determining stakeholders for feasibility analysis

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DETERMINING STAKEHOLDERS FOR FEASIBILITY ANALYSIS Russell R. Currie University of British Columbia, Canada Sheilagh Seaton Okanagan College, Canada Franz Wesley University of British Columbia, Canada Abstract: Most techniques for stakeholder identification and salience in the pre-start up phase of a tourism development are not systematic in approach. This paper explores the util- ity of a systematic stakeholder analysis within a feasibility analysis. For a more inclusive assess- ment of stakeholder salience in the context of sustainable development, balancing the managerial lack of intrinsic stakeholder commitment, a third party perspective is added to the evaluation process. Contributing to the final evaluation of a development proposal, the coding scheme provides practitioners with parameters for stakeholder identification and sal- ience. While application of the theory bears limitations in quantitative measurement, the results suggest that systematic stakeholder analysis is beneficial and useful in the context of feasibility analysis. Keywords: stakeholder theory, feasibility analysis. Ó 2008 Elsevier Ltd. All rights reserved. INTRODUCTION Stakeholder and collaboration theory is often referenced in the liter- ature on sustainable tourism development. The argument is in order to produce equitable and environmentally sustainable tourism develop- ments multiple stakeholders must be involved in the process of plan- ning and implementing the project. At the site level, however, tourism developers have few theory-based or analytic resources to assist in achieving stakeholder involvement. They need a planning frame- work that supports both the ideals of sustainability and the practical application of policy. Feasibility analysis offers a potential framework for planning and assessing a proposed development including identifying stakeholders. At the pre-development phase, most planners attempt to identify po- tential stakeholders, producing often unsatisfactory results. While the literature announces stakeholder involvement as a vital aspect of pre- start up planning, most of the techniques for identifying and assessing Russell Currie researches in the new business development and tourist behavior areas based at the Faculty of Management, University of British Columbia Okanagan, 3333 University Way, Kelowna, BC, Canada V1V 1V7. Email <[email protected]>. Sheilagh Seaton researches special event and sport marketing and Franz Wesley researches tourist behaviors. Annals of Tourism Research, Vol. 36, No. 1, pp. 41–63, 2009 0160-7383/$ - see front matter Ó 2008 Elsevier Ltd. All rights reserved. Printed in Great Britain doi:10.1016/j.annals.2008.10.002 www.elsevier.com/locate/atoures 41

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Page 1: Determining stakeholders for feasibility analysis

Annals of Tourism Research, Vol. 36, No. 1, pp. 41–63, 20090160-7383/$ - see front matter � 2008 Elsevier Ltd. All rights reserved.

Printed in Great Britain

doi:10.1016/j.annals.2008.10.002www.elsevier.com/locate/atoures

DETERMINING STAKEHOLDERSFOR FEASIBILITY ANALYSIS

Russell R. CurrieUniversity of British Columbia, Canada

Sheilagh SeatonOkanagan College, Canada

Franz WesleyUniversity of British Columbia, Canada

Abstract: Most techniques for stakeholder identification and salience in the pre-start upphase of a tourism development are not systematic in approach. This paper explores the util-ity of a systematic stakeholder analysis within a feasibility analysis. For a more inclusive assess-ment of stakeholder salience in the context of sustainable development, balancing themanagerial lack of intrinsic stakeholder commitment, a third party perspective is added tothe evaluation process. Contributing to the final evaluation of a development proposal, thecoding scheme provides practitioners with parameters for stakeholder identification and sal-ience. While application of the theory bears limitations in quantitative measurement, theresults suggest that systematic stakeholder analysis is beneficial and useful in the context offeasibility analysis. Keywords: stakeholder theory, feasibility analysis. � 2008 ElsevierLtd. All rights reserved.

INTRODUCTION

Stakeholder and collaboration theory is often referenced in the liter-ature on sustainable tourism development. The argument is in order toproduce equitable and environmentally sustainable tourism develop-ments multiple stakeholders must be involved in the process of plan-ning and implementing the project. At the site level, however,tourism developers have few theory-based or analytic resources to assistin achieving stakeholder involvement. They need a planning frame-work that supports both the ideals of sustainability and the practicalapplication of policy.

Feasibility analysis offers a potential framework for planning andassessing a proposed development including identifying stakeholders.At the pre-development phase, most planners attempt to identify po-tential stakeholders, producing often unsatisfactory results. While theliterature announces stakeholder involvement as a vital aspect of pre-start up planning, most of the techniques for identifying and assessing

Russell Currie researches in the new business development and tourist behavior areasbased at the Faculty of Management, University of British Columbia Okanagan, 3333University Way, Kelowna, BC, Canada V1V 1V7. Email <[email protected]>. SheilaghSeaton researches special event and sport marketing and Franz Wesley researches touristbehaviors.

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stakeholder orientation at this stage are not theory driven or systematicin approach. This paper, therefore, turns to the stakeholder theory lit-erature for an identification and salience typology and then, throughfield research, explores the utility of this systematic stakeholder analysiswithin feasibility analysis context.

FEASIBILITY AND SYSTEMATIC STAKEHOLDER ANALYSIS

A significant challenge for planners and practitioners of sustainabletourism developments is the implementation of sustainability princi-ples at the tourism site level, where regional and destination contextsyield tangible results (Marcouiller 1997). In terms of stakeholderinvolvement in the planning process, often stakeholder issues and ori-entations will be site-specific. Considering the need for multiple stake-holder involvement in the planning process and subsequentoperations, tourism operators and planners need to address the iden-tification and voice of stakeholders in the early stages of strategicplanning.

Feasibility Analysis

Feasibility analysis is a pre-start up and strategic planning tool, con-ducted in the pre-business plan phase of a development. It involves aprocess of ‘‘collecting and analyzing data prior to the new businessstart up, and then using knowledge thus gained to formulate the busi-ness plan itself’’ (Castrogiovanni 1996:803). Implementing a detailedfeasibility analysis during the project planning process demonstrateshow the development will operate under a specific set of assumptions(Matson 2004) considering all economic and non-economic factors(Graaskamp 1970). It is conducted at a key juncture allowing for an in-formed go/no go decision on a proposed development before consid-erable investment is made.

