Stakeholder Management in Charity Organizations

CHAPTER 1 INTRODUCTION

Keeping the stakeholders satisfied is one of the key tasks for any organisation, be it a profit-oriented business or a not for profit organisation. If the stakeholders are not managed and satisfied effectively, then it can have a detrimental impact on the operations of the firm and could even jeopardise its very existence (Haigh & Brubaker, 2013). However, charity organisations are very different from those of the normal ‘for-profit’ enterprises. Such organisations do not have any shareholders, which means that owners of such organisations are not associated with management related roles, responsibilities and processes. However, these organisations need to focus on satisfying their stakeholders to the greatest extent. This is mainly due to the reason that if they are not satisfied, then it can be an indication of the bad performance of the company (Beringer & Jonas, 2013). For those studying these dynamics, seeking management dissertation help can provide deeper insights and support in analysing stakeholder relationships effectively. For those studying these dynamics, seeking management dissertation help can provide deeper insights and support in analysing stakeholder relationships effectively.

In charity organisations, there are minimal chances of agency-principal conflicts, because owners of the charity organisations are not associated with the management and day-to-day activities of such organisations (Woo & Uysal, 2018). However, there are chances that when the stakeholders are expanded, some issues might arise, but they would outside of the realm of agency-principal relations.

The focus of this study is on studying the impact of expanding the involvement of stakeholders in the operations of charity organisations. The researcher has performed this investigation from the lens of determining whether the agency-principal relations lens. The main reason for conducting this study was the fact that the UK has the highest number of charity organisations in the world and therefore it is imperative to analyse the impacts of the agency-principal relations in expanding the involvement of stakeholders in charity organisations.

Aim and Objectives

The aim and objective of this study are “To Examine the Effects of Expanding Stakeholder Involvement in Charity Organisations with Reference to a Principal-Agent Relationship”.

Research Questions

To achieve aim and objective, answers to the following questions had to be determined first:

Who are the agents and the principals in Non-Profit organizations?

How do the activities of the principals affect the activities of the agents in Non-Profit Organizations?

How do the agency theory, stewardship theory and stakeholder theory influence the activities of Non-profit Organizations?

Rationale of the study

One of the key characteristics of charity organisations is the separation of ownership and control. The owner(s) are not involved in day-to-management of these organisations. There are several stakeholders of charity organisations, and it is extremely important for such enterprises that they keep their stakeholders satisfied. If the level of satisfaction is not high, i.e. if the charity organisation does not manage its stakeholders effectively, then it can have a negative impact on the overall image of the organisation and also jeopardise its existence in the market.

There is no specific framework that can be used for analysing such relationships (Park & Chidlow, 2014). Moreover, it is a lot harder for anyone to identify the agent and the principal in charity organisations. In these enterprises, the owners are not involved in active day-to-day management processes. Stakeholders of the charity and not-for-organisations operate in a very fixed manner, i.e. they have certain tasks and activities that they perform and are not associated in any other part of operations of such organisations. Although stakeholders for charity organisations have been studied in several past investigations, however, there is a lack of studies that have focused on the agency-principal relations in the context of the charity organisations. This study also examines the principal-agency theory and how the combination of agency theory, stakeholder theory and stewardship theories help in governance and management of these organisations.

Introduction

In any research investigation, the role of the literature review is crucial. It helps in developing a sound theoretical understanding of the subject matter and also aids in the process of getting clarity about the research topic. A well-developed literature review can add more value to the investigation and make it's more appealing and interesting for the readers. In the following paragraphs, different aspects and topics related to the current research topic have been critically reviewed and analysed.

Stakeholders are defined as any individual or groups of individuals who are directly affected by the operations of an organisation. It is highly imperative for an organisation, regardless of the industry of its operations, that it keeps its stakeholders happy and satisfied. Harrison and Wicks (2013) stated that it could be the differentiating factor in the success and failure of an organisation.

