special interest stake-
holders. Much of the discussion is centered on
whether CSR should take priority over a company’s
obligation to make money for its stockholders, or
vice versa (Bakan and Burke, 2005). For example
Mintzberg et al. (2002: 67) suggest that
‘‘In the past 15 years, we in North America have
experienced a glorification of self-interest perhaps
unequalled since the 1930s. It is as if, in denying
much of the social progress made since then, we
have reverted to an earlier and darker age. Greed
has been raised to some sort of high calling;
corporations have been urged to ignore broader
social responsibilities in favor of narrow share-
holder value...’’
The above quote illustrates the extent to which a
firm’s social responsibility behavior has been a pop-
ular subject in recent decades. Social responsibility can
be viewed as running the gamut from a purely
stockholder perspective, such as that advocated by
Friedman (1962), where the sole focus is on a firm’s
responsibility to its equity holders, to a perspective
that suggests that firms have an obligation to all
stakeholders, not just its equity holders (see for
example Polonsky, 1995; Post et al., 2002; Mintzberg
et al., 2002). Munilla and Miles (2005) propose that
a corporation’s commitment may follow a Social
Responsibility Continuum that ranges from a compliance
perspective (corporations meet legal and ethical
requirements but do not expend stockholder monies
for non-economic priorities), to a strategic perspective
(corporations change their business models to in-
clude CSR strategies that create economic returns
for stockholders), to a forced perspective (corporations
are pressured by various entities to go beyond
compliance or strategic interests and expend re-
sources that may not, in the long-term, be in the best
interest of the stockholders).
But wherever companies fall on the CSR spec-
trum, most would agree that a concerted effort must
be made to align strategies to take full advantage of
CSR business opportunities while also including
stakeholders in the strategy-making process. This
paper explores the use of strategic conversations in
the formation of CSR strategies from a conceptual
perspective and suggests that explicitly including
conversations with diverse stakeholder groups in the
CSR strategy-making process will, through the
mechanism of strategic conversations, maximize
stakeholder engagement and organizational sustain-
ability.
Strategic conversations
Strategic conversations are multi-directional multi-
dimensional communication mechanisms for better
shaping and integrating the strategic intent of top
management with both the firm’s capabilities and the
competitive realities the organization encounters. For
strategic conversations to be effective in strategy
making, communications must explicitly involve
both talking and reflective listening by all participants.
Typically, strategic conversations have been used to
create open channels of unfiltered information
between top managers and ground level marketing,
technology, and sales force boundary-spanning
employees (BSEs) (for a discussion of BSEs see
Bezrukova et al., 2003). These conversations help the
BSEs to understand the strategic intent of top
management while simultaneously enabling execu-
tive-level managers to gain a richer and more honest
understanding of both the possible future the firm
faces and the ability of the firm to align itself with its
desired future.
In the past few years, one facet of organizational
planning has evolved that includes ...‘‘the capability
of organizations to perceive what is going on in their
business environments, to think through what this
means for them, and then to act upon this new
knowledge’’ (Van der Heijden et al., 2002: 2). Van
der Heijden et al. (2002) refer to this strategy as
adaptive organizational learning, a holistic, proactive
approach to the organizational management learning
process that is centered on scenario planning, the use
of positive and negative scenarios to examine a range
of potential situational antecedents and their corre-
sponding consequences. As one approach to scenario
planning, strategic conversations evolve as ‘‘...people
come together to share and analyze information,
ideas and paradigms that are of strategic importance
to our organization’’ (Maricopa, 1999).
This philosophy of active stakeholder engagement
by management reflects structural changes in orga-
nizational communication models that evolved in
the l980s, as a strategic response to market and
 The Role of Strategic Conversations with Stakeholders 197

STAKE HOLDERS

BOUNDARY
SPANNING
EMPLOYEES

MIDDLE
MANAGEMENT

TOP
MANAGEMENT

unfiltered information flows

Figure 1. Parties to strategic conversations. Adapted from Kotler and Keller (2006).