While feasibility analysis is generally considered an important busi-ness tool, it is also subject to the debate on the usefulness and benefitsof strategic planning to business success. Critics of strategic planningusually refer to the rigidity and suppression of creative solutions thatplanning can produce (Miller and Cardinal 1994). Some studies, how-ever, argue convincingly that pre-start up planning has concrete advan-tages depending on certain contexts and contingencies (Castrogiovanni1996, Delmar and Shane 2003; Soteriou and Roberts 1998). Such con-texts include a number of environmental conditions, such as uncer-tainty, munificence, and industry maturity, and founder conditions,such as knowledge and capital (Castrogiovanni 1996). The various con-texts have either positive or negative results on the effectiveness of stra-tegic planning efforts. Basing their evaluation on the contexts in Yip’s(1985) article, Murphy and Murphy (2004) claim that strategic planningis particularly relevant in the tourism industry provided a plan remainsflexible and fluid. Reflecting the complexity of the tourism context anda new tourism planning paradigm, Costa states,

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Tourism planning ought to be viewed from a rational and technicalpoint of view (professionalism), which has to be matched againstthe particularity of every place, the needs and wishes of the peoplethat live in the area, market forces, the availability of manpowerand funding, and the position of the place in the world market.(2001:439).

In other words, strategic planning in the tourism industry is crucialin so far as it integrates multiple stakeholders, and remains adaptableto changing environmental, social and economic conditions.

Castrogiovanni (1996) argues that, with all contexts considered, pre-start up planning has no direct result on financial performance, sur-vival or other outcomes. Planning does, however, yield direct benefitsthat bear upon the firm’s ability to act in a way conducive to achievingits goals and objectives. These benefits include legitimization of thebusiness, improving communication with external stakeholders, meet-ing expectations of many people who simply believe in pre-planning,learning through planning, increased efficiency and cooperationthrough improved communication within the organization, andstreamlining certain procedures before starting up the business (Cas-trogiovanni 1996). Lyles, Baird, Orris, and Kuratko (1993) proposethat formal planning offers small firms a comprehensive strategic deci-sion making process including a wide variety of alternative strategiesand this in turn leads to higher levels of performance and profitability.

Engaging the debate on the usefulness of strategic planning, numer-ous studies assess the relationship of pre-start up planning to businessperformance, yielding mixed results. A number of authors concludethat the literature does not provide a comprehensive and consistentconclusion: that formal strategic planning results in performance suc-cess (Pearce, Freeman and Robinson 1987; Powell 1992; Schwenk andShrader 1993). Methodological differences are potential explanationsof these inconsistencies (Miller and Cardinal 1994). Despite the ambi-guity in the study results, taken as a whole they do suggest that strategicplanning is a beneficial activity. Rue and Ibrahim (1998) find enoughsupport in the literature to argue that planning in small business for-mation can increase performance and success rate. Powell notes thatamong the number of studies he reviewed ‘‘positive planning-perfor-mance relationships outnumbered negative ones’’ (1992:552). AndSchwenk and Shrader conclude from their meta-analysis, ‘‘the overallrelationship between formal planning and performance across studiesis positive and significant’’ (1993:53).

Most of these planning-performance studies examine the impact ofstrategic planning on financial performance only (Bracker, Keats andPearson 1988; Pearce et al 1987; Powell 1992; Rhyne 1986; Robinsonand Pearce 1983; Schwenk and Shrader 1993). Introducing an alterna-tive indicator for performance success, Castrogiovanni (1996) arguesfor business survival to be the defining success factor. In recent years,however, measuring the success of a business must involve an evalua-tion that goes beyond the financials or survival. Elkington (1999) artic-ulates the need for businesses to implement policies and practices thataim for economic, social and environmental sustainability. While previ-

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ous articles on strategic planning focus on financial success, an increas-ing number of studies reflect the changing attitudes that ‘‘strategicplanning can and should have an impact beyond the financial perfor-mance of the firm’’ (Judge and Douglas 1998). Those studies that doexamine the incorporation of environmental and social concerns intostrategic planning and the subsequent results on performance are con-cerned with large existing firms well past the start up phase (Hart andAhuja 1998; Judge and Douglas 1998; Ruf, Muralidhar, Brown, Janney,and Paul 2001). Very few studies measure the impact of pre-start upplanning on long-term social, economic and environmental success.In the ecotourism industry, one case study examines how a pre-busi-ness plan environmental management and control system, developedin conjunction with multiple stakeholders has resulted in a successfulsustainable tourism business (Herremans and Welsh 1999, 2001; Welshand Herremans 1998).

Success, then, refers to much more than financial profitability. In thetourism industry specifically, the push for sustainable tourism certifica-tion (UNWTO 2003) and the recent declarations of organizations suchas the United Nations World Tourism Organization (UNWTO 2002),reflects the pressure for a sustainable tourism industry, one that mea-sures success by environmental and social indicators as well asfinancial.

Moving beyond the ideals of sustainability as a concept and into itsimplementation and practice, uncovers challenges that a strategic plan-ning tool like feasibility analysis could help overcome. One such chal-lenge is the fragmented nature of tourism planning (Berno andBricker 2001; Ioannides 1995; Ladkin and Bertramini 2002; Soteriouand Roberts 1998). Integrative links for effective planning are few be-tween all levels of planning from the international level down to thesite itself. Without common goals and vision, tourism site operatorsmay plan independently of broader concerns and policies. Murphyand Murphy note that often entrepreneurs initiate tourism develop-ment, but their personal motivations ‘‘may not necessarily reflect whatis best for the overall community’’ (2004:372). Furthermore, tourismplanning can also occur independent of other local planning ap-proaches and policy, such as land use planning, natural resource man-agement and community economic development schemes (Dredge1999). A single pre-start up study offers common language and sub-stantive information, which various sectors, planners, and stakeholderscan then discuss (Castrogiovanni 1996). Feasibility analysis thus servesas an intersectoral link, connecting policies made at higher levels ofplanning to their implementation at the site level. In this scenario,pre-determined public policy determines the factors and criteria forfeasibility and each tourism site proposal must conduct the analysisbased on these factors. A further advantage to having a strategic plan-ning tool at the site level is that it focuses on local particulars and spe-cifics while still adhering to wider policies built on sustainableprinciples, thus linking the strategic and the normative (Costa 2001).

