Owner's Salience in Unlisted Businesses

Abstract: Shareholder activism in sustainability is increasingly being used to influence companies and their managers. Previous studies have focused on listed firms, but little theory has concentrated on unlisted assets. By conducting a qualitative study with stakeholder salience and its three areas as the underlying theoretical framework (Mitchell, Agle & Wood, 1997), this thesis suggests that several different prerequisites in unlisted assets affect how owners work to influence the companies they own. The findings suggest that power is used to a minor degree, as the focus mainly is on private engagement, and many power sources are seen to undermine the relationship. As for legitimacy, owners work to increase their credibility in the market and focus on alignment of thoughts and incentives, even before an investment is made. The importance of this work and of legitimacy is enhanced by the target firm being able to choose its investors. Owners therefore position themselves to increase management's commitment by providing strong business cases for engaging in sustainability, but sometimes fail to provide guidance between different sustainability issues, partly reducing legitimacy. As the focus mainly is on private engagement, owners struggle to make the issues time-sensitive. Urgency is, however, increased through criticality, as owners work persistently to showcase the importance of sustainability, also through the allocation of resources. This thesis extends the application of Mitchell, Agle & Wood (1997) stakeholder salience to unlisted assets and suggests that the dynamics of the factors differ due to some of the unique characteristics of unlisted firms. This thesis increases the theoretical understanding of owners' work to enhance salience in unlisted companies within sustainability and provides valuable insights into how practitioners could work to enhance their salience.