technology turbulence, resulting in a shift from a
hierarchical ‘functional’ approach to a flatter ‘cus-
tomer-driven’ structure for organizational commu-
nications (Raspberry and Lindsay, l994: 52). In
addition, the rapid and widespread adoption of
e-mail and the Internet for intra and inter organi-
zational communications made it possible for all
stakeholders to have a voice in organizational issues.
These changes altered the communication flow
within organizations – which traditionally flowed
downward – to one which also allows stakeholders
and BSEs to directly communicate with top exec-
utives. Figure 1 illustrates an example of a hierar-
chical model designed to include all stakeholders in
the communication process. It illustrates that for
effective strategy making to occur, there should be a
channel for honest, unfiltered information to flow
from the BSEs who directly interact with stake-
holders and technology and strategy making top
executives. For strategic conversations to be most
effective, all levels of an organization must, at a
minimum, be aware of stakeholder concerns. Hastak
et al. (2001) suggest that consumer survey research
techniques should be explicitly integrated into pol-
icy-making processes. Strategic conversations enrich
this communication process to include direct, open
ended, bi-directional dialogue between management
and other relevant stakeholders.
Figure 1 adapts Kotler and Keller’s (2006) per-
spective of a market orientated firm to illustrate the
role of various ‘‘actors,’’ that is, those involved in
strategic conversations who inform the firm about
the CSR issues of importance. Customer needs
should be the focus of the organization’s strategy
formation efforts. BSEs that actually interact with
customers, technologies, suppliers, competitors,
regulators, and other external stakeholders are next
in importance to the strategy formation process.
BSEs tend to have the most informed perspective of
opportunities and capabilities, and a firm might
actually be able to exploit these opportunities (for
more on the opportunity discovery, assessment, and
exploitation process see Shane and Venkataraman,
2000). In addition, BSEs tend to be most aware of
the value drivers for their specific target markets and
the concerns of relevant stakeholders. This deep
understanding of the competitive environment and
the target market mandates that BSEs have influence
on the organization’s strategic conversations.
Liedtka and Rosenblum (1996: 147) discussed the
metaphor of strategic conversations ‘‘as a way of
thinking about how organizations address (its)
198 Morgan P. Miles et al.
external and internal questions.’’ Strategic conver-
sations consist of open issue oriented, fact-based
conversations between stakeholders, BSEs, and top
management. Likewise, Von Krogh and Roos
(1995: 391–392) suggest that
‘‘Strategic conversations ... are oriented towards
the advancement of the company, to the creation
of the future for the business. You (in theory)
meet with other people in the organization to
discuss issues of a different nature than operational
issues...Strategic conversations are also about the
creation and acquisition of resources for the future
and how these resources should be allocated in
the future. In short, strategic conversations are the
cradle of a company’s strategy.’’
While strategic conversations have been used to
better align the perceptions, values, and concerns of
top management with BSEs (see Chesley and
Wenger, 1999; Liedtka and Rosenblum, 1996), little
work has been done on leveraging strategic con-
versations to better align the aspirations of top
management with BSEs and other relevant stake-
holders (for an excellent discussion of the impact of
communications with stakeholders on the mental
models of management see Bronn and Bronn, 2003).
In one seminal study, Buysse and Verbeke (2003:
453) found that ‘‘more proactive environmental
strategies are associated with a deeper and broader
coverage of stakeholders.’’ In fact, without engaging
stakeholders in strategic conversations, top manage-
ment runs the risk of intellectual isolation from its
stakeholders and its own BSEs, creating a ‘‘bunker
mentality’’ that offers a very management-centric,
limited perspective of the firm, its capabilities, and
potential futures.