Baud-Bovy (1982) asserts that an early assessment of social, cultural,environmental and economic implications of a tourism development

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could alleviate obstacles to the implementation of sustainable develop-ment policies. The current emphasis on financial indicators for successin both the strategic planning/performance studies and in the feasibil-ity analysis templates does not reflect the growing trend of sustainabledevelopments. Consequently, the literature on pre-start up planning,and templates for feasibility analysis, does not clearly offer feasibilityanalysis as an aid in the implementation of policies that take into ac-count social, economic, and environmental concerns in general at aspecific locale. Shen, Wu, and Wang (2002) recognize the same defi-ciency in the construction industry, noting a current lack of guidancefor actually implementing the principles of sustainability. Their studysees a solution in strategic planning, proposing a quantitative feasibilityanalysis model for sustainable construction developments. While oftenassociated with financial feasibility such as cost-benefit analysis and re-turn on investment, given a broader definition, feasibility analysis ispoised to make a more holistic assessment of a proposed tourism devel-opment. A few feasibility analysis templates and handbooks suggest theinclusion of a broader range of factors, but none are exhaustive or con-clusive. As a whole, these templates usually prescribe some combina-tion of economic, environmental and social/cultural impactassessments, defining the goals and objectives of the project, definingthe criteria that will determine the go/no go decision, identifying legaland policy issues, assessing management and technical issues, site anal-ysis, market and financial analyses, and the generating and evaluatingof alternatives (Angelo 1985; Barret and Blair 1982; Behrens and Haw-ranek 1991; Canestaro 1989; The Economic Planning Group of Canada2005; Erfourth and Agosta 2002; Etter 1988; Geltner and Miller 2001;Graaskamp 1970; Hofstrand and Holz-Clause 2004; Myers, Lawless,and Nadeau 1998; Neal and Trocke 2002; Reilly and Millikin, 1996;Smith 2002; West 1993).

In addition to the aforementioned factors, one important aspect of apre-start up study is an identification of potential stakeholders. Variousscholars make the call for stakeholder identification and involvementearly in the planning process (Murphy and Murphy 2004; Sautterand Leisen 1999; Simpson 2001). In the pre-business plan phase, stake-holders are involved at the point where major decisions and significantfinancial and emotional investments have not yet been made, there islittle forward momentum to redirect (Chrisman and McMullan 2000),and the tourism development has not yet affected the environmentand society. Indeed, such initial involvement would avoid the costs ofmajor stakeholder conflicts later on. According to Sautter and Leisen,‘‘tourism planners should proactively consider the strategic orienta-tions of all groups affected by the venture before proceeding withdevelopment efforts. As congruency across stakeholder orientation in-creases, so does the likelihood of collaboration and compromise’’(1999:318).

The literature, furthermore, strongly supports the claim that stake-holder involvement plays a vital role in sustainable tourism develop-ment (Sautter and Leisen 1999); as Clarke and Roome (1999) assert,consideration for social and environmental issues requires the identifi-

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cation of numerous stakeholders and the incorporation of their opin-ions. Hardy and Beeton (2001) argue that understanding stakeholderperceptions should be viewed as a prerequisite for sustainable tourism.In the context of community tourism planning, widespread stake-holder participation will ensure all major issues are addressed, leadingto decisions that will be tenable in the long-term (Murphy and Murphy2004).

Recognition of the strategic value of stakeholder involvement andearly stakeholder assessment has not translated into research at thepre-start up phase. Most studies involving identification of stakeholdersprovide analysis after planning and implementation are underway(Aas, Ladkin and Fletcher 2005; Hardy and Beeton 2001; Medeirosde Araujo and Bramwell 1999; Sheehan and Ritchie 2005; Timothy1999; Yuksel, Bramwell and Yuksel 1999). Medeiros de Araujo andBramwell (1999), for example, identify and survey stakeholders afterthe development’s initial planning and implementation stage. Theyconclude that those stakeholders advancing social/cultural and envi-ronmental issues were underrepresented in the planning phases. Thisunderscores the need for a strategic planning tool that incorporatesstakeholder analysis prior to implementation of the plan if the princi-ples of sustainability are to be integrated. No research articles wereidentified that explores the application of a systematic stakeholderidentification scheme at the pre-implementation phase of tourismplanning.

Review of the literature suggests that an early assessment of stake-holder orientation and all other pertinent issues is an important strate-gic step for sustainable tourism developments. Systematic stakeholderanalysis, therefore, can and should fit within the domain of feasibilityanalysis. Nevertheless, the literature on feasibility analysis and pre-startup planning does not offer a framework for determining stakeholderstatus. While many techniques are available to involve stakeholders inthe tourism planning phase (Yuksel et al 1999) there is no templatefor identifying these stakeholders during pre-start up planning. Somestudies hint at the varying methods that planners use for identifyingstakeholders in tourism developments; these include open meetings,review of local sources, relationship mapping and interviews (Medeirosde Araujo and Bramwell 1999; Yuksel et al 1999). These methods, how-ever, are not necessarily theory driven or systematic in approach oranalysis.

Increasingly, tourism planners and managers need to look deeperthan cursory reports of the more obvious stakeholders (Sautter andLeisen 1999). Therefore, this paper turns to stakeholder theory for asystematic stakeholder analysis framework and then explores its utilityfor feasibility analysis. As stakeholders are identified, planners incollaboration with numerous stakeholders could conduct feasibilityanalysis. In moving from tokenistic forms of public participation to amore collaborative and partnering form (Lane 2005), using a com-mon framework to collectively plan, set goals and objectives, andevaluate a proposed development would empower stakeholders fromthe outset.

