Stakeholder responses to government austerity: what happens when strong stakeholders fail to react?

Abstract

Using stakeholder theory and a historical case study, I examine how key stakeholders failed to challenge the Alberta provincial government’s fiscal reforms, leading to the emergence of an unlikely champion in the Calgary hospital laundry workers. Notwithstanding that several prominent and powerful professional groups had the opportunity to oppose the government’s reforms, these groups either acquiesced or sought compromise individually with the government. This case calls into question the professions’ ability to protect public institutions under their domain.

Points for practitioners

In terms of potential implications for public administrators, this case provides an example of professional failure to intercede in the public interest, despite having the power and legitimacy to act according to stakeholder theory. This raises questions as to the circumstances under which professional groups will exercise their advocacy role. Unaddressed are the conditions under which relatively powerless demanding stakeholders can acquire power and legitimacy. Accordingly, administrators ‘relying’ upon established stakeholders as barometers of public opinion may misread public sentiment.