The stakeholder theory states that relations of an enterprise are with several individuals and entities such as the customers, suppliers, the community, competitors, government and many more. They are directly affected by the operations and decisions of the company. According to Bridoux and Stoelhorst (2014), if the stakeholders are not satisfied, then it can be detrimental to the firm and can have a significant negative impact on its operations. Freeman (2015) argues that a company can be successful only when its stakeholders are satisfied to the greatest possible extent. This process is extremely crucial to the overall success of the firm and therefore, can be the differentiating factor in the ability of an organisation to attain success and thereby sustain for long-term in the market.

Jones and Wicks (2017) argue that focus on satisfying the stakeholders helps in increasing investments for the charity organisations and therefore, also aids in enhancing the overall image and performance of the entity. The stakeholder theory also highlighted that there are various ethical benefits as well that a charity organisation can gain. By using the stakeholder theory to its fullest extent, overall image and performance of the company can also be enhanced greatly, which then can be the key to its long-term sustainability in the market.

Agency theory

Van and Caers (2012) defined agency theory as a principle which helps in explaining and resolving different issues that may arise between principals, i.e. owner(s) of the business and their agents. According to Wiseman and Cuevas‐Rodríguez (2012), the role of agency theory in the operations of charity and not-for-profit organisations is critical. It helps in determining the roles of different individual actors who could have an influence over the firm’s operations and therefore, can be the differentiating factor in success or failure of the organisation. Based on the agency theory identifying and fulfilling demands of different agents and also maintaining healthy and positive relations with the principals is crucial.

In view of Hull and Dawar (2014), maintaining healthy relations between principals and agency or the agents is critical to the success of an organisation. The author further stated that to make such relations more effective and healthier; two-way communication is of great essence. If such communication is not maintained appropriately, then it can have a detrimental impact on the company and can also jeopardise its very existence.

Stewardship theory

This theory is defined as the framework which states there is an intrinsic motivation for the people to work for other or for firms where they have been assigned different tasks, roles and responsibilities for which they have been trusted. Segal and Lehrer (2012) argue that people have collective mindsets and thus have pro-organisational thinking. This means people tend to work well in team-based situations and have a tendency to work so that the goals and targets of the team can be achieved to the greatest possible extent. Thus, the stewardship theory provides information on the various traits and characteristics that generate and encourage managerial behaviour and attitude among people.

Welsh and Memili (2013) used this theory from the viewpoint of a charity or not-for-profit organisation. Their results showed that internal stakeholders tend to develop an attitude wherein they focus on ensuring the attainment of the goals and targets that could provide significant benefits to the community. Schillemans (2013) further considered the larger community to be a team, of which the organisations are a part. Thus, through the stewardship theory, Glinkowska and Kaczmarek (2015) presented a detailed analysis and description of operations and functioning of different types of organisations and entities.

Introduction

This chapter presents information regarding the different tools and methods that have been used in conducting the investigation. Developing the research methodology section is important because it helps the researcher in controlling the pace of the study (Mackey & Gass, 2015). Through the research methodology section, the researcher highlights the various methods and tools that have been used to conduct this study; reading which the readers get a better understanding of the research process. Many future scholars can also use this section to identify a gap between the topic and use it as a base for their studies.

Research Philosophy

Research philosophy is the section of a research investigation which is associated with the source, nature and development of knowledge. This means research philosophy is involved with the ways the data is collected, used and analysed during the study (Kumar, 2019). By defining the philosophy, the researcher can determine ways in which the data can be used effectively. There are two main types of philosophies – interpretivism and positivism. In the current study, the researcher has used interpretivism philosophy. The main reason for selecting this philosophy was that the role of the researcher is not limited to just collecting and analysing the data; instead, researcher is also involved in its interpretation.