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Stakeholder Theory

Stakeholder theory literature provides numerous processes forexplaining stakeholder identification and salience (Borrini-Feyerabend1996; Daniels and Walker 1996; Engel and Salomon 1997; Grimble andChan 1995; Mitchell, Agle and Wood 1997; Savage, Nix, Whiteheadand Blair 1991; Vos 2003). Most of the processes are descriptive and de-rive their basis from original ideas put forth by Freeman (1984). Free-man’s often cited definition describes a stakeholder as ‘‘any group orindividual who can affect or is affected by the achievement of the orga-nization’s objectives’’ (1984:46). Freeman’s definition is very broadand inclusive. In fact, one of the primary critiques of Freeman’s ap-proach is that the possible number of stakeholders is unlimited andcould include competitors and media (Donaldson and Preston1995). In terms of natural resource attractions, for example, the listof applicable stakeholders would include not only individuals andgroups associated with the project, but also society and future genera-tions. Freeman’s (1984) definition requires all claimants of stakeholderstatus to receive recognition as actual stakeholders; in practical terms,however, management needs to effectively prioritize stakeholderclaims. Treating each potential stakeholder as equal will be cost inef-fective and will potentially conclude in a stalemate with opposing posi-tions. Prioritising claims will allow management to position their forcesand allocate resources in a systematic response. The questions then be-come what parameters determine salience and from whose perspectiveare these parameters analyzed?

Stakeholder theory raises interesting questions of perspective in theidentification of stakeholders. Most studies and models present stake-holder analysis from the perspective of CEOs and managers (Agle,Mitchell and Sonnenfeld 1999; Mitchell et al 1997; Savage et al 1991;Sheehan and Ritchie 2005; Vos 2003). Indeed, Mitchell et al (1997)strongly state that management’s perspectives dictate stakeholder sal-ience. In that case, the priority given to one stakeholder over anotheris valid only from a managerial perspective, which could be problem-atic in the context of social and environmental responsibility. The lit-erature suggests that if managers alone determine stakeholdersalience, then attention to those groups or individuals representing so-cial and environmental concerns depends upon two factors. In the firstinstance, management’s internalization of some social or environmen-tal issue or the firm’s moral commitment to uphold stakeholders’ inter-ests influences strategy and financial performance. In the secondinstance, managers take a strategic approach, responding to stake-holder pressure and only when such action could result in financialgain (Berman, Wicks, Kotha and Jones 1999; Winn 2001). One study,however, shows no support for what the authors call the intrinsic stake-holder commitment (Berman et al 1999). Instead, their study con-cludes that managers attend to stakeholder concerns only when suchaction is perceived to enhance financial performance (Berman et al1999). In a more recent article, Sheehan and Ritchie (2005) ask CEOsof tourism destination management organizations to identify

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stakeholders in their existing projects. None of them identified specialinterest groups that represent environmental or social/cultural con-cerns. These results underscore the socially constructed nature ofstakeholder identification and salience. Stakeholder analysis is not aformula for ensuring equitable and environmentally sustainable devel-opments, but instead its success in this regard can only follow theadvancement of democratic ideals in society at large (Grimble and Wel-lard 1997). Given this reality, in the absence of a managerial intrinsicstakeholder commitment, then, other perspectives are needed for amore inclusive assessment of stakeholder salience in the context of sus-tainable development.

The other question, what determines salience, involves definingparameters for stakeholder identification. The literature offers severalprocesses for differentiating stakeholders, most categorizing them ingeneric groups. Clarkson (1995), for example, differentiates stake-holder groups into primary and secondary; the corporation dependson the primary stakeholders for its survival, while secondary groupsare not essential but have influence or are influenced by the corpora-tion. Savage et al (1991) classify stakeholders as four types dependingon two dimensions: their potential for cooperation and their potentialfor threat. Hardy and Beeton (2001) differentiate four generic group-ings: locals, operators, tourists and regulators. The difficulty with a pri-ori generic groupings, however, is that this approach ignores theheterogeneity of groups and the plurality of stakes (Winn 2001).Reporting on several issues in stakeholder theory, Harrison and Free-man (1999) call for a finer-grained typology of stakeholder groups.

This task requires development of a stakeholder theory of identifica-tion and salience. While other theories exist (for example, Savage et al1991), this paper applies the Mitchell et al (1997) theory because itmeets several requirements suggested in the literature: it allows forsite-specific influences (Simpson 2001); it offers a finer-grained typol-ogy than generic groups (Harrison and Freeman 1999); and it is nor-mative as well as descriptive (Donaldson and Preston 1995). Mitchellet al aim for a theory ‘‘that can explain to whom and to what managersactually pay attention [. . .and identifies] those entities to whom manag-ers should pay attention’’ (1997:854). Towards this goal, their theoryproposes a more precise typology of stakeholders by introducing threeattributes rather than creating generic groups. Mitchell et al’s theorystates ‘‘[s]takeholder salience will be positively related to the cumula-tive number of stakeholder attributes—power, legitimacy, and ur-gency—perceived by managers to be present’’ (1997:873). Becausethese attributes are not restricted to generic guideline categories, thistypology also allows for site-specific influences.

The theory as presented in Mitchell et al (1997) is adequate for thepurposes of this article. Because this paper explores the utility of sys-tematic stakeholder analysis in the pre-start up phases, it is not con-cerned at this point with altering stakeholder theory. At issue is thepotential contribution of stakeholder theory to feasibility analysis.Mitchell et al (1997) depict their theory in a Venn diagram of threesets, with each set representing one of the three attributes. All groups

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or individuals gain salience in stakeholder status depending upon thecumulative number of stakeholder attributes: the greater the numberof attributes the higher the salience of the stakeholder. In the Venndiagram, then, the more sets to which the stakeholder belongs, thegreater the salience. Stakeholders possessing only one attribute aretermed ‘‘latent stakeholders’’; with two attributes, ‘‘expectantstakeholders’’; and with all three attributes, ‘‘definitive stakeholders’’(Table 1). Entities perceived as having none of the three attributes willnot be stakeholders and have no salience. Depending upon the num-ber and type of attribute, the stakeholders’ needs are different as istheir ability to influence the management of the development.

