Stakeholder Engagement and Start-up Company Growth : A Qualitative Study of Swedish Start-up Companies

Abstract: In today’s dynamic business environment, stakeholders are seen as essential and companies are expected to engage stakeholders in mutually productive areas such as innovation and product development, market and sales development, sustainability, etc. However, prior literature of stakeholder engagement has mainly focused on large companies and the benefits of stakeholder engagement are usually narrowed to one specific area of growth. Therefore, this thesis focuses on the micro level of start-up companies and examines benefits of stakeholder engagement in terms of different aspects of company growth (namely financial performance, product development and innovation, marketing/sales development, reputation, sustainability and CSR, knowledge learning and information.).   Literature review of concepts of stakeholder engagement, start-ups and company growth has led to the theoretical framework of the thesis. It serves as guidance for the overall methodology. In order to meet the research objectives, we conduct a qualitative exploratory study on eight Swedish start-ups from different industries and with different characteristics. The data collection technique we use is semi-structured interviews with the eight owners (CEOs) of the start-ups. Through the interviews we examined the stakeholders that start-up companies are engaging, the benefits of engaging different stakeholders, the costs which may prevent them from engagement and the relationships between stakeholder engagement and their company growth.   The thesis has found that start-ups do engage different stakeholders for various growth aspects, and identified major focus areas and main stakeholders that start-ups attach more importance to than others. Customers and suppliers are frequently mentioned for driving product, market and sales development, which leads to direct financial growth. Owner-managers, employees and investors are in the second group of growth drivers, while the third group includes personal network, government organizations and communities. Meanwhile, the thesis has also categorized the benefits of stakeholder engagement into two groups according to the relative importance found out. Market and sales development, innovation and product development and financial performance are the primary, more frequently mentioned benefits than sustainability/CSR, Knowledge Learning/Information and reputation. Thus, the thesis has extended the theoretical framework by fitting it to the start-up context. The thesis has contributed to prior literature by reinforcing the prior research on stakeholder engagement and also filling the research gap in micro start-up company context. The thesis can give practical implications to start-up companies in terms of how to engagement stakeholders to drive company growth. We could conclude that start-up company context carries certain difference from large companies in stakeholder engagement, and start-ups should be encouraged to engage stakeholders more to drive company growth.