Stakeholder Fusion vs Stakeholder Management

There’s a phrase that keeps appearing in business ethics courses, corporate sustainability reports, and tourism industry conferences: stakeholder management. The concept sounds responsible. Enlightened, even. It suggests that businesses should attend to the interests of communities, employees, suppliers, and environments - not just shareholders. And compared to the alternative of ignoring everyone except investors, this represents progress.

But I’ve spent 20 years wondering whether the framing itself creates the problem it claims to solve.

Stakeholder management assumes something that might not be true: that operator interests and community interests are fundamentally separate things requiring careful balance. The framework positions the business as a mediator between competing claims. Shareholders want returns. Communities want protection. Employees want security. Suppliers want fair treatment. The manager’s job is to weigh these claims, make tradeoffs, find acceptable compromises.

What if the separation is optional? What if business structure could make the categories collapse into each other so completely that there’s nothing left to manage?

I’ve started calling this stakeholder fusion A structural condition where operator survival becomes mechanically dependent on community wellbeing, making the distinction between business interests and stakeholder interests operationally meaningless. - not because it sounds more impressive than stakeholder management, but because it describes something structurally different. The distinction matters for anyone trying to build tourism operations that actually protect communities rather than performing protection while preserving the option to extract later.

The Management Paradigm

Stakeholder management theory emerged in the 1980s, primarily through R. Edward Freeman’s foundational work. The core insight was that businesses affect and are affected by groups beyond shareholders - communities, employees, customers, suppliers, regulators. Ignoring these groups creates risk. Attending to them creates opportunity. Smart managers therefore track stakeholder interests, engage stakeholder concerns, and balance competing claims in ways that sustain business viability.

This represented genuine progress from pure shareholder primacy. It acknowledged that extraction has consequences and that long-term business health depends on maintaining relationships. The framework gave managers permission to consider community impacts without violating their fiduciary duties.

But notice what the framework doesn’t question: the assumed separation between the business and its stakeholders. The operator sits at the center of a web, with various groups positioned around the periphery. Each group has interests. Those interests sometimes align with the operator’s interests, sometimes conflict. The manager’s skill lies in navigating these relationships - building trust here, making concessions there, maintaining the social license to operate.

The separation is built into the vocabulary. Stakeholder engagement. Stakeholder consultation. Stakeholder communication. These are things you do to parties outside yourself. The language assumes distance.

In tourism, stakeholder management typically involves things like community liaison meetings, local hiring programs, supplier codes of conduct, environmental impact assessments, and benefit-sharing agreements. An operator identifies affected communities, assesses their concerns, develops response strategies, and monitors outcomes. Professional. Systematic. Defensible in sustainability reports.

And almost entirely voluntary.

This is where the Sustainability Removal Test becomes useful. Can the stakeholder management practices be discontinued without causing immediate business failure?

In almost every case, yes. An operator can stop holding community meetings. They can reduce local hiring when cheaper labor becomes available elsewhere. They can pressure suppliers for discounts when margins tighten. They can minimize environmental mitigation when enforcement is lax. The business continues. The stakeholder management was additive - something done in addition to the core business model, not something required by it.

What remains when voluntary practices become inconvenient?

The Structural Alternative

I didn’t set out to develop a theoretical alternative to stakeholder management. I set out to answer a practical question: could I structure a tour company so that the communities we worked in actually benefited rather than just receiving managed attention?

The answer required constraints that made community benefit non-optional.

When Culture Discovery Vacations launched in 2006, we adopted structural rules that seemed restrictive at the time. Zero commissions from any vendor - no kickbacks, no referral fees, no per-head payments from restaurants or shops. Volume caps - 18 guests maximum per group, 14 weeks maximum per year in any destination, roughly 250 guests annually per location. Local ownership requirements - every partner must be family-owned and locally operated, no corporate chains, no external investors. Fair pricing - full rates to vendors with no bulk discount negotiation.

I discussed these constraints in “What Existential Sustainability Means” and the research paper on SSRN. What I want to explore here is what these constraints do to the relationship between operator and community. Something structural happens when you eliminate the option to extract.

Consider the zero-commission policy. In conventional tourism, operators select partners based partly on financial kickbacks. Restaurant A pays a 15% referral fee. Restaurant B, which might serve better food with more authentic local sourcing, pays nothing. The operator has financial incentive to send guests to Restaurant A regardless of quality. This creates systematic misalignment between guest interests, community interests, and operator financial interests.