Mitchell et al (1997) justify the three attributes from the literature,noting many stakeholder scholars who contend that stakeholder selec-tion is often based solely on the legitimate claims of potential stake-holders, which reduces the importance of power and urgency.Mitchell et al define power ‘‘as the extent to which a party has orcan gain access to coercive, utilitarian, or normative means, to impose

Table 1. Stakeholder Attributes, Classification and Identification Typology

Attributes Classification ofStakeholders

Identification Typology

Power LatentStakeholders

Dormant Stakeholders—while holdingpower, they lack legitimacy and

urgency, therefore power is oftenunused

Legitimacy Discretionary Stakeholder—holding nopower or urgency to influence the

organizationUrgency Demanding Stakeholder—holding

urgent claims yet lack the power orlegitimacy to influence the

organizationPower and Legitimacy Expectant

StakeholdersDominant Stakeholders—they havelegitimate claims and the ability to actupon these claims by the power they

holdPower and Urgency Dangerous Stakeholder—lack legitimacy

yet has the power and urgency toinfluence the organization

Legitimacy and Urgency Dependent Stakeholder—lack the powerto carry out their urgent legitimate

claims and therefore have to rely onothers power to influence the

organizationPower, Legitimacy and

UrgencyDefinitiveStakeholder

Definitive Stakeholder—Holding allthree attributes the stakeholders has

the ability to influence theorganization in the immediate future

Adapted from Mitchell et al (1997).

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its will in the relationship’’ (1997:869). Legitimacy is defined as ‘‘a gen-eralized perception or assumption that the actions of an entity aredesirable, proper, or appropriate within some socially constructed sys-tem of norms, values, beliefs, and definitions’’ (Mitchell et al1995:574). Urgency is defined ‘‘as the degree to which stakeholderclaims call for immediate attention’’ (Mitchell et al 1997:870).

While presenting the three attributes as more reliable than previoustheories, Mitchell et al (1997) also recognize possible limitations to thepractical application of the model based on the appropriateness andmeasurement of the three attributes: power, legitimacy and urgency.They raise the following questions:

1. Are power, legitimacy and urgency appropriate for measuring stake-holder salience?

2. Are the attributes clearly defined and distinct from one another?3. What is the effect of not being able to quantify each attribute on a

continuum?

Further questions also arise, namely the challenge of identifyingstakeholders despite the dynamic nature of their position. Stakehold-ers are not static entities; therefore, movement between categories ispossible (Mitchell et al 1997). In fact, stakeholders often try to acquirenew attributes by varying means: coalition building, political action, so-cial persuasion and economic dependence (Mitchell et al 1997). Forexample, a conservation group complains repeatedly to a resourceextraction company about changing its behaviour, to no avail. The con-servation group then decides to inform the local government about aresource extraction company not abiding by regulations, thus using thelocal government as an ally to change the resource extraction com-pany’s behaviour. Another limitation of the theory is the lack of quan-tifiable measurement for the attributes. Mitchell et al acknowledge thislimitation, stating that ‘‘[t]o build our identification typology, we treateach attribute as ‘‘present or absent,’’ when it is clear that each oper-ates on a continuum or series of continua’’ (1997:881).

Mitchel et al’s (1997) framework is designed to explain how existingmanagers perceive stakeholders and prioritize stakeholder interests. Aprevious study tested the theory, finding strong support for the rela-tionship between the three attributes and salience (Agle et al 1999).While that study supports the descriptive nature of the theory, its nor-mative elements suggest potential for application in an objective sense.This paper explores the theory’s capacity to identify potential stake-holders and predict their orientation vis-a-vis a new tourism develop-ment. In using the theory in this manner, the researchers make onesignificant amendment. To account for the criticisms of manager-dri-ven bias and the lack of a managerial intrinsic stakeholder commit-ment, a third party (researchers) is introduced that advocates forintrinsic stakeholder commitment and becomes another perspectivein determining salience. While the third party too brings a bias, theydo provide legitimate perspective.

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Stakeholder analysis theory could potentially fill the gap in the feasi-bility analysis literature with a stakeholder identification process. Thispaper explores the application of a systematic stakeholder analysisframework to an objective pre-start up feasibility analysis. What meth-odological issues arise in the process? What are the benefits of applyinga systematic stakeholder analysis at the pre-start up phase of adevelopment?

Study Methods

In this study, Mitchell et al’s (1997) theory is applied to the feasibilityanalysis of a potential land and water trail located on the NorthwestCoast of British Columbia, Canada. This particular setting offers ahighly relevant context for applying a theory for stakeholder identifica-tion and salience; nature-based tourism and recreation developmentsoften affect a variety of groups, organizations and individuals (Grimbleand Wellard 1997). Water trails are similar to other natural resourcedevelopments in this regard; because of the distance covered by thetrail, natural barriers or borders between interest groups are oftencrossed. Water trails can connect private residential property, commer-cial and sport fishing grounds, First Nations lands, resource extractionindustries, and pristine wilderness. Hence there is often competitionand variances in the management and development of water trails.To further complicate the potentially tense relationship between theseindividuals and groups, each of the special interest groups often claimstakeholder status along with rights and privileges. Therefore, develop-ment and operation of a water trail leads to the question articulated byFreeman (1994) as ‘‘The Principle of Who or What Really Counts.’’While the interests of all groups affected by the water trail demandsrecognition, not all interests will fit in a feasible manner to ensure sus-tainability of the project; thus, management must determine amongcompeting voices, a structure that will allow them to recognize stake-holder status and prioritise stakeholders’ claims.

The Tsimshian Nation has the physical land and water base and thehuman resources to create water trail systems that will attract outdoorand adventure enthusiasts. Due to the growth of the outdoor andadventure tourism industry, land and water trail systems are becomingincreasingly lucrative. Historically, however, developments in thenorthern regions of British Columbia become controversial becauseof the sensitive nature of the environment and the ongoing discoursein land ownership between the First Nations and government agencies.Therefore, before investing millions of dollars in a natural resourceattraction that will affect the Tsimshian Nation and also surroundingcommunities, businesses, not-for-profit agencies, governmental andnon-governmental organizations, special interest groups, the fishing,logging, transportation and tourism industries, a feasibility analysisneeds to be conducted in order to determine sustainable viability.