Research Approach

It consists of different stages and steps that need to be performed to conduct the study. It is important for the researcher to determine the stages that need to be carried out to perform the investigation, as they enable the researcher in identifying the various aspects which need to be given thorough attention. There are two main types of research approaches – deductive and inductive (Flick, 2015). In the current study, the researcher has used the inductive approach. This approach was selected mainly due to the reason that it starts with a detailed observation of the research phenomenon and then moves to a general topic, i.e. generalisation of the ideas. Through this research approach, the researcher was able to perform an in-depth analysis of the topic and also present a considerable amount of information and understanding of the phenomenon.

Inductive Research Approach

Data Collection

As the name suggests, this aspect is associated with the way in which data is collected from different sources. Identifying these sources and the tools for data collection can be vital for any research investigation. There are two main sources from where data related to the research topic can be collected – primary and secondary (Tuohy & Cooney, 2013). The current investigation entails using secondary sources for collecting the data. Herein the researcher relied on accessing and reading through peer-reviewed articles and online articles as well as websites related to the research topic. This source was selected for the investigation mainly due to the reason that there is an abundance of information available on this topic already. Moreover, using the secondary sources enabled the researcher to perform an extensive analysis of the topic. If primary data would have been used in the investigation, then there could have been chances that a detailed analysis of the topic might not have been carried out.

Data Analysis

This section is concerned with analysing the data collected from the sources identified in the previous section. There are two methods of data analysis – qualitative and quantitative (Jamshed, 2014). In this study, the researcher has used a qualitative approach. This viewpoint for data analysis was selected so as to enable the researcher to perform an intensive analysis of the topic. The abundance of information on the topic was also a key driving factor behind the selection of this method of data analysis. Herein the researcher used a thematic approach. Under this approach, the researcher developed different themes, and on that basis, the data was analysed and evaluated.

Ethical Considerations

Ethics is a very important part of any investigation (Mackey & Gass, 2015). In the current study, the researcher has paid attention to this aspect by ensuring that no content from any of the articles reviewed is used ‘as it is’ to avoid plagiarism. This was an important ethical consideration for the study. Apart from this, the researcher also focused on giving credit to the authors from where the data and information were used in the current study.

The role of stakeholders for any organisation is imperative. One of the critical objectives for an enterprise regardless of the market that it might be operating in is to keep its stakeholders happy and satisfied. In the context of charity organisations, the stakeholders are the community, the society, government, donors (corporate and individual donors). The primary purpose of this study was to explore and examine the effects of expanding stakeholders’ involvement in UK based charity organisations. Herein the researcher collected secondary data. In the following paragraphs, an assessment of this data is presented through a thematic analysis technique.

Stakeholder relationships

For charity organisations managing relations with different stakeholders is an essential aspect of its operations. However, managing healthy and effective relations with the stakeholders is not an easy task to perform, as there are several aspects which have to be kept in mind by the authorities. A charity organisation, by focusing on building healthy and strong relations with the stakeholders, will have higher chances of attaining success and thereby sustaining in the market.

Stakeholder management is the key to charitable organisations. According to Zainon & Atan (2012), charities need to focus on building healthy and dynamic relations with the stakeholders. The findings of Connolly & Hyndman (2013) further support these results. Herein the author stated that healthy and strong relations with the stakeholders could enable the charitable organisations to determine their needs and demands. Based on such information, management of such organisations can thus focus on making appropriate decisions, with which overall efficiency and effectiveness of the charitable organisation can be enhanced.

For developing and maintaining such relations, the role of two-way communication is the key. Herein the authorities need to use different forms and mediums to interact with different stakeholders. Use of proper means and channels for communication will encourage the stakeholders to form a dialogue with the charitable organisation. This way, the organisation can identify trends in the target market and then can use this information to develop its strategies to fulfil demands of such stakeholders in a better and effective manner. This sharing of quality information, according to many of the past studies analysed in the current investigation, showed that communication is one of the most effective ways through which better relations with the stakeholders can be developed. The charity organisations have to cater to demands of various types of stakeholders, both internal and external, although the charitable organisations are more oriented to fulfilling needs and requirements of the external stakeholders. However, these enterprises pay attention to the management and leadership styles, so as to ensure that the stakeholders are satisfied to the greatest possible extent.