When you refuse all commissions, the misalignment disappears. Partner selection must be based on quality, authenticity, and relationship potential because there’s no financial distortion. The operator’s interest in excellent partner experiences becomes identical to guest interests in authentic cultural encounters and community interests in supporting quality local businesses.

Or consider the volume cap. In conventional tourism, successful destinations attract volume growth. Operators maximize bookings. Partners invest in expanded capacity. Land values rise. Family businesses sell or get priced out. The community transforms to serve tourism rather than integrating tourism into community life.

A hard volume constraint prevents this cycle from starting. Our partners can’t become economically dependent on tourism because the mathematics make dependency impossible. A cooking instructor hosting 12-14 sessions per year earns meaningful supplemental income - maybe €4,000-€5,000 - without restructuring her life around tourism demands. She maintains her primary livelihood. Tourism integrates into existing patterns rather than displacing them.

But here’s what I didn’t fully understand when we started: these constraints don’t just protect communities from us. They make our survival depend on them.

When Categories Collapse

The standard stakeholder model positions the operator as a distinct entity managing relationships with external groups. Community is out there. The operator is in here. The relationship requires active maintenance.

Our structural constraints dissolved this boundary in ways I only gradually recognized.

If our local partners collapse, we can’t operate. There’s no alternative vendor network. No corporate hotel chain to fall back on. No commission-based supplier pool to draw from. The 72% of gross revenue retained locally isn’t corporate social responsibility that we generously provide. It’s the structural mechanism of the business model. Reduce it significantly and operations become impossible.

The local ownership requirement means we depend entirely on family businesses. If Soriano nel Cimino’s artisan families decided to stop working with us, we couldn’t substitute corporate alternatives. The authentic experiences guests pay €4,500-5,000 per week for are authentic precisely because they’re provided by real families in their actual homes and workshops. Substitute commercial staging and the product ceases to exist.

The zero-commission policy means our reputation with partners depends on genuine quality of relationship. We can’t compensate for friction with financial payments. If trust breaks down, partnerships end. We’ve maintained 100% partner retention over 20 years not through contractual enforcement but through mutual benefit that both parties recognize and want to continue.

At some point I stopped thinking of this as stakeholder management. The categories didn’t fit. We weren’t managing relationships with external parties. We were structurally intertwined with families whose interests had become indistinguishable from ours.

Their success was our success. Not metaphorically. Not as a corporate values statement. Literally. If they thrived, we had partners. If they struggled, we had nothing to sell.

I started calling this stakeholder fusion because the word “management” implies separation and the separation no longer existed. Fusion describes what happens when distinct things merge into something undifferentiated. You can’t manage stakeholders when you’ve become operationally identical to them.

A Note on Terminology

I should acknowledge that “stakeholder fusion” as a phrase appears elsewhere in business and systems literature, though referring to something quite different. In systems engineering and organizational modeling, “model-stakeholder fusion” describes processes for integrating stakeholder input into computational models - gathering information about system states, translating it into symbolic form, and using that data to inform operational decisions. It’s a methodology for stakeholder engagement, not a structural business condition.

The concept I’m describing is closer to the opposite. Rather than a process for managing stakeholder input, it’s a structural state where the need for management processes largely disappears. When operator survival depends mechanically on community wellbeing, you don’t need elaborate engagement methodologies. Interests align automatically because they’ve become structurally identical.

This distinction matters because the systems engineering usage keeps stakeholder and operator as separate categories - fusion refers to combining their data inputs, not their fundamental interests. What I’m describing eliminates the categorical separation itself.

The Evidence from 20 Years

Theory is comfortable. Operational evidence is messier. Let me describe what stakeholder fusion actually produces over two decades of practice.

Our partner network in Soriano nel Cimino includes 37-38 families. Three derive primary income from our partnership - more than 75% of household revenue. Four derive significant income - 25-75%. The remaining 30-odd families treat it as supplemental income, integrated into existing livelihoods. This distribution is itself structural. The volume constraint mathematically prevents creating partner dependency that would make families vulnerable to our decisions.

Partner retention is 100% over 20 years, excluding partners who retired or sold businesses for non-partnership reasons. In an industry where supplier relationships are transactional and turnover is high, this stability suggests something operating differently.

