Interdisciplinary Description of Complex Systems 11(2), 217-226, 2013

STAKEHOLDER ANALISYS OF
HIGHER EDUCATION INSTITUTIONS

Ivana Marić*

Department of Organization and Management, Faculty of Economics and Business

– University of Zagreb
Zagreb, Croatia
DOI: 10.7906/indecs.11.2.4 Received: 20 December 2012.
Regular article Accepted: 19 February 2013.

ABSTRACT

In recent years, knowledge, the human capital, and learning organizations have become the key
determinants of current global progress. Higher educational sector has been faced with globalization
and strong competition. Therefore, the need has arisen for professional management structures and
more entrepreneurial style of leadership. Organizations have been transformed to learning
organizations by the life long learning concept, while the knowledge management has become the
leading tool in building competitive advantages. High education organizations are being pushed
forward by competitiveness. That pressure requires continuous improvement emphasizing the need
for measuring outcomes and building excellence. The paradigm of stakeholder analysis, applied to
specific determinations of the system of higher education institutions, could be a good way for
comprehending and predicting interests, needs and requirements of all key players in the environment.
The purpose of this paper is to enhance the possibility of understanding the connection between
higher education institutions and its environment in context of stakeholder analysis. The paper uses
literature as a basis in identifying critical parameters for stakeholder analysis and its implementation
to higher education sector. The findings of the paper reveal that the concept of stakeholders is critical
and difficult to implement everywhere and to everything. There is a clear attempt of all organizations,
especially those that create and encourage knowledge, to understand the actions of all participants and
predictions of interests and requirements of the changing environment.

KEY WORDS
higher education institutions, stakeholder analysis, knowledge management

CLASSIFICATION
JEL: M00, M12

*Corresponding author, : imaric@efzg.hr; +385 1 238 3235;

*Faculty of Economics and Business Zagreb, Trg J.F. Kennedyja 6, HR – 10 000 Zagreb, Croatia
*
 I. Marić

INTRODUCTION
The last decades have been defined by significant social, economic, political and cultural
changes, while European higher education sector has been transforming, and above all those
important chages affect the conceptualisation and functioning of universities [1]. Modern
economy, organizations and workers are focused on and are determined by knowledge.
Because knowledge is a key resource and a basic asset in this day and age, our society is
being transformed by new skills, techniques and paradigms of knowledge, so new e-
generations need 21st century skills: critical thinking/ communications, collaboration and
creativity [2]. Our time has become known as the Knowledge Age, implying that we live in
knowledge economy rather different from the Industrial Age and we shifting to 21st century
thinking [3]. Knowledge Management (KM) is a new trend of management for modern global
organizations. KM involves cultivating a learning culture [4; p.63] and this concept of
developing new forms of organizational structures and knowledge workers including some
applications of the philosophy of KM, is widely applicable, particularly in the field of
education. Modern management is people-oriented emphasizing the importance of their role
(skills, knowledge and commitment) in modern organizations. The function of human
resources management becomes strategically important when providing organizational
purpose in the highly competitive environment [5]. In that context, the managing of high
education organizations means understanding the complexity of the environment, investing in
capable people, developing research capacity through concept of knowledge management and
increasing the competitive advantage from stakeholders perspective.
Purpose of this paper is to enhance the possibility of understanding the connection between
organization and environment in the context of stakeholders determination. The paper is
written mainly based on the literature review as a source for identification of critical
parameters for stakeholder analysis and its implementation to heigher education sector. The
results of the research demonstrate that the stakeholder analysis is a good starting point for
improvement of modern HEI management. The paper uses literature as a basis in identifying critical
parameters for stakeholder analysis and its implementation to higher education sector. The findings of the paper
reveal that the concept of stakeholders is critical and difficult to implement everywhere and to everything

TOWARD KNOWLEDGE SOCIETY

In view of the fact that the management is becoming increasingly aware of the role of
education and development, it is obvious that the importance and meaning of modern high
educational organizations are changing along with the importance of education in general [6].
Individuals, organizations, and entire economies are finding knowledge and investing in
education to be a unique opportunity for developing personal, organizational, economic
capabilities and potentials in achieving competitive advantage [7]. The process of
transformation of economy and society in the era of knowledge is inevitably tied to the entire
education system, especially to high education organizations. Consequently, a stakeholder
analysis could be one of the successful tools when planning and managing such type of
organizations in a highly changing environment. A dramatic shift of social, technological and
economic values arriving in 21st century is transforming organizations through long life
learning model [4]. Figure 1 shows that the levels of economy, organization and individuals
get the dimension of knowledge philosophy. These changes are also mirrored in the field of
education, and are especially true for high education organizations involving business
perspective of thinking and operating.
The role of knowledge and education in the knowledge society is not the same as it was some
time ago. It is dramatically changed, and it will continue to change in the years to come.