A first step in this project consisted of identifying leaders for the fea-sibility analysis phase of the project and to then set objectives for the

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feasibility analysis. The researchers identified the Tsimshian TribalCouncil Administration as project leaders who, in consultation withthe researchers, set management objectives for the feasibility analysisand determined potential benefits of a water trail to the Tsimshian Na-tion and surrounding communities. Benefits sought for the TsimshianNation are both immediate and long-term: creating own source reve-nues, sustainable development, economic diversification and trainingand management opportunities for all members of the Tsimshian Na-tion. In addition, other First Nations and communities in the regionshould derive the benefits, similar to those of the Tsimshian Nation,from the water trail.

The researchers’ next step was to develop an exhaustive list and eval-uation of potential stakeholders. Each member of the project teamindependently developed a list of possible stakeholders. Initial develop-ment of the list utilized the key informant approach. This approach in-volves the gathering of data collected from structured contacts withexperts or influential leaders and is useful where ‘‘qualitative descrip-tive information is sufficient for decision-making. . . [and] when thereis a need to understand motivation, behaviour, and perspectives’’(USAID 1996:1). The initial stage in the key informant approach isthe careful identification and selection of these individuals. Theresearchers asked the Tribal Council to identify whom they consideredthe most influential leaders (both for and against the proposed devel-opment). The researchers then met with these government officials,members of the business community, NGO’s and tribal members to as-sess their potential involvement in the proposed water trail develop-ment. In this initial meeting, the researchers also requested thesekey informants to identify others who might affect or be affected bythe project. This snowball sampling was an attempt to ensure a widerrepresentation of interests and further minimize the impact of re-searcher bias in the selection process.

Following this initial record of potential stakeholders, the research-ers used content analysis to further expand the list. Scholars considercontent analysis a qualitative research methodology useful for discover-ing, describing and categorizing the focus of individual, institutional,or social attention (Stemler 2001). The researchers conducted a con-tent analysis on the relevant literature found in the websites, publica-tions, and mission statements of the Tsimshian First Nation,businesses, NGO’s and the local community. The literature producedin other similar tourism sites also provided useful information. Infer-ences made from this information to potential group or individualinvolvement or interest in the proposed water trail lead to inclusionin the list.

The Tsimshian Tribal Council Administration and the researchersused both key informant and content analysis methods to ensure thateach approach had some method of corroboration, since inferenceswere sometimes made from the data collected. Following the develop-ment of these independent lists, the team combined the lists to makeone exhaustive compilation. Agreement between individual research-ers and Tribal Council was not necessary for inclusion in the combined

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potential stakeholder list. For an initial classification of all potentialstakeholders, the population was divided into five categories: FederalGovernment Agencies, Provincial Government Agencies, Crown Cor-porations, First Nations, and Local Governments, Businesses and vari-ous Socio-Economic Organizations. Researchers placed potentialstakeholders under the relevant classification and identified their po-tential to influence the project’s objective.

An exhaustive list now completed, the Mitchell et al (1997) theoryprovided the coding scheme with which to further define and catego-rize the potential stakeholders. The two field researchers, based onexperience and knowledge of natural resource tourism development,feasibility analysis, and social, political and economic issues, indepen-dently evaluated each of the potential stakeholders. Each researcher as-signed the attributes of power, legitimacy and urgency, if applicable, tothe potential stakeholders. In order to account for possible future rela-tionships, the researchers evaluated the nature of each relationship andmade predictions as to the likelihood of a stakeholder moving betweenclassifications should they acquire or lose attributes. Since both the eval-uations of current and future relationships were subjective and across awide spectrum of potential stakeholders, the researchers gave much lat-itude in assigning attributes. This improved the interrater reliability.

The process of assigning attributes was iterative. The researchers dis-cussed discrepancies regarding the initial assignment of attributes.Subsequently, researchers returned to previous data acquired throughthe key informant and content analysis and accessed any new support-ing materials (mission statements etc.) from which to infer the poten-tial future interests of stakeholders. Mutual agreement betweenresearchers on attributes assigned was reached as the differentresearchers coded the same stakeholders with the same attributes.

Results

The researchers and project leaders formed the list of potentialstakeholders using various methods in an attempt to minimize biasand ensure a wide representation of interests and concerns. Not onlywere the key informants included in the list of potential stakeholders,but they also recommended other possible stakeholders in the project.The resultant list included: Industry Canada—Aboriginal BusinessCanada, Ministry of Sustainable Resource Management, Tourism Brit-ish Columbia, Tsimshian Nation & Tribal Council, City of Prince Ru-pert, various Environmental Groups with interest in wildlife, oceansand forests, such as the Raincoast Conservation Society, Valhalla Wil-derness Society and the Western Canada Wilderness Committee,numerous recreation groups, and the fisheries industry. In total, 21stakeholders were identified. These groups represented a great diver-sity in position, from potential partners in marketing and funding topotential conflicts for land and water use.

The two field researchers conferred the attributes to each of the po-tential stakeholders.

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Figure 1 illustrates the number of stakeholders in each typology anddepicts the perceived amount of stakeholder salience using the threeoverlapping circles as defined by Mitchell et al (1997).

The stakeholders located in all three overlapping circles are labelleddefinitive stakeholders, possessing the greatest salience, and are morelikely to influence management objectives in the course of the feasibil-ity analysis. The definitive stakeholders were the largest group includ-ing the Tsimshian Nation, Land and Water British Columbia, agovernment agency concerned with land and water usage, natural re-source industries and the transportation industry. Dangerous, domi-nant and dependent stakeholders are those in two sets. Thesestakeholders have less salience than the definitive stakeholders and in-clude government enforcement agencies, environmental groups, fish-eries, and the tourism and hospitality industry. The stakeholders withthe least amount of salience are described as latent stakeholders. Inthe latent category, there are two discretionary stakeholders, local gov-ernment and local recreation interests, and two demanding stakehold-ers, the aquaculture industry and Tourism Prince Rupert. Thestakeholders, which were determined to have no influence for thepurpose of a feasibility analysis, are listed outside the concentric cir-cles and are described as currently disinterested stakeholders. Thisgroup included Industry Canada—Aboriginal Business Canada, andTourism British Columbia. Table 2 outlines a sample of the stake-holder classification, detailing the attributes and reasons for theirassessment.