Guest return rate is 31%. People pay €4,500-5,000 per week, have an experience they can’t get elsewhere, and come back. They tell friends. Marketing costs remain minimal because word-of-mouth drives acquisition. The authenticity that partners provide - because they’re actual families rather than tourism professionals staging experiences - produces quality that guests recognize and value.

Net margins are approximately 18%, comparable to industry averages of 15-20%. This matters because it demonstrates structural sustainability doesn’t require financial sacrifice. Premium pricing compensates for the structural constraints. The model remains profitable precisely because it works relationally.

I want to be careful about what this evidence shows. It demonstrates that stakeholder fusion can produce stable, profitable operations over extended periods. It doesn’t demonstrate that stakeholder fusion is always preferable to stakeholder management or that it works in all contexts.

What Management Produces Differently

To understand what fusion changes, consider what conventional stakeholder management produces in tourism.

A large tour operator decides to demonstrate community commitment. They establish a community liaison office. Hire local staff. Conduct regular stakeholder consultations. Fund community projects. Publish sustainability reports documenting their engagement activities.

All of this can happen while the operator simultaneously negotiates bulk discounts that squeeze vendor margins. Or accepts commissions that bias partner recommendations. Or pursues volume growth that gradually transforms the destination. The stakeholder management activities exist in parallel with extractive practices, not as replacements for them.

The community liaison office addresses community concerns while the operations team pursues efficiency gains. The sustainability report documents engagement while the finance team targets margin improvements. Different departments, different objectives, different metrics. Management assumes and preserves the separation.

I’m not suggesting malice. Most operators genuinely want to benefit communities. But the structure allows extraction regardless of intent. When things get difficult - economic downturn, competitive pressure, ownership changes - the stakeholder management activities can be scaled back. They were never structurally required. They were voluntary additions to a business model that functions perfectly well without them.

This is the problem the Sustainability Removal Test reveals. Can the practice be discontinued without causing business failure? If stakeholder management can continue indefinitely but might not - if it depends on sustained goodwill rather than structural necessity - then communities are protected only as long as protection remains convenient.

Fusion eliminates this optionality. Not through moral commitment but through mechanical constraint.

The Mechanism in Detail

Let me walk through how specific structural constraints create fusion rather than management relationships.

Zero commissions and partner trust. In commission-based tourism, partners understand the relationship is transactional. They pay for referrals. The operator delivers volume. If a better-paying partner emerges, loyalty shifts. Trust is limited because both parties know financial incentives could override relationship quality at any time.

When we tell partners we accept no commissions, the initial response is often disbelief. Twenty years in, that disbelief has transformed into something else. Partners know we recommend them because we believe in their quality. They know our interests align with their success rather than competing with it. This produces protective behavior - partners who catch problems report them, who suggest improvements volunteer them, who encounter competitors spreading disinformation push back.

One partner noticed a guide was secretly accepting side payments from a shop - a violation of our zero-commission policy we had no way to detect internally. She reported it because she understood the policy protected everyone’s relationship quality, including hers. Under commission-based tourism, she would have had no reason to report. Under fusion, protecting the system protected herself.

Volume caps and family integration. Tourism employment typically strains families. Extended hours, weekend work, conflicting schedules, geographic mobility. The industry’s divorce rates and family disruption are well documented.

Our 14-week operating season and 250-guest annual limit create different dynamics. Families work together during concentrated periods - husband and wife co-hosting cooking sessions, adult children helping during peak weeks - then return to primary livelihoods. Tourism becomes something families do together rather than something that separates them.

This isn’t stakeholder management. We’re not running programs to support work-life balance. The structure itself produces the outcome. Families benefit not because we’ve decided to prioritize their wellbeing but because the volume constraint mechanically prevents the patterns that damage families in conventional tourism.

Local ownership and authenticity. Corporate tourism can stage authenticity. Trained performers present cultural experiences designed to meet tourist expectations. The product might be polished, but something is obviously missing - the sense that you’re interacting with people in their actual lives rather than actors in their workplace.

Our local ownership requirement means experiences are provided by families in their real homes and workshops. The cooking instructor teaches in her actual kitchen. The artisan demonstrates in his actual studio. The winemaker pours from bottles he drinks with his own family.