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Figure 1. Concept of life long learning and learning organization.

Education is a key factor of progress, and investments in education are crucial for
“knowledge economy” when referring to people and organizations, well-organized and
innovative education system ensures overall economic growth [8]. All developed economies
consider this learning potentials important for national development.
Education is a part of public sector. Its orientation is towards nonprofit goals, and its primary
focus is social in providing education for all citizens at certain levels. Education institutions
belong to nonprofit organizations, and are oriented towards society not market, being “servants
to citizens”. Finally, their results are social, unmeasurable and qualitative [9]. All this means
that the theory of nonprofit management is applicable to managing high education institutions.
Firstly, these organizations must be aware of the distinction between profit and nonprofit
sectors which is of particular importance when achieving the mission of managing nonprofit
organizations. That is a specific starting point for understanding the concept of managing
high educational organizations as specific nonprofit organizations described in Table 1.

THE ROLE OF HUMAN RESOURCES MANAGAMENT AT HEI

Human resource management (HRM) process involves the acquisition, retention and development
of human resources, its basic dimensions are: (i) recruitment/selection, (ii) performance
appraisal and (iii) training [10]. HRM is important for several reasons. First many studies
have concluded that people are the most significant source of competitive advantage, second
HRM is important part of organizational strategies and finally, the way organizations treat
people has been found to significantly affect organizational performance [11]. In the age of
human capital, human resource strategy means – a people centered approach which
emphasizes the need to develop to their fullest potential all present and future employees [10].
Table 1. Differences between profit and nonprofit concept [9].
Dimension Profit Nonprofit
General public good/service to the public
Starting point Profit
or/and civil society
Arena Market Society
Focus Consumer Individual/citizen
Concept Economic Social
Results Economic/measurable/ Quantitative Social/unmeasurable/qualitative

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 I. Marić

People management, performance measurement and funding as well as social responsibility

are some of the major problems common to all nonprofit organizations, including those in the
public sector. The organizations in the area of education are in particular need of a good
leadership, capable employees, good quality staff programs and work performance monitoring.
Globalization, demographic changes, IT revolution and Knowledge economy are drivers of
contemporary changes determining the new knowledge society while simultaneously
searching for new skills and knowledge [4].The organizations that recognize knowledge
workers as the most valuable resource and an important competitive advantage in the
knowledge economy have a chance to survive. The practice of human resources management
is about implementation of knowledge management respecting the knowledge workers.
Knowledge workers use and create new knowledge, and with their skills, abilities and ideas
they make significant contribution to sucess and development of a company [12].
Higher education institutions are undergoing a process of transformation [13]. Modern
European University faces new challenges in modifying its conduct and activites, questioning
the role of modern management and leaders, encouraging significant innovations and
developing investment in employees. It is necessary to provide quality concerns for students’
and stakeholders’ satisfaction and enable cooperation between Faculties and community
ensuring the social benefit.
The final results are learning outcomes – new values, customer satisfaction and rich and
balanced society [14]. Learning organizations emphasize the importance of human capital as
a part of the intellectual capital referring to skills, knowledge, abilities, organization
commitment and potentials for innovation, in other word, its creativity. Learning is key if
organizations are to survive, compete and manage their surroundings [15].
Human Resources Management is the central part in management process relating to
recruitment, training and development of people contributing to the development of
organizational strength. It is up to managers to find the best people, motivate them and let
them do the work in their own way. The management plays an important role in human
resources management. It is responsible for successful encouragement of people in developing
their potential and directing them to specific destinations, but also monitoring and rewarding
their work and providing a stimulating and healthy working environment [5]. Some of the
most important subfunctions of HRM, that are vital for organization, are shown in Figure 2 [4].
Good HRM practices refer to philosophy that shows the real interest in all the people within
an organization that treats its employees as the only living organizational element. Further,
there is a developed program of training, development and monitoring of people and good
reward programs in such organizations [16]. A successful organization has the management
dedicated to giving support to the people and the concept of knowledge management, the one
that develops and encourages the participation of employees [1]. If we apply the paradigm of
HRM to the Faculty we can see that it is possible to construct a model of learning
organization with respect to the principles of knowledge management, as shown in Table 2.