Principal-Agent Relationship

According to Wellens & Jegers (2014), operations of the charitable organisations are governed and managed through various theories and models. These guide the management in discharging their roles and responsibilities in the most effective and efficient manner possible. One of the key theories in this regard is the principal-agent relationship theory. The theory states that since there is no principal owner(s) of the charitable organisations, generally agents are hired who manage routine operations and activities of the entity. This is aptly described as the principal-agent relationship. Cantrell & Kyriazis (2015) stated in their study that this theory, to a great extent, explains operations of charitable organisations.

Dhanani (2012), in their study, described the principal-agent theory as a tool through which the relationship between accountability and responsibility can be developed. As per the theory, attention should be given to ensuring that the agents are accountable for the tasks that they need to perform and also the impact that it can have on the organisation as well as its sustainability.

During the current study, it was observed that the principal-agent relationship could, to a great extent enable the charitable organisations to build and improve their relations with different stakeholders. It enables them to determine the needs and requirements of the stakeholders and based on that information; appropriate decisions can be made. According to Stuart (2016), this is mainly due to the reason that the 'agent' can act on behalf of the principal(s). Since he will be a professional individual with relevant experience and expertise, he can serve the stakeholders in a better and more effective manner, ensuring attainment of goals and objectives of the charitable organisation. The agent uses different professional mechanisms that would help him/her to communicate effectively with the stakeholders and also obtain relevant information about their needs, demands and requirements.

Dilution of Management’s Responsibilities

In view of Brown & Forster (2013), when the involvement of stakeholders in charitable organisation increases, it tends to dilute and reduce the role and responsibilities of management of the concerned charitable organisation. This happens because different stakeholders start to show an increasing amount of interest in operations of the charity, due to which role and responsibilities of the management starts reducing significantly. Eventually, such situations also start to inhibit the kind of impact or influence that the management can have on operations of the charitable organisation. During the present investigation, it was further observed that several past studies have highlighted that involvement of stakeholders in charitable organisations should be increased because this way 'power balance' within the entity can be developed and maintained. However, such increment in the involvement of stakeholders should be done at a languid pace and in a minimal manner. This is mainly because of the reason that it would reduce the overall ‘grip’ that the management and authorities might have developed over a specified period.

Yasmin & Haniffa (2014) presented a different picture of this aspect. This study suggested that increased involvement of stakeholders in charity organisations can help in enhancing the overall quality of operations of the entity because it would have to pay more attention towards ensuring that the management effectively performs its duties and is also focused on satisfying needs and demands of the stakeholders. Apart from creating a power balance, increasing role of stakeholders helps in improving the accountability of the management as well. On this basis, it may be said that increasing involvement of the stakeholders does not result in diluting role and responsibilities of the management. The study of Good (2015) suggests that if anything, it increases the role of the management, as in such situations, they have to pay even more attention to managing functions of the charity organisation.

Stakeholder Engagement

Apart from just managing the stakeholders, charity organisations are also required to ensure that the stakeholders are engaged effectively. This way, the charity can function to the fullest of its capacity and thereby achieve its goals and objectives. Beringer & Jonas (2013) stated in their study that the role of stakeholder engagement is critical for the success of a charity. The main reason behind this is the fact that happy and satisfied stakeholders can provide a significant amount of information to the management of the charity organisations. Based on this information, regarding their needs, demands and expectations of the stakeholders and also determine ways through which they can be engaged effectively.

There are several methods and approaches that can be used by charity organisations to engage their stakeholders. The study of Hull & Dawar (2014) advocates selection of these methods of engagement in a proper manner so that the stakeholders can be engaged with effectively. According to Segal & Lehrer (2012), if the involvement of the stakeholders is increased in the functioning of the charity organisations, then it can enhance their engagement levels with the enterprise. Engaged stakeholders, mostly can be the differentiating factor in success or failure of a charity. This is mainly due to the reason that higher engagement levels indicate that needs, demands and expectations of the stakeholders have been fulfilled to a great extent and also that they are happy and satisfied with their engagement with the concerned organisation.