This authenticity is what guests pay premium prices for. It’s also what makes the business possible. Remove the local families and you remove the product. We can’t substitute corporate providers without destroying what makes the experience valuable. Our survival depends on their continued participation.

The Question of Conflict

Stakeholder management assumes conflicts between stakeholder groups that must be mediated. Shareholders want returns. Employees want wages. Communities want protection. Customers want value. These interests genuinely compete, and management skill lies in finding acceptable balances.

Does fusion eliminate conflict, or does it just obscure it?

I think the structural constraints prevent most conflicts from arising rather than suppressing them after they emerge.

Consider volume conflicts. In conventional tourism, partners often pressure operators for more referrals. More bookings mean more revenue. But aggregate volume increases eventually damage the destination - the tragedy of commons where individual rationality produces collective harm.

Under volume caps, partners can’t demand volume increases because the cap applies to everyone. A cooking instructor can’t ask for twice as many sessions because twice as many sessions don’t exist. The constraint removes the decision from the relationship. There’s nothing to negotiate.

Or consider pricing conflicts. In conventional tourism, operators continually pressure vendors for better rates. Margin improvement often comes from squeezing the supply chain. Vendors resist. Negotiations become adversarial. Relationships are transactional rather than collaborative.

Our fair pricing commitment means we pay full rates without bulk negotiation. Partners set their prices. We accept them or don’t work with them. There’s no annual price review where we leverage volume for discounts. The structural commitment removes pricing from the relationship dynamic.

I’m not claiming fusion eliminates all tension. Personalities clash. Expectations diverge. Communication failures create friction. But the structural conflicts that dominate conventional stakeholder management - the zero-sum competitions over volume, margin, and control - largely don’t exist because the structure prevents them from forming.

Where Fusion Can’t Reach

The Civita di Bagnoregio experience taught me the limits of operator-level fusion.

We operated in Civita from 2007 to 2018 under identical structural constraints to Soriano. Same volume caps. Same partnership model. Same zero-commission policy. Our relationships with Civita partners demonstrated the same fusion characteristics - mutual benefit, trust, collaborative protection of quality.

Then aggregate volume overwhelmed the destination. Media coverage attracted mass tourism. Annual visitors reached 850,000 in a village of 11 permanent residents. Day-trippers arrived by bus. Original residents sold and departed. Family businesses became tourist-serving operations. The community fabric we depended on dissolved.

We ceased operations in 2018. Not because our partner relationships had failed but because the destination no longer supported the authentic experiences our model requires. The product ceased to exist.

This reveals a critical limitation: stakeholder fusion at the operator level cannot prevent destination-level destruction when unconstrained competitors enter the market. Our volume discipline in Civita protected our partnerships but couldn’t protect Civita itself from aggregate pressure.

Individual operator virtue cannot overcome collective action problems. The fusion I’m describing is a firm-level structural condition. Destination-level protection requires policy coordination - visitor caps, local ownership requirements, commission prohibitions - implemented at municipal and regional levels.

Soriano has survived because it hasn’t attracted the attention that destroyed Civita. Population remains stable at approximately 8,000. Our 250 annual guests integrate without distortion. But this isn’t because fusion protects against all threats. It’s because the particular threat that destroyed Civita - mass tourism volume growth from unrelated operators - hasn’t materialized in Soriano.

The framework offers genuine protection against extraction by structurally-constrained operators. It offers limited protection against aggregate extraction by operators without constraints.

Implications for Tourism Design

If you’re building tourism operations and want something beyond stakeholder management, what does fusion require?

First, structural constraints that eliminate extraction optionality. Not policies that could change when ownership changes or competitive pressure increases. Actual operational constraints embedded so deeply that removing them would cause business failure. Zero commissions means zero - not “minimal commissions” or “commissions only from approved partners.” Volume caps mean hard limits - not “soft targets” that flex under demand.

Second, business model design where community benefit is the mechanism rather than an addition. Revenue structures that mechanically retain value locally. Partnership models that create mutual dependency. Authenticity requirements that can only be satisfied by genuine community participation. If community benefit could be stripped away while business operations continue, you have management, not fusion.

Third, acceptance of mathematical ceilings. Fusion requires volume constraints. Volume constraints create revenue limits. Growth-oriented metrics will produce frustration. Success must be measured in stability, relationship quality, community health, and adequate rather than maximum returns.