THE PERSPECTIVE OF STAKEHOLDERS ANALYSIS IN HEI

Universities everywhere are being forced to carefully reconsider their role in the society and to
evaluate the relationships with their various constitutions, stakeholder, communities. Modern
European University is faced with new challenges. Improving the quality of the European
society of knowledge generates certain expectations from European universities that need to
fulfill the three key dimensions of essential university mission [17]: (i) Teaching and
Education, (ii) Research and Innovation, and (iii) Knowledge transfer and community service.

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Figure 2. HRM activities 5.

Table 2. Implementation of HRM to a Faculty 5.
A successful organization The Faculty as the learning organization
The real interest for the people. Interest for employees (professors, assistants and other staff)
Employees are the only living People are the most important resource
organizational element, and the Bearers of knowledge – a true competitive advantage.
most valuable asset.
Good training, development, Enables development, international experience, education and
monitoring and the opportunity for development of evaluation and provides conditions for
advancement. promotion.
Good reward programmes. Provides a system of promotion and career development, and
allows the system criteria of excellence.
Being able to retain the best In the higher education system extracts and retains the best
employees. professionals.
Management is dedicated to Management recognizes people as true creators of knowledge,
giving support to the people. innovation and valuable organizational resources.
Management supports the philosophy of knowledge
management.
Develop and encourage the Supports participating leadership style and the concept of
participation of employees. knowledge management.
The essential purpose of University is teaching and education, but also research and
innovation. The third part of the mission covers the knowledge management, the cooperation
between sectors and questions the role and the position of knowledge and high education
organization in the contemporary, turbulent times. The HEI mission was expanded to strech
beyond teaching and reserch to include services to the community requiring partnerships be
established.
The stakeholder perspective is questioning organization in the light of its environment,
finding the best way in successfully managing opportunites in and out of organizations and
recognizing all the participants included in the process of organizational activities [18]. The
first step is trying to identify the key stakeholders, their goals and expectations. The second

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step is trying to fullfill their goals to their utmost satisfaction concurrently accomplishing the
organizational mission.
Stakeholders are any group or an individual who can affect or is affected by the achivement
of the organization objectives [7] any constituencies in the organization’s external
environment that are affected by the organisation’s decisions and actions [11]. The main
groups of stakeholders: are: customers, employees, local communities, suppliers and
distributors, shareholders [19]. Stakeholder analysis can be used to generate knowledge about
relevant actors so as to understand their behavior, intentions, interrelations, agendas, interests
and the influence or recources they have [20].
The stakeholder theory illustrated for the University analyzes twelve categories of
stakeholders and desribe them as constitutive groups, communities, stakeholders and clients,
as shown in Table 3.
Table 3 presents various groups of stakeholders applied to high education institutions, and
indicates a different pressure, influences reflected through actions, policies and the behaviour
of each groups. Applying stakeholder analysis to University of Zagreb could be the first step
in comprehension and conceptualization of stakeholder theory and its implementation on the
high education institutions. Table 4 presents’ primary and secondary stakeholders and
explains their outcomes. The basic groups that provide performance of the core mission are:
Government, Ministry of Science and Education, National Agency and Society. Other
groups: students, employees, competition and other faculties are forming specific relations,
have various demands, interests and build networks that need strong management and
interactions among all sectors. This stakeholder analysis is the result of theoretical reflections
and given the example of the one HEI.
Table 4 is a simplified framework for understanding stakeholder analysis applied to higher
education. It presents key stakeholders and their implications. The next step must be further
positioning of other relations that include groups’ interconnections.
It is necessary to develop this model reviewing the third mission of universities that refers to
engaging in interactions with industrial and regional partners, prevents mission overload and
Table 3. Stakeholder categories and constitutive groups [17].
Stakeholder category Constitutive groups, communities, stakeholders, clients, etc. Formatted: Space After: 0 pt
Government entities State & federal government; governing board, board of trustees, buffer Formatted: Space After: 0 pt
organisations;
sponsoring religious organizations
Administrattion President (vice chancellor); senior administrators Formatted: Space After: 0 pt
Employees Faculty; administrative staff; support staff Formatted: Space After: 0 pt
Clientele Students, parents, service partners, employees Formatted: Space After: 0 pt
Suppliers Secondary education providers; alumni; other colleges and universities; Formatted: Space After: 0 pt
food purveyors
Competitors Direct: private and public providers of post-secondary education Formatted: Space After: 0 pt
Potential: distance providers; new ventures.
Substitutes: employer-sponsored tranining programmes
Donors Individuals Formatted: Space After: 0 pt
Communities Neighbours; school systems, social services Formatted: Space After: 0 pt
Government regulators Ministry of education, buffer organizations; state and federal financial Formatted: Space After: 0 pt
agencies
Non-governmental Foundations; institutional and programmatic accrediting bodies; Formatted: Space After: 0 pt
regulators professional associations
Financial intermediaries Banks; fund managers; analysts Formatted: Space After: 0 pt

