Companies see big benefits in collaborating with their critics, says new research from the Economist Intelligence Unit

Companies are embracing a new breed of stakeholders and are gaining significant commercial benefits as a result, according to a new report released today, Dangerous liaisons: How businesses are learning to work with their new stakeholders, published by the Economist Intelligence Unit and sponsored by Verizon. In a global survey of senior executives, almost four-fifths (78%) of respondents say that interaction with special interest groups, non-governmental organisations (NGOs) or citizen groups is considered important to their business. Online communities are also seen by business as key stakeholders—a plurality of surveyed executives (33%) say that these will be their most important category of "non-traditional stakeholder" in five years—and companies are increasingly conducting their relations with all the aforementioned groups online.

Yet despite the anticipated commercial advantages, companies continue to view interaction with these groups as the remit of public relations or marketing departments, and fail to incorporate new stakeholders into their strategic thinking at board level. Although reputation and brand enhancement are seen by surveyed executives as the main positive outcomes of such interaction, there are other vital areas of business that could also benefit, such as accessing new ideas and improving customer relationships, regulatory compliance, market entry strategies and recruitment. However, a lack of senior-level oversight means that many companies may be missing potential commercial benefits, especially as online groups increasingly hold sway over the way a company is perceived.

"Executives may need a leap of faith to join up with their critics", says report editor Paul Lewis, "but if terms and conditions are worked out early on and parties communicate often and in good faith, then business can re-affirm its role as one of the great agents of social and economic improvement."

Other key findings of the report include the following:

• Risk will remain inherent in new stakeholder relationships. Some 43%, the largest group of our survey respondents, see reputation damage as their main risk in dealing with online communities, and 38% say the same in regard to NGOs and civic groups. Therefore, companies must learn how to tread a line between partnership and confrontation and continuously manage the risk of reputation damage or loss of intellectual property.
• Firms will have to relinquish some control of information. One of the toughest challenges for companies in the Internet era is how to engage in the free flow of online debate while ensuring that confidential or inaccurate information is not released. "Everything will get out there in the end", warns one expert interviewed for the report. But learning to manage the information flow will be vital given that the largest group of survey respondents (42%) agree that online social networks are becoming the most effective means of communicating with new stakeholder groups.
• Intellectual property issues will remain vexing. A similar dilemma exists over how far to protect intellectual property, especially when new ideas derive directly from the collaboration with new stakeholders. While companies want exclusive benefit from innovations, the aim of their partners is often to publicise these as much as possible without concern for the business impact.

Dangerous liaisons: How businesses are learning to work with their new stakeholders
is available free of charge at: www.eiu.com/sponsor/Verizon/New_stakeholders

Notes for editors
Dangerous Liaisons: How businesses are learning to work with their new stakeholders is an Economist Intelligence Unit briefing paper sponsored by Verizon. The research drew on two main initiatives. We conducted a global online survey in March-April 2010, in which 660 executives took part. To supplement the survey results, we also conducted in-depth interviews with 17 senior executives and independent experts knowledgeable in the field of stakeholder management.

About the Economist Intelligence Unit
The Economist Intelligence Unit is the business information arm of The Economist Group, publisher of The Economist. Through our global network of over 650 analysts, we continuously assess and forecast political, economic and business conditions in 200 countries. As the world's leading provider of country intelligence, we help executives make better business decisions by providing timely, reliable and impartial analysis on worldwide market trends and business strategies. Follow us on www.twitter.com/theeiu

About Verizon Business
Verizon Business, a unit of Verizon Communications (NYSE, NASDAQ: VZ), is a global leader in communications and IT solutions. We combine professional expertise with one of the world’s most connected IP networks to deliver award-winning communications, IT, information security and network solutions. We securely connect today’s extended enterprises of widespread and mobile customers, partners, suppliers and employees – enabling them to increase productivity and efficiency and help preserve the environment. Many of the world’s largest businesses and governments – including 96 percent of the Fortune 1000 and thousands of government agencies and educational institutions – rely on our professional and managed services and network technologies to accelerate their business. Find out more at www.verizonbusiness.com.