During the current study, it was observed that by enhancing engagement with the stakeholders, charity organisation could improve its functioning. This is mainly due to the reason that it enhances the overall image of the enterprise and therefore provides critical information that can be used by the charity to perform its functions effectively. Thus the study by Glinkowska & Kaczmarek (2015) rightly highlights enhancing stakeholder engagement can provide charity organisations with critical information about their target markets. Moreover, such information can also be used by the management of the charity enterprise and use it as a tool to enhance its overall performance and therefore, sustainability in the market.

Accurate Representation of Stakeholders

Wellens & Jegers (2014) stated in their study that if the involvement of stakeholders is to be enhanced in operations of a charity organisation, then attention should be paid to ensuring that they are properly represented. Accurate representation is essential to ensure adequate participation of stakeholders in the charity organisation. According to Schillemans (2013), if the stakeholders are poorly or inaccurately represented, then it can have an adverse influence on overall operations of the charity organisation and could even jeopardise its overall operations.

Since a charity organisation deals with several stakeholders at all times, there must be a sufficient number of different types of stakeholders who are getting involved in operations of the charity organisation. Yasmin & Haniffa (2014) stated that if the stakeholders are accurately represented, then it would have a positive influence on the operations and functioning of the charity organisation. This is mainly due to the reason that such a scenario will enable the charity to obtain a significant amount of information about their target market, i.e. the individuals and groups that they want to cater to.

Inaccurate representation of stakeholders can result in mismanagement. However, according to Harrison & Wicks (2013), if there is more involvement of stakeholders in the charity organisation, then it can enhance the overall quality of functioning of the charity. Thus Freeman (2015) rightly stated that increasing involvement of stakeholders can provide access to more information to the charity organisations, that they can use to get a better understanding of the market. Based on such information, the management can take relevant decisions. The increasing involvement of stakeholders in the charity organisations also help in enabling such enterprises to focus on enhancing their performance and thus, sustainability in the market.

Stewardship Theory

The stewardship theory states that when the managers are left alone, i.e. without any supervision, then as well they will perform their tasks and duties effectively. According to Bridoux & Stoelhorst (2014), stewardship theory plays a crucial role in the functioning of charity organisations. Through this theory, the management can identify and clearly understand the roles of every person involved with the process of managing the charity organisation and thus ensure that its goals and targets are fulfilled to the greatest possible extent. The stewardship theory provides an adequate explanation about the impact of increasing involvement of stakeholders in the functioning of charity organisations.

While analysing the past studies for the current study, it was observed that a vast majority of the past authors had accorded the stewardship theory as an effective way of understanding the role and importance of stakeholders. According to Cantrell & Kyriazis (2015), stakeholders of charity organisations want to enhance their involvement in operations because they are intrinsically motivated to work for the betterment of others. Due to this reason, they try to get involved in different aspects of the functioning of charity organisations. This way, they also try to 'give something back to the community'.

As per the stewardship, theory increasing the involvement of stakeholders in charity organisations is an effective way of understanding their importance for charity organisations. Based on the findings obtained by Park & Chidlow (2014), it can be said that if the involvement of stakeholders increases in operations of the charity organisations, then it shows that the entity is working well and more stakeholders want to get involved with it so that they too can work for the betterment of the society.

The main purpose of conducting this investigation was to analyse the effects of expanding the involvement of stakeholders in charity organisations. This study was performed in relation to the Principal-Agent relationship and the way it influences the operations of the charity organisations. It is imperative for the charity organisations to keep their stakeholders happy and satisfied, as it can be the differentiating factor in success or failure of such organisations. If the level of satisfaction among the stakeholders is high, then the performance of the organisation will also be optimal. In a way, this aspect can be detrimental to operations as well as the existence of such enterprises. In this study, the researcher used secondary sources for collecting all the relevant and necessary information about the research topic.