Maignan et al. (2005) developed a step-by-step
approach to be used by firms who want to integrate
CSR into their long-term goals. In the communi-
cation loop of the model, ‘‘gaining stakeholder
feedback’’ is one of the eight steps. The model is
designed to build ...‘‘an organizational identity and
reputation based on stakeholders’ norms and values’’
(Maignan et al., 2005: 975), leveraging stakeholder
engagement to build and reinforce brand and cor-
porate reputation. Urde (2003) suggests that for a
brand to be effective, the organization’s mission, its
brand, and its products must all consistently reflect
the values of its stakeholders. Engaging in strategic
conversations with stakeholders is presented as one
method for identifying the corporation’s core values
that are ultimately incorporated into brand building
(Urde, 2003), creating a synergistic enhancing
‘‘convergence of branding and CSR’’ (Blumenthal
and Bergstrom, 2003).
When there is a lack of congruence and accuracy
between what an organization perceives its stakeholders
value and what they actually value, the result can be
highly dysfunctional for the organization and its
stakeholders. For example, when Robert Shapiro,
Monsanto’s CEO during the mid 1990s, shifted
Monsanto’s business domain from that of a chemical
company to a bio-tech firm, he and his executives felt
that Monsanto would reap an enhanced reputation as an
environmental leader by creating new environmentally
sustainable agricultural technologies that would be
much less dependent on pesticides and fertilizers (see
Magretta, 1997). Unfortunately, for Monsanto’s
executives and shareholders, Shapiro did not foresee the
negative, strategically significant impact to Monsanto’s
reputation that resulted from stakeholder concerns
about the safety and ethical implications of bio-
technology. Monsanto’s reliability, trustworthiness,
credibility, and responsibility associated with the pro-
duction and consumption of genetically modified
(GM) agricultural products (see Hall and Vredenburg,
2003; Miles and Covin, 2000) were greatly diminished
resulting in the destruction of brand equity and value for
the organization and its stakeholders.
Monsanto’s experience with GM agricultural
products is not unique and, in fact, is typical of the
myopic blindness of strategy making often evident
within organizations. This ‘‘strategic myopia’’ is
largely due to the current trend of top management
to ‘‘stack’’ governing boards with directors, includ-
ing independent board members who are tightly
aligned with the interests of top management, who
then communicate only with middle management.
Those in these middle management positions are
often promoted due to their willingness to consis-
tently support and reinforce the perspectives of top
management. Therefore, middle management tends
to reflect only top management’s values, under-
standings, and knowledge base (see Bedeian, (2002)
for an excellent discussion of this issue). Often,
opportunities for strategic innovation can only be
 The Role of Strategic Conversations with Stakeholders
discovered and realized through alternate commu-
nication channels that bypass business level man-
agement and allow for a direct reflective dialogue to
be established between top management and BSEs.
This myopic, management-centric perspective of
strategy making suggests that what is good for
executives is good for the firm and what is good for
the firm must be good for its stakeholders. This type
of outlook effectively limits meaningful conversa-
tions with BSEs and stakeholders, thus resulting in a
strategy that may be unpopular, unwise, and, over
time, one that may prove unsustainable. For exam-
ple, Atkinson et al. (1997) note that managers should
explicitly integrate stakeholders’ preferences and
needs into the organization’s performance manage-
ment system in order to enhance organizational
performance. Similarly, Polonsky and colleagues
(Polonsky, 1995; Polonsky et al., 2002) argue for the
inclusion of stakeholders in the strategic marketing
processes. Likewise, Post et al. (2002) suggest that
comprehensive stakeholder management is abso-
lutely essential for any strategy to be effective and
sustainable since stakeholders contribute to the
organization’s resource base, shape the structure of
the industry in which the firm operates, and create
the social/political arena in which the organization
exists.
Illustrations of stakeholder engagement
Strategic conversations can help bridge critical gaps
in perceptions through issue-oriented, fact-based
open conflict between top management (who are
responsible for developing intended strategies and
the strategic vision for the organization), BSEs (who
tend to create emergent strategies), and relevant
stakeholders (Eisenhardt et al., 1997). For example,
Chesley and Wenger (1999: 55) report on the suc-
cessful transformation of strategy making through
the use of sometimes high conflict strategic con-
versations at the U.S.’s National Reconnaissance
Office, a once ‘‘super-secret spy organization.’’ This
suggests that even the most highly classified intelli-
gence arm of the U.S. Government can actually
leverage strategic conversations to transform itself
into a more strategically relevant organization.