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Joint venture Alliances & consortia; corporate Formatted: Space After: 0 pt

Table 4. One example of stakeholder analysis of the HEI.

Identification of Formatted: Left, Space After: 0 pt
Primary Secondary Outcome
stakeholders/users Formatted Table
Government  The financial support of the national strategy Formatted: Left, Right: -0,19 cm,
Ministry of Science and  The financial support of the national strategy Space After: 0 pt
Education Formatted: Left, Space After: 0 pt
The Education and  Evaluation and monitoring of the Formatted: Space After: 0 pt
Teacher Training Agency criteria for excellence
Formatted: Centered, Space After: 0
Faculties  High level of knowledge is required pt
Students  Satisfaction with study conditions, Formatted: Space After: 0 pt
the level of required knowledge
Formatted: Space After: 0 pt
Employees  Satisfaction with working
conditions,commitment Formatted: Centered, Space After: 0
pt
Competitors  Knowledge transfer, collaboration
Formatted: Space After: 0 pt
Fair Competition
Society  A balanced society Formatted: Space After: 0 pt
Transfer of knowledge Formatted: Centered, Space After: 0
pt
questions the issues of governance, social responsibilities and research agenda along the lines Formatted: Space After: 0 pt
of the model of entrepreneurial dynamism of higher education institutions [17]. Formatted: Space After: 0 pt
Formatted: Centered, Space After: 0
DISCUSSION pt

The world is changing day by day, becoming smaller and more closely linked in many Formatted: Space After: 0 pt

different ways. The role of education is a transformation of society and technological trends Formatted: Space After: 0 pt
by redefinition of values and concept of knowledge. The education is becoming more Formatted: Centered, Space After: 0
pt
informal through modern technologies of the Internet and various social networks while Formatted: Space After: 0 pt
formal education system takes new forms and structures using and applying models from
Formatted: Space After: 0 pt
business sector. Knowledge management finds people the most valuable asset in
Formatted: Centered, Space After: 0
organization, and develops programmes for constant learning on individual, organizational pt
and global levels. The key part of every management process (applied to high education Formatted: Space After: 0 pt
organizations) is investing in people and providing successful HRM practice. Finally,
Formatted: Space After: 0 pt
managing organization in time of changes means being aware of the significance of setting
Formatted: Centered, Space After: 0
the mission, finding resources (people, money, knowledge) and finally meriting outcomes. pt
High education institutions are being dramatically transformed. They need to understand the Formatted: Space After: 0 pt
power of change and the aspiration toward concept of knowledge management. Stakeholder
Formatted: Space After: 0 pt
analysis helps to realize who the key stakeholders are and what they want. The second phase
Formatted: Centered, Space After: 0
is attempting to accomplish organizational goals and respect different stakeholders’ requests pt
providing organizational mission in the best possible way. Formatted: Space After: 0 pt