1 DangerousStakeholder 7

Definitive Stakeholder

1 Dominant

Stakeholder

0 Dormant

Stakeholder

2 DemandingStakeholder

2 Dependent

Stakeholder

2 DiscretionaryStakeholder

6 Currently Disinterested

Stakeholders

POWER

LEGITIMACY

URGENCY

Figure 1. Stakeholder Configuration

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Table 2. Sample Evaluation of Stakeholders Represented by Stakeholder Classification

Stakeholders Attribute Identification Typology

Non Stakeholders

Industry Canada—AboriginalBusiness Canada

Holding no attribute at thistime.

Currently DisinterestedStakeholders

Tourism British Columbia

Latent Stakeholders

Recreation—Examples: Fishing,

Boating, Biking, Hiking,

Local Use

Legitimacy—established land

owner and resource usage

Discretionary Stakeholder

Aquaculture Urgency—potential conflicts

could result in land/water use

restrictions

Demanding Stakeholder

Expectant Stakeholders

Government Enforcement

Agencies—Examples:Fisheries and Oceans Canada,

Ministry of Water, Land and

Air Protection, Ministry ofForests, Ministry of Energy

and Mines

Power—based on legal authority Dominant Stakeholder

Legitimacy—provided bygovernment representation

Environmental Groups withinterest in wildlife, ocean and

forest

Urgency—protection of naturalresources

Dangerous Stakeholder

Power—ability to impose

political willTourism and Hospitality

Industries

Legitimacy—established tourism

businesses

Dependent Stakeholder

Urgency—desire to encourage

tourismDefinitive Stakeholders

Tsimshian Nation & Tribal

Council

Power—based on participation

in project

Definitive Stakeholder

Legitimacy—provided by

representation of bands

Urgency—defined byparameters of project

Land and Water British

Columbia

Power—based on legal authority Definitive Stakeholder

Legitimacy—provided bydemocratic service

Urgency—provided by direct

involvement in BC land useissues

Natural Resource Industries—

Examples: Forestry, Logging,Ranching, Mining, Oil and

Gas

Power—current control of forest

and land resources

Definitive Stakeholder

Legitimacy—currently hold

range and forest tenures

Urgency—potential conflictscould result in restrictions or

changes in resource usage

Transportation—Examples: Power—legal ownership of land Definitive StakeholderRail Legitimacy—established

transportation infrastructureRoad

Water Urgency—potential conflictscould result in restrictions to

proposed trail

Air

R.R. Currie et al. / Annals of Tourism Research 36 (2009) 41–63 55

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56 R.R. Currie et al. / Annals of Tourism Research 36 (2009) 41–63

Discussion

An important aspect of stakeholder salience mentioned in the liter-ature review is the question of perspective. While in Mitchell et al’s(1997) methodology only the firm’s managers identified and ratedstakeholders, for this study the position of those involved in the processwere broadened to include members of the tribal council and theresearchers. This allowed for differing perspectives on salience, thuscontributing to the discussion on the theory’s utility for feasibility anal-ysis. The literature review showed that when managers assess salience,they generally overlook social and environmental concerns. But thisstudy shows that the Mitchell et al (1997) theory accommodates thesegroups within the parameters of power, legitimacy and urgency. Theexplanation for the previous lack of environmental and social repre-sentation in the stakeholder set must then rest on the managerial per-spective. Because selection of stakeholder groups will reflect the valuesof those selecting (Yuksel 1999), involving parties other than manage-ment or the organization’s directors ensures a wider more comprehen-sive list of stakeholders and a less biased assessment of salience.Moreover, when assessed in the pre-start up phase of a development,salience does not need to be subject only to managers and their partic-ular bias. The results of this study indicate that groups representing theenvironment and local communities are present in the field of stake-holders; managers should pay attention to them. They are classifiedas either expectant or definitive stakeholders, holding two or threeof the attributes of power, urgency and legitimacy. In this regard, thetheory is a potentially powerful framework for wide stakeholderinvolvement at an early stage of a sustainable tourism development.

The results of the study also offer for discussion the possible limita-tions of the appropriateness, measurement, and distinction of thethree attributes. In terms of appropriateness, though some scholarsclaim precedence for legitimacy over power and urgency (Donaldsonand Preston 1995; Freeman 1984), assessing power and urgency pro-vides a more detailed description of potential stakeholders. For exam-ple, environmental groups are typed as dangerous stakeholders in thedevelopment of the water trail. In this typology, that means they pos-sess urgency and power, but not legitimacy. The environmental groupscould gather support and obtain global persuasion to impose their ide-als on the future of the proposed development. In addition, given theresearchers’ experience in natural resource development, environmen-tal groups will demand immediate involvement in any proposed devel-opments and therefore possess urgency. In this case study, however,potential actions of environmental groups to prevent the proposeddevelopment, would not be considered desirable, proper or appropri-ate actions as defined within socially acceptable norms, values or beliefsof the region because they do not have control of the resources in theregion. This example illustrates the importance of not limiting stake-holders to only groups who possess a legitimate claim, but expandingto a broader and more flexible definition that includes power and ur-gency. Moreover, in terms of distinction between attributes, it is

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possible to distinguish legitimacy and power given Mitchell et al’s(1997) definitions. It is evident that environmental groups do havethe power to impose ideals on the Tsimshian Nation, but are not per-ceived to have control of the resource within the social norms of theregion. In the domain of feasibility analysis, this example also showsthe utility of a systematic stakeholder analysis theory. One advantageof this particular typology is its common language, which allows man-agers and planners to discuss the nuances and define the issues sur-rounding each potential stakeholder in terms of the three attributes.

The appropriateness of the typology does have some limitation. Theapplication of the term ‘dangerous’ to environmental groups in thisstudy suggests a weakness in Mitchell et al’s (1997) typology in the con-text of sustainable tourism. From the perspective of collaboration andcompromise, the term communicates a non-collaborative approach. Atissue is the willingness of planners to redistribute legitimacy in order tocreate an environment where partnerships and compromise can devel-op. This requires a strategy for managing stakeholders, which is notimmediately imbedded in Mitchell et al’s (1997) theory (Sheehanand Ritchie 2005).