Strategic conversations are dynamic and recursive
in nature, resulting in an increase in both the
199
quantity and quality of information and technology
transfers between the various stakeholders of the
firm, BSEs, and top management. For example, in
the late 1990s, DuPont considered developing a
titanium dioxide mine adjacent to the Okefenokee
National Wildlife Refuge in Georgia. However,
DuPont quickly realized that a large-scale mining
operation next to an environmentally fragile
wilderness area would likely result in strong oppo-
sition. To understand the nature and impact of this
decision, DuPont organized stakeholder meetings
with national and local environmental groups, pro-
business economic development groups, and regu-
lators (DuPont Postpones ...., 1997). Ultimately, and
following open and continual strategic conversations
with these highly diverse stakeholder groups,
DuPont decided that it was in its best interest to
abandon the strip-mining project (Sissell, 1999).
While regulators did not mandate DuPont to make
this decision, the strategic conversations between
DuPont and its stakeholders ultimately shaped
DuPont’s subsequent strategy and resulted in a better
strategy making process. This is an illustration of
strategic conversations effectively shaping strategy
formation and impacting CSR and DuPont’s con-
cept of strategy.
Recent changes in technology have resulted in
the Internet emerging as a forum for CSR-type
strategic conversations. For example, the Business
Alliance for Local Living Economics, a cooperative
of organizations and individuals involved in CSR
issues, has used the Internet’s World Café web site
forum to facilitate honest, open conversations
between diverse groups of stakeholders in a virtual
and, subsequently, physical context (see http://
www.livingeconomies.org and http://www.the
worldcafe.com). For example, in Atlanta the World
Café has helped in the formation of a forum of
business leaders, scholars, and government decision
makers who have an interest in promoting the
environmentally sustainable and economically just
development of Atlanta. Another example is HP,
which in its 2006 corporate Citizenship Report states,
‘‘Stakeholder engagement is an important part of our
global citizens activity,’’ and that ‘‘HP is integrating
stakeholder engagement into our core business
practices’’ (accessed 3-28-06, http://www.hp.com/
hpinfo/globalcitizenship/gcreport/publicengage/
stakeholder.html). HP worked with SustainAbility, a
200 Morgan P. Miles et al.
stakeholder consultancy firm, in 2005 to train
employees who deal with external stakeholders and
additional training is planned in 2006.
The emergence of global CSR communication
consulting firms such as SustainAbility, have gener-
ated innovative methods for more direct engage-
ment with stakeholders: ‘‘It is unusual for any of our
projects to not involve stakeholder analysis or engage
of some sort...’’ (http://www.sustainability.com,
accessed 3-06-06). Companies can even sign up for
the Center for Sustainable Community Develop-
ment’s ‘‘Online Stakeholder Workshops’’ that will
provide direction for fostering stakeholder relation-
ships (http://www.sfu.ca/cscd/cli/online_work-
shop.htm, accessed 3-8-06).
In addition, strategic conversations between top
management, BSEs, and stakeholders can be an
instrumental component of a firm’s decision to adopt
international environmental and social accountabil-
ity standards and its subsequent implementation of
the standards (see Miles et al., 1997 for additional
information on ISO14000 environmental standards
and Miles and Munilla, 2004 for additional infor-
mation on SA8000 social accountability standards).
Both ISO14000 and SA8000 certification processes
mandate significant inputs from stakeholders and
offer an opportunity to initiate and engage in fruitful
strategic conversations between many various
stakeholder groups. For example, the ISO14000
environmental management system certification
process includes the establishment of an environ-
mental management system that must acknowledge
the organization’s relevant stakeholders. ISO14000
forces the organization to assess its supply chain to
ensure that its vendors are in compliance with
ISO14000 standards (see Miles et al., 1997). Like-
wise, SA8000 social accountability certification
requires input from workers, local suppliers, and
other stakeholders (see Miles and Munilla, 2004).