During the study, it was observed that developing and maintaining relations with the stakeholders is one of the key activities for the functioning of many non-profit organisations. By performing such activities, charity organisations can build better relations with the stakeholders. This way, the overall functioning and performance of the charity firm can be enhanced, and its operations can be made more sustainable and effective for sustaining in the market. Based on the study, it can be concluded that building and maintain such relations is a challenging activity and therefore can have a detrimental impact on the way such organisations are managed as well as their overall performance. Herein the role of effective communication is the key. If appropriate channels and methods of communication are used, then it can be the differentiating factor in the overall functioning of the charity organisation, as well as the way it builds and maintains relations with the stakeholders.

While analysing several past studies used in the current investigation, it was noted that a vast majority of the researchers have emphasised on two-way communication. Use of appropriate method and channel of communication, the agent and principal-agent relationship is maintained effectively. For charity organisations, principals are the different types of stakeholders such as the community, government and many more; while agents are the individuals and groups of people who work towards managing the charity and perform various activities related to it.

During the study, it was noted that the principal-agent relationship has a significant impact on charity organisations. If this relationship is maintained to the greatest possible levels, then it can enable the firm to perform to the best of its skills and capabilities, because of the near-perfect coordination between the principal(s) and the agents. Several past studies had mentioned that by properly maintaining this relationship, the charity organisation could fulfil its targets and goals and thereby enhance sustainability in the market. In addition to this, following such relations can also enable the charity organisation to exceed its targets and key objectives. Principals perform activities or discharge their duties as per directives provided by or requirements of the stakeholders. Therefore, the activities of principals have a major influence on the functioning and performance of non-profit or charitable organisations.

During the study, it was further observed that increasing the involvement of stakeholders in charitable organisations can dilute the role, responsibilities and powers of the agents or the management team. In such situations, this is one of the main areas of concerns for the charitable organisations and their overall functioning as well. During the study, it was further noted that the stewardship theory has a significant impact on the functioning and operations of the charitable organisations. As per the theory, the managers and management team, i.e. the agent(s) are able to work optimally, thereby working towards the attainment of charitable organisations’ goals and objectives.

Based on the above study, it can be said that the functioning of charity organisations is influenced by a large variety of factors and forces. While analysing the data, it was observed that with the increasing involvement of the stakeholders, the responsibilities and power of the agents or the management team(s) gets diluted by a great extent. This is a key issue, and if left unchecked, then it can have an adverse impact on overall functioning and performance of the charity organisation. In order to ensure that such an event or situation never occurs, fixing roles and responsibilities of the agents can be suggested. Through such an approach, it would help in ensuring power and responsibilities are not diluted. Herein the primary stakeholders, such as the government, investors and others would need to identify and define exact parameters based on which performance of the management team would be assessed. By performing this study, it was observed that dilution of roles and responsibilities of the management is a widespread belief among the past researchers.

Although fixing the roles and responsibilities in itself is an effective way that can help in tackling the situation. However, to further effectively manage the situation, it can be recommended that the stakeholders should not be involved in the decision-making process. This will have the most positive impact in ensuring that roles and responsibilities are limited to the managers and management team(s) only. Through this approach, even though stakeholders will be involved in the functioning and operations of the charity organisation, but they would not be associated with the decision-making process. This will help in maintaining the roles and responsibilities of the managers and thereby hep the charity organisation to perform to the best of its skills and abilities.

Apart from this, it can further be recommended that the communication process should be given more emphasis. During the study, it was noted that effective and two-way communication is the key for charity organisations to be able to function appropriately and thereby ensure that goals and targets of the charity firm are fulfilled to the greatest possible extent. There are a number of channels and methods of communication that can be used by the authorities; however, they should be very careful in selecting and implementing a method of communication. Any mistake here can have a detrimental impact on the functioning of the charity organisation, as well as its ability to achieve its goals and objectives.