Limitation in terms of measurement is an issue, but this does notbear strongly on the utility of the theory at the pre-start up phase.The Mitchell et al (1997) theory does not provide a method to quantifythe amount of power, legitimacy or urgency that each stakeholder pos-sesses. The theory provides a general overview of stakeholder configu-ration with three classifications of stakeholders: latent, expectant anddefinitive, and eliminates currently disinterested stakeholders. The va-lue of the model is the ability to determine amongst competing voiceswhich stakeholders possess the capacity to influence the feasibility ofthe development. At this stage in planning, quantifying the degree ofpower, urgency or legitimacy is not as important as the identificationof stakeholders and an understanding of the stakeholder relationships.The result of applying the model is a stakeholder configuration thatmanagement can use to recognize stakeholder status and broadly pri-oritise stakeholder claims within the parameters of the feasibility study.

Measurement in the domain of feasibility analysis could also be re-framed as the ability to place boundaries on the number of potentialstakeholders. One of the difficulties in adopting traditional stake-holder theory is that the number of potential stakeholders is unlimited.The difficulty is particularly true in assessing the development of a nat-ural resource attraction that will directly and indirectly have implica-tions for outdoor and adventure tourism as a whole. Application ofthe Mitchell et al (1997) theory provides a definable boundary by lim-iting potential stakeholders to only those who possess power, legiti-macy, and/or urgency with respect to influencing management ormanagement’s objective. The theory simplified the process of identify-ing potential stakeholders by enabling the researchers to start withstakeholders that strongly possessed one or more attributes and mov-ing outwards to include stakeholders that only weakly displayed oneattribute. The limit for stakeholders was reached when potential stake-holders were identified who no longer possessed one of the three

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attributes. The application of the theory provided a boundary that isclearly defined and systematically applied during the process of identi-fying potential stakeholders.

Mitchell et al (1997) identifies a potential limitation in the applica-tion of the theory resulting from a static model representing dynamicstakeholder relationships. This study explored the application of thetheory during a feasibility analysis. At this stage of a proposed develop-ment, the relationship with stakeholders is often non-existent and theoutcome of possible relationships is undetermined. Although the out-come of the theory is a static representation of stakeholder configura-tion, the model provides some flexibility by enabling the researchers tomake assumptions regarding the future progression of relationshipsand incorporating the predictions in the measurement of stakeholdersalience. The adjustment enabled the researchers to include stakehold-ers in the study that initially appeared insignificant, but in the futuremay be expectant or definitive; in addition, it excluded potential stake-holders whose future relationship for the purpose of the feasibilitystudy was determined to be insignificant.

CONCLUSION

The purpose of this study was to explore the benefits of incorporat-ing stakeholder theory and application to the feasibility analysis of anatural resource attraction. One advantage of this application wasthe ability in the pre-start up phase of a development to gain multipleperspectives on stakeholder salience. While the original intention ofstakeholder theories like Mitchell et al’s (1997) is to explain the man-agerial perspective, for sustainable developments this limitation canleave social and environmental concerns underrepresented. Wideningthe perspective does mitigate some of the managerial bias.

Determining stakeholder orientation using the three attributes ofpower, legitimacy and urgency is beneficial in a number of ways. First,the three attributes provide common language based on defined char-acteristics with which multiple project leaders can discuss stakeholderissues. Second, in practical terms, the systematic stakeholder analysisclearly delimits stakeholders. The theory identifies and classifies stake-holders based on the presence or absence of three attributes. Thestructured process of assigning attributes provides a justifiable anddefinable boundary for distinguishing between stakeholders and cur-rently disinterested stakeholders. And third, the model allows for in-formed predictions, which are particularly valuable for a feasibilityanalysis, where stakeholder relationships are often undetermined. Mit-chel et al’s (1997) theory defines three elements of salience, each ofwhich can be isolated for the purposes of predicting the nature of a po-tential stakeholder relationship. This study examines the application ofthe model for one specific purpose, determining stakeholder saliencerelevant to the feasibility analysis of a natural resource attraction. With-in this context, the model effectively provides a pragmatic typologywith a justifiable measure of stakeholder salience.

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This paper also suggests that a combination of strategic planningand stakeholder theory is a possible solution to some of the challengesof implementing the ideals of sustainable tourism development. Whilea feasibility analysis embodies the elements of strategic planning, suchas an emphasis on goal and target specification, quantitative analysisand prediction of environment, identification and evaluation of alter-native policy actions, and an evaluation of means against ends, theincorporation of stakeholder theory can empower various interests inthe planning process. The interests of other entities concerned with so-cial/cultural and environmental impacts will thus balance the manage-rial lack of intrinsic stakeholder commitment, which can lead moststrategic plans to focus on financial returns. Given the multiplicity ofstakeholders groups and stakeholder interests reflected in the study re-sults, this study shows the benefits of applying stakeholder analysis tofeasibility analysis. Considering the wide recognition that sustainabletourism must encompass various and often competing interests, it isnot surprising that current planning literature rejects the notion of ahomogenous public interest (Lane 2005). With multiple stakeholdersidentified and involved, the tourism project stands a better chance ofachieving the triple bottom line.

Further research should incorporate the strategies and methodolo-gies of facilitating collaborative planning at the pre-start up stage. Thereis at this point, however, no definitive critical study of a pre-start up fea-sibility analysis. Could, for instance, a suitable framework exist for feasi-bility analysis that would assist planners in facilitating collaborativedecision-making before major decisions have already been made? Doesfeasibility analysis distinguish between operational and financial feasi-bility, and long-term viability versus initial revenue surpluses? How doesfeasibility analysis compare with other planning techniques concernedwith sustainability? Considering the call for implementation strategiesfor sustainable tourism, further research in planning at the site leveland at the pre-business plan stage is needed. Understanding the roleof feasibility analysis in decentralized planning, integrative and intersec-toral planning, and facilitating collaboration will address some of thechallenges of implementing sustainable tourism development.

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Submitted 31 May 2007. Resubmitted 1 October 2007. Resubmitted 6 October 2008. FinalVersion 8 October 2008. Accepted 10 October 2008. Refereed anonymously. CoordinatingEditor: Peter Murphy

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