Effective Stakeholder Engagement for Enhancing Long-Term Project Impact

Abstract

Project impact arises when the value created by a project is experienced by its stakeholders. For example, a social housing project generates positive societal impact only when residents are able to benefit from affordable and suitable housing. Consequently, the extent to which a project meets stakeholders' expectations largely determines the significance and sustainability of its long-term impact. Project stakeholder engagement facilitates impact by fostering a deeper understanding of, and support for, diverse stakeholder needs. Traditional stakeholder engagement literature focuses largely on decisions made by market stakeholders, such as project managers, structurally overlooking nonmarket stakeholders, such as community members. This narrow focus limits a project's ability to address diverse stakeholder needs, offering nonmarket stakeholders little influence over decision-making and ultimately constraining impact generation. Although the recent literature increasingly recognises that broad stakeholder engagement is important for enhancing project impact, it may also elevate stakeholder expectations and intensify tensions among stakeholders with competing priorities, making long-term impact generation more challenging. At the same time, residents may prioritise affordable and accessible housing that meets their everyday needs. This tension creates an engagement paradox: while engaging nonmarket stakeholders is essential for achieving long-term project impact, their diverse and often competing expectations make engagement increasingly difficult throughout the project life. Consequently, project organisations require a better understanding of both the factors that motivate nonmarket stakeholders to engage with the project and the practices through which market stakeholders can sustain effective engagement. To address this gap, this research poses two questions: (1) What factors drive nonmarket stakeholders to engage in projects? and (2) How can market stakeholders effectively engage with nonmarket stakeholders to enhance project value and project impact? Drawing on new stakeholder theory, this study employs a mixed methods design to sequentially develop and empirically validate a stakeholder engagement framework that enhances a project's long-term impact. Study 1 developed an initial framework based on data from 49 interviews, 5 focus groups and 257 project documents in the Australian government. The study identified four key factors influencing nonmarket stakeholder engagement, stakeholder mapping, reciprocity, legitimacy and trustworthiness, and derived nine guiding principles for market stakeholders to follow to engage effectively with nonmarket stakeholders from both instrumental and normative perspectives. Building on these insights, Study 2 tested the framework using survey data from 28 content experts, 228 market stakeholders and 75 nonmarket stakeholders in Australia. The results indicate that stakeholder mapping and trustworthiness are positively associated with stakeholder engagement; stakeholder engagement enhances project value, which is positively associated with project impacts. Importantly, reciprocity was found to reinforce the relationship between stakeholder engagement and project value. The research makes three theoretical contributions. First, it advances the project stakeholder management literature by identifying factors that enhance nonmarket stakeholder engagement and demonstrating how such engagement drives project impact. Second, it strengthens the project impact literature by clarifying the mechanisms linking project outputs to long-term impacts through stakeholder engagement. Third, it extends NST by incorporating a temporal perspective and foregrounding nonmarket stakeholders' viewpoints, illustrating how their perceptions of market stakeholders' trustworthiness, shaped by prior project experiences, influence engagement and impact generation. Show more