Both of these CSR certification frameworks man-
date that the organization engage its external stake-
holders in some form of strategic conversations.
Related work with Ericsson (see Covin and
Miles, forthcoming) suggests that Ericsson’s pro-
grams, designed to encourage corporate entrepre-
neurship, enhanced open strategic discussions
between the developers of environmentally benefi-
cial technology, top management, and stakeholders
(see Darroch et al., 2005). For Ericsson, this com-
munication channel provided top management with
‘‘un-filtered’’ information from the BSEs who were
creating technology that had the potential to be
highly valuable to Ericsson and its stakeholders in the
environmentally sustainable ‘‘intelligent car’’ and
‘‘intelligent house’’ Projects. This type of open and
honest, conflict-based communication between
employees who span the boundaries between the
firm and its technology, customers, regulators,
partners, competitors, and other stakeholders, is
critically important to how those within the orga-
nization perceive the future of the organization and
the impact of new technologies upon that future.
Strategic conversations tend to by-pass business unit
middle-managers who typically serve as information
and value gatekeepers for top management. In
addition, strategic conversations seemed to help
minimize turf protection and dysfunctional organi-
zational behaviors. Thus, strategic conversations
provided multiple advantages to Ericsson. These
findings are supported by Eisenhardt et al. (1997)
who argue that strategy making benefits from open,
fact-based conflicts driven by honest, unfiltered
information.
At Skandia, honest, open strategic conversations
have become embedded into the strategy making
process (Skandia is a global insurance and financial
services firm, headquartered in Stockholm). Skan-
dia leverages its internal innovation program to
foster the open interaction between strategy mak-
ing top management and strategy implementing
BSEs who operate at different levels of the orga-
nization (see Covin and Miles, forthcoming).
These multi-level conversations provide honest,
unfiltered input to top management from the
employees, who actually work with customers,
technologies, and vendors. As a consequence, top
management has a more realistic understanding of
the firm, its capabilities, opportunities, and social
responsibilities.
What is common at both Ericsson and Skandia is
that strategic conversations are valuable in the
strategy formulation process since they are a mech-
anism that allows top managers, other managers,
BSEs, and sometimes other internal and external
stakeholders the opportunity to directly exchange
knowledge about specific resources, the business in
general, and the environment in which the business
operates.
 The Role of Strategic Conversations with Stakeholders
The role of strategic conversations in closing
gaps
Strategic conversations are critical to a firm’s ability to
compete in an emerging and constantly changing
future because they help shape mental models of top
management, BSEs, and stakeholders by the transfer
of honest and unfiltered information. Markides (1997:
13) stated that a ‘‘prerequisite to strategic innovation is
an honest, fundamental questioning of the mental
models or industry recipes that seem to govern the
behavior of any individual or organization.’’ The
realization that there may be a wide variance of mental
models and values among and between top manage-
ment, BSEs, and stakeholders is the first step in
encouraging strategic conversations. For example,
Bronn and Bronn (2003: 291) suggest that
‘‘Organizations are undergoing dramatic changes
as stakeholder groups exert an ever-increasing
influence on the place and responsibilities of
organizations in society. Important drivers in this
process include the environmental movement,
the search for total quality management, and the
concept of sustainable development, ethics and
organizational learning. Because the various
stakeholders can view these complex issues quite
differently from the organization, it is important
that those working with communications (and
strategy, our words) are able to understand the
underlying complexities of stakeholder relation-
ships.’’
Based on an understanding of strategic CSR man-
agement, the authors propose two primary gaps
between the perceptions of an organization’s top
management, BSEs, and stakeholders. In addition,
we argue that strategic conversations can be used
effectively to close or at least minimize either or
both of these gaps.
These two gaps are
1. The Performance/Capability Gap – The gap
between Top Management’s perception of
the firm’s CSR current performance and its
capabilities, BSEs’ perception of the firm’s
CSR current performance and its capabili-
ties, and stakeholders’ perception of the
firm’s current CSR performance and its
capabilities.
