Association of Chartered Certified Accountants (ACCA) Certification Practice Test

What defines the term "connected stakeholders"?

1. Those who have no relationship with the organization

2. Individuals involved but with no formal contract

3. Employees who contribute to daily operations

4. Those with a direct contractual relationship

The correct answer is: Individuals involved but with no formal contract

The term "connected stakeholders" refers to individuals or groups that have a significant interest or involvement with an organization, which can manifest in various forms. The correct choice highlights that these stakeholders may be involved in the organization's activities or processes but do not necessarily have a formal contractual relationship. This makes them distinct within the context of stakeholder theory, which recognizes the importance of a variety of relationships that can exist outside traditional frameworks. Connected stakeholders can include suppliers, customers, community groups, and other parties who engage with the organization, sharing a mutual interest even though their engagement lacks formal binding contracts. This perspective is crucial because it emphasizes how an organization can be influenced by a broader network of relationships, not just those defined by contractual agreements. In contrast, the other options detail relationships that do not fully capture the essence of "connected stakeholders." For instance, individuals with no relationship to the organization lack engagement and therefore cannot be classified as connected. Moreover, employees, although important contributors, are typically considered internal stakeholders rather than being described in the context of being "connected" in a broader, informal sense. Lastly, stakeholders with a direct contractual relationship would be considered formal stakeholders rather than the broader category suggested by the term "connected stakeholders."