Creating Common Ground - A Model for Dialogue between Shareholders and Companies

How can shareholders and companies overcome divergent views and work together for mutual benefit? This research identifies three cycles of interaction between both parties that can engender a cooperative and fruitful relationship.

Research has shown that dialogue and collaboration between corporations and stakeholders can be advantageous to both parties. Issues of mutual interest can be identified and discussed, and the opportunity for flexibility and understanding in working together can be developed. Nevertheless, the studies conducted till now have not provided a clear account of the mechanisms by which such dialogue successfully unfolds.

The paper Creating Common Ground: A Communicative Action Model of Dialogue in Shareholder Engagement asks the question: How can corporations and stakeholders set aside confrontational positions and achieve a more collaborative engagement?

It offers an empirical exploration of the conditions under which productive engagement can occur.

It explores the role of dialogue in shareholder engagement with a comparative longitudinal analysis of two engagements between a leading investor coalition, the Interfaith Centre for Corporate Responsibility (ICCR – a pioneer in the practice of shareholder engagement), and two major U.S. auto manufacturers, Ford Motor Company and General Motors (GM). The dialogue took place between 1997 and 2009. The focus of the engagements was climate change. Interviews and archival sources such as resolution texts, internal documents, records, and media reports from this period were studied.

The research found that communicative action emerges from strategic action as a result of three cycles of interaction between shareholders and corporate managers.

  • The first cycle involves reinterpreting the relationship as a dialogue, whereby parties publicly commit to continuous engagement and exhibit openness to listening to the other party, leading to an increase in mutual trust.

  • The second cycle consists of framing activity, which involves finding points of agreement despite having different frames of the same issue (in this case, climate change), culminating in a common ground. The exchange is not purely discursive, as it also emerges from the concrete actions of the two parties and their mutual interpretations of those actions.

  • If parties can find common ground, the final cycle of deliberation can commence, in which the parties exchange arguments and provide alternative solutions to address an issue, ultimately engaging in joint experiments that produce social learning. Effective action might result from this deliberative process.

This study contributes to the literature on shareholder engagement by integrating communicative and strategic action, thereby offering a new interpretation of how reputational threat and dialogue come together to produce common ground between activists and companies.

The accepted version of the paper Creating Common Ground: A Communicative Action Model of Dialogue in Shareholder Engagement is available for download at City Research Online.