201
2. The Futures Gap – The gap between Top
Management’s perception of Future and the
firm’s role in that future, BSEs’ perception of
Future and the firm’s role in that future, and
stakeholders’ perception of the Future and
the firm’s role in that future.
These gaps extend Bronn and Bronn’s (2003)
framework of the gaps in congruency and accuracy
between an organization’s stakeholders’ and man-
agement’s perceptions of its own and each others’
point of view on organizational issues. The Perfor-
mance/Capability Gap is defined as the differences
between the perceptions of a firm’s current CSR
performance and its CSR capabilities as viewed by
various stakeholders: the corporation’s executives,
BSEs, and stakeholders. Often top management is so
insulated from the reality of the firm’s operations
that it fails to understand the fundamental strengths
and weaknesses of the firm, its customers, suppliers,
and competitors and is myopic with respect to many
of the issues of paramount importance to external
stakeholders. By contrast, BSEs tend to have the
deepest understanding of the firm’s capabilities, but
this understanding is almost always very narrow in
scope and only relevant to their specific area(s) of
operations. Strategic conversations among BSEs and
between BSEs and top management allow the deep
but narrow understandings of the abilities of differ-
ent business areas to be aggregated into a corporate
profile of capabilities.
In this paper, the Futures Gap is defined as the
differences between (a) the vision of the ‘‘most
probable’’ future; (b) the vision of an ‘‘ideal’’ future;
and (c) the various visions, held by management,
BSEs, and stakeholders, of the firm’s role in the
creation of these futures. The Futures Gap can be
conceptualized as the distance between what the
firm’s executives, BSEs, and stakeholders value. For
example, BP (British Petroleum) recently re-
invented itself as an energy company that is deeply
concerned about long-term environmental and
economic sustainability. While some of BP’s more
environmentally oriented stakeholders envision BP
as a leader in the commercialization of alternative
energy, BP’s executives may see a somewhat
different short-term future, with the world’s econ-
omy and BP remaining highly dependent upon coal,
oil, and other carbon based sources of energy.
202 Morgan P. Miles et al.
The authors suggest that the role of strategic
conversations is to reduce the magnitude of the
Performance/Capability gaps (thus providing a
common ground upon which to base subsequent
discussions) and to help bridge the Futures Gap to
allow the entire organization to transform itself to
better (1) recognize, create, and discover attractive
economic opportunities; (2) be able to realistically
evaluate economic opportunities with respect to the
firm’s strategic intent and capabilities; and (3) be able
to profitability exploit economic opportunities (see
Shane and Venkataraman, 2000). Strategic conver-
sations can effectively minimize these gaps in
understanding between strategy making top man-
agement, middle management, strategy implement-
ing BSEs, and stakeholders by making tacit
knowledge held by top management, other man-
agement, BSEs, and stakeholders explicit and,
therefore, useful in the strategy formation and real-
ization process. In fact, the authors argue that sharing
tacit knowledge is an essential first step in the stra-
tegic conversation process. Further, transforming
tacit knowledge into explicit knowledge is a critical
second step for managers to take as they formally
capture strategic conversations and integrate the
essence of those conversations into strategy. There-
fore, integral to strategic conversations is the facili-
tation of the flow of tacit knowledge and the transfer
of tacit knowledge into explicit knowledge in and
TABLE I
The steps of effective strategic conversations
Stepa
1. Questioning and understanding the mental models
and concerns of top management, BSEs, and relevant
stakeholders
2. Sharing tacit knowledge among and between
organizational and stakeholder groups
3. Transforming relevant tacit knowledge into explicit
knowledge
4. Using this shared explicit knowledge to evaluate
intended and emergent strategies in the process
of strategic rationalization
5. Strategy formation
a
Adapted from von Krogh and Roos (1995), Liedtka and Rosenblum (1996), Liedtka (1998), Bronn and Bronn (2003).
around an organization (see Nonaka and Takeuchi,
1995 and Darroch, 2003 for a discussion of
techniques that facilitate knowledge transfer within
organizations). Table I summarizes these steps of
effective strategic conversations.