Fourth, realistic assessment of competitive context. Fusion protects against your own extractive potential. It doesn’t protect against aggregate destruction from unconstrained competitors. If your destination is attracting operators without your constraints, firm-level fusion may not prevent destination-level degradation.

Fifth, patience. The trust effects of fusion develop slowly. Partners who’ve experienced commission-based tourism don’t immediately believe zero-commission claims. Communities that have watched tourism transform other places don’t immediately trust volume constraints. Demonstrating structural commitment through consistent behavior over years produces relationship quality that can’t be purchased or accelerated.

What I’m Still Uncertain About

Twenty years of evidence is substantial but not comprehensive. There are questions I can’t answer with confidence.

Does fusion scale? Our model works with 250 guests per destination. What about 2,500? What about 25,000? At some point, scale might require management structures that reintroduce the separations fusion eliminates. I suspect fusion has size limits, but I don’t know where they lie.

Does fusion transfer across cultures? Our evidence comes from Italian destinations. Would identical structural constraints produce similar fusion effects in Southeast Asia, Africa, Latin America? Cultural contexts shape how relationships form and how communities respond to tourism integration. The mechanism might work differently or fail entirely in different settings.

Can fusion survive ownership transitions? If we sold Culture Discovery Vacations, would the structural constraints persist? New owners would inherit the partnerships and the operational model, but would they maintain structural commitments that limit their returns? I suspect fusion requires ownership continuity or very unusual incoming owners who value the structure despite its constraints.

Is fusion optimal? I’ve described what fusion produces and how it differs from management. I haven’t demonstrated that fusion produces better outcomes than excellent stakeholder management. Maybe disciplined management with strong commitments could achieve similar results without requiring structural constraints that limit flexibility. I doubt it, but I can’t prove it.

These uncertainties matter. I’m presenting a framework based on operational evidence, not a universal theory. The evidence supports the framework in specific contexts. It doesn’t guarantee the framework works everywhere.

Beyond Balance

Stakeholder management asks: how do we balance competing interests?

The question assumes competition between interests that must be traded off. Community protection costs money. Volume limits reduce revenue. Fair pricing cuts margins. The manager navigates these tradeoffs, finding acceptable equilibria.

Stakeholder fusion asks: how do we eliminate the competition?

The answer requires structural design that makes interests mechanically identical. When operator survival depends on community wellbeing, there’s nothing to balance. The tradeoff disappears because the categories have merged.

I’m not suggesting this is easy. The structural constraints that produce fusion require accepting limits that growth-oriented thinking finds intolerable. Volume caps. Commission prohibitions. Local ownership requirements. Fair pricing commitments. Each constraint reduces optionality. Each constraint makes the business less flexible.

But optionality to extract is optionality to harm. Flexibility to pursue margin improvement is flexibility to squeeze communities. The constraints that produce fusion are the same constraints that make extraction mechanically impossible.

This reframes the question. Not: how much community benefit can we afford while remaining competitive? But: how can we structure operations so community benefit is not optional?

Twenty Years Later

The partner families in Soriano have become something I don’t have a business vocabulary for. Not vendors. Not contractors. Not even partners in the conventional sense. Their children have grown up with our seasonal guests. Their businesses have evolved alongside ours. Their lives have integrated with operations in ways that make separation difficult to imagine.

When I visit Soriano now, I stay with families I’ve known for two decades. Their grandchildren know me. Their neighbors know what we’ve built together. The integration isn’t something we manage. It’s something that happened because the structure made it happen.

I think this is what stakeholder fusion produces over time. Not better stakeholder management but the gradual dissolution of the stakeholder category itself. When your survival depends on theirs and theirs depends on yours, when interests have merged so completely that separation makes no operational sense, when the question “whose interests should we prioritize?” has no answer because the interests have become indistinguishable…

That’s not a relationship you manage. That’s a relationship you are.

I’m still learning what this means and where its limits lie. The academic community will determine whether the framework holds up to rigorous examination. The tourism industry will determine whether operators can adopt structural constraints that produce fusion rather than settling for management approaches that preserve extraction optionality.

But the central question remains. When you describe your stakeholder relationships, are you describing something you do, or something you are?

If it’s something you do, what happens when doing it becomes inconvenient?

If it’s something you are… perhaps there’s less to manage than we’ve been taught to believe.