CONCLUSIONS
The paper shows the complexity of problems in managing higher educational organizations in
context of dynamics and its relation to the environment. Organizations in field of higher
education also need to build a quality management system that respects the philosophy of
Knowledge management, and they have to deal with problems of Human Resource
management in relation to appearance and development of knowledge workers. Furthermore,
the modality of stakeholders indicates the diversity and multidimensional environment that
defines and determines a modern organization. By organizing the model of lifelong learning

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and respecting the learning organization criteria we should be able to build organizations
highly representative in our competitive era.
In recent years, the application of stakeholders analysis tool has become widespread.
Therefore, the higher education institutions has started using it too, in order to improve their
field of work. There are numerous researches on this subject, see e.g. [1, 13, 17].
Education sector is in the proces of tranformation in Croatia, while entrepreneurial
approach for the management of universities is desirable [16], and at the same time
stakeholder analysis as business techniques allows significant improvement in education
system in theoretical and practical implications [21].
There are various options of stakeholders analysis applications in all areas, including
education, higher education in particular, which is under continuous pressure of changes and
demands to follow the global trends of technology innovations. At the same time, it is
expected to promptly respond to demands of market and competition. Universities are,
inherently, learning organizations familiar with the concept of lifelong learning and
Knowledge management, so they value the perspective of changes and the adoption of
environment observation from the stakeholders point of view.
Formatted: Space Before: 6 pt, After:
This paper has tried to correlate the research of the stakeholder analysis application at 0 pt
universities and the role of knowledge workers along with the human resources potential. The
ultimate goal is the building a model of learning organizations – organizations that have
developed the capacity to learn, adapt and change continously [18], as a result of all the
changes within the society. The article is merely attempting to indicate the value of
knowledge, human potentials and the need for instilling the concept of stakeholder analysis in
higher education institutions.
The world is changing daily, forcing the concept of knowledge and technology to become the
key factor of modelling organizations and the entire society. Higher education institutions are
changing and are in need of entrepreneurial style of leadership. They have to be capable of
daily transforming and reacting to change, at the same time remaining true to their main
mission, as well as being professionally and socially responsible. Since universities are the
professionally managed institutions, carrying strategic weight in society development, this
area of research is yet to witness defining new moments.
Formatted: Space Before: 6 pt, After:
0 pt

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STAKEHOLDER-ANALIZA
INSTITUCIJA VISOKOG OBRAZOVANJA
I. Marić
Katedra za organizaciju i menadžment, Ekonomski fakultet – Sveučilište u Zagrebu
Zagreb, Hrvatska

SAŽETAK
Posljednjih godina, znanje, ljudski kapital, te učeće organizacije su postali ključne odrednice globalnog
napretka. Visoko obrazovanje je suočeno s globalizacijom i jakom konkurencijom. Dakle, postoji potreba za
profesionalnim upravljačkim strukturama i poduzetničkim stilom vodstva. Suvremene organizacije su podložne
konceptu cjeloživotnog učenja, dok je upravljanje znanjem postalo vodeća tehnika u izgradnji konkurentne
prednosti. Organizacije u sustavu visokog obrazovanja su pritisnute konkurencijom što zahtijeva stalno
unaprjeđenje poslovanja, što prati naglašena potreba za mjerenjem ishoda i izgradnjom izvrsnosti. Paradigma
stakeholder može se primijeniti na redefiniranje i poboljšanje poslovanja visokoobrazovnih institucija što može
biti dobar način za razumijevanje i predviđanje interesa, potreba i zahtjeva svih ključnih igrača u okruženju
visokog obrazovanja. Svrha ovog rada je utvrditi mogućnost razumijevanja veza između visokoobrazovnih
organizacija i njegove okoline u kontekstu analize stakeholder. Ovaj rad kreće od identificiranja kritičnih
parametara odnosno teorije analize stakeholder i moguće primjene u domeni visokog obrazovanja. Nalazi ovog
rada pokazuju da je zadani koncept teško provoditi te da zahtijeva dobru pripremu i razumijevanje svih
interesno-utjecajnih skupina. Naravno to se osobito odnosi na one organizacije koje stvaraju i potiču razvoj
znanja i učenja što dalje podrazumijeva poticanje i razvijanje svih sudionika i predviđanja njihovih interesa i
zahtjeva u suvremenom promjenjivom okruženju.
KLJUČNE RIJEČI
institucije visokog obrazovanja, stakeholder-analiza, upravljanje znanjem

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