While a plethora of research on strategy forma-
tion/making exists (for summaries see Mintzberg
and Lampel, 1999 and Eisenhardt and Sull, 2001),
very little research on how top management actually
participates with stakeholders in honest and open
conversations that centers on fact-based conflict and
that foster deep strategic thinking has been con-
ducted (see Liedtka, 1998). Out of these conversa-
tions between top management, BSEs, and
stakeholders emerges a description of a more com-
monly desired future (bridging the Futures Gap).
This desired future may or may not be aligned with
current strategy, but the Futures Gap can be bridged
through this form of dynamic emergent strategy
making. Top management rationalizes these emer-
gent strategies, which are often combined with in-
tended strategy, to either reinforce or shape the
future concept of strategy (see Burgelman, 1983).
Conclusion and research implications
Managers are increasingly cognizant of the role their
organizations play in the wider social community.
Outcomes
A richer understanding of the preferred
strategic intent of the various participants
Enhancing the organization’s knowledge base,
creating a shared understanding of the firm’s history,
capabilities, performance, and future
Codifying the firm’s knowledge base
A forced ‘‘reality check,’’ to determine
whether there really is a ‘‘shared understanding’’
of the firm’s history, capabilities, performance, and future
Enhanced competitive standing as an outcome of more
informed and relevant strategy making
 The Role of Strategic Conversations with Stakeholders
Increasingly, we are exposed to multiple examples of
firms that manage to demonstrate a pluralistic
mindset – for example, Johnson & Johnson and
Procter & Gamble, along with other member
companies of the Global Environmental Manage-
ment Initiative (GEMI), demonstrate their ability to
provide superior returns to shareholders while
maintaining a strong CSR profile (GEMI, 2004).
In the current paper, we propose that traditional
models of strategic decision making are not likely to
support the effective adoption of CSR principles
that align the interests of stakeholders, top managers,
and BSEs. By adopting an inside-out perspective to
strategic decision making in which managers believe
that what is good for managers must be good for the
firm and what is good for the firm is also good for
stakeholders is unlikely to advance a CSR position.
Managers need to be adept at including the
perspectives of both BSEs and stakeholders early in
the strategy making process, thereby adopting an
outside-in approach to strategy formation.
We propose the use of strategic conversations as
one way of enabling BSEs to link the organization
with its wider community. We have also explained
why the use of strategic conversations may minimize
both the performance/capability and futures gaps
caused by different perceptions held by managers,
BSEs, and stakeholders. While managers need not
agree with every divergent perspective that might
arise during a strategic conversation process, we
suggest that the strategy making – strategy realization
process would be greatly enhanced by an under-
standing of the concerns and preferences of diverse
stakeholder groups through a public and open stra-
tegic conversation process.
We hope that this area will attract considerable
research attention. Accordingly, we propose a range
of possible research topics. More specifically, we
suggest data could be collected to empirically test the
conceptual frameworks discussed in this paper. For
example, we suggest that firms holding effective
strategic conversations between managers, BSEs, and
stakeholders should experience smaller gaps in per-
ceptions of the corporations’ mission and values, key
issues, brands and current and future performance
than firms which do not hold strategic conversations.
In addition, the impact of strategic conversations on
corporate reputation and, ultimately, performance
would enhance an understanding of the conse-
203
quences of effective strategic conversations. For
example, we propose that firms holding effective
strategic conversations will be perceived as more
socially responsible, innovative and enjoy stronger
brands than firms which do not. The impact of
technology on strategic conversations would be an-
other research area that would be of great value to
both scholars and managers.
We also suggest research programs that examine
each step of effective strategic conversations pro-
cesses, as proposed in Table I. For example, how are
mental models extracted and questioned? How is
tacit knowledge shared between managers, BSEs,
and stakeholders? How is tacit knowledge converted
into explicit knowledge and then evaluated? How
do strategic conversations inform strategy formation?
In summary, we believe that the most effective
processes, outcomes, and overall value of strategic
conversations in the CSR strategy making and
strategy realization areas are yet to be fully under-
stood by scholars or managers.
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