In conducting this project, one of my key objectives was to assess and develop my critical thinking and reasoning skills. These are considered to be very important skills for a researcher. In this regard, through this research project, I wanted to develop and further improve my critical thinking and research skills. From the current project, I have also learned that such skills are useful not only in academic contexts but are also considered to be very important employability skills as well. There are a number of aspects that I have learned through this project. The knowledge and understanding that I have developed from undertaking this project will certainly provide me with an opportunity to learn more about the research topic, and also comprehend the role of stakeholders as well as its impact on business organisations.

The knowledge that I have learned in this project can also be applied in future job scenarios as well. For instance, I now have a deeper understanding of stakeholders and the way(s) in which they influence overall operations of a business enterprise. By using this knowledge in my future job scenarios, I can help businesses to improve their performances and develop better relations with the stakeholders. Herein I can also learn about the various ways in which the stakeholders can be satisfied, and their varied needs and demands can be fulfilled to the greatest possible extent. One of the key learning that I have gained by undertaking this project is the fact that the use of various methods, systems and channels of communications can be the key. They can have a significant impact on the way firms function and strive to achieve their goals and objectives. Apart from this, I believe my overall employability skills have improved significantly by undertaking this project. My team working skills have improved significantly during the course of this research. Although this was an individual project, during its course, sometimes, I used to feel that if I had help and assistance from others. This made me realise the overall importance of team working, and now I believe that I am a much better team player with an overall focus on ensuring that goals and objectives of the team are achieved, as they are of central importance. Since a charity organisation deals with several stakeholders at all times, there must be a sufficient number of different types of stakeholders who are getting involved in operations of the charity organisation. If the stakeholders are accurately represented, then it would have a positive influence on the operations and functioning of the charity organisation.

This is mainly due to the reason that such a scenario will enable the charity to obtain a significant amount of information about their target market, i.e. the individuals and groups that they want to cater to. Inaccurate representation of stakeholders can result in mismanagement. The increasing involvement of stakeholders can provide access to more information to the charity organisations, that they can use to get a better understanding of the market. Based on such information, the management can take relevant decisions. The increasing involvement of stakeholders in the charity organisations also help in enabling such enterprises to focus on enhancing their performance and thus, sustainability in the market. The role of agency theory in the operations of charity and not-for-profit organisations is critical.

It helps in determining the roles of different individual actors who could have an influence over the firm’s operations and therefore, can be the differentiating factor in success or failure of the organisation. Based on the agency theory identifying and fulfilling demands of different agents and also maintaining healthy and positive relations with the principals is crucial. People have collective mindsets and thus have pro-organisational thinking. This means people tend to work well in team-based situations and have a tendency to work so that the goals and targets of the team can be achieved to the greatest possible extent. Thus, the stewardship theory provides information on the various traits and characteristics that generate and encourage managerial behaviour and attitude among people. For charity organisations managing relations with different stakeholders is an essential aspect of its operations. However, managing healthy and effective relations with the stakeholders is not an easy task to perform, as there are several aspects which have to be kept in mind by the authorities.

A charity organisation, by focusing on building healthy and strong relations with the stakeholders, will have higher chances of attaining success and thereby sustaining in the market. Stakeholder management is the key to charitable organisations. For developing and maintaining such relations, the role of two-way communication is the key. Herein the authorities need to use different forms and mediums to interact with different stakeholders. Use of proper means and channels for communication will encourage the stakeholders to form a dialogue with the charitable organisation.

This way, the organisation can identify trends in the target market and then can use this information to develop its strategies to fulfil demands of such stakeholders in a better and effective manner. This sharing of quality information, according to many of the past studies analysed in the current investigation, showed that communication is one of the most effective ways through which better relations with the stakeholders can be developed. The charity organisations have to cater to demands of various types of stakeholders, both internal and external, although the charitable organisations are more oriented to fulfilling needs and requirements of the external stakeholders. However, these enterprises pay attention to the management and leadership styles, so as to ensure that the stakeholders are satisfied to the greatest possible extent.

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