Shareholders vs. Stakeholders

Recently, corporations have begun to answer to both shareholders and stakeholders, unlike in the past, where they would mostly be interested in shareholders. This is in tune with the emergence of corporate social responsibility (CSR), a business-model that encourages companies to take into consideration the interest of a wide range of stakeholders and constituents in the business environment. Therefore, when making their decision-making process more engaging, companies might consider the impact of their choices on a variety of stakeholders rather than making choices based solely on the interest of shareholders. The World Economic Forum has been debating the trade-off between all these concepts, releasing what has been known as the Davos Manifesto. It centers on the debate over what type of capitalism we should have if we want to sustain our economic system for future generations. As such, three models are presented: “shareholder capitalism,” which aligns with our concepts of “shareholder value” (i.e., corporation’s primary goal is to maximize profits), “state capitalism,” where the government sets the direction of the economy (e.g., China), and “stakeholder capitalism,” which aligns with our concepts of “stakeholder value” and the M2W principles.