Stakeholder Value Perspective

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Emphasizing responsibility over profitability. Explanation of Stakeholder Value Perspective.

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  1. Summary
  2. Forum
  3. Best Practices
  4. Expert Tips
  5. Resources
  6. Print

Introduction

Over the last 200 years, the influence of business corporations on our society has grown quickly and tremendously. No wonder that the corporate purpose they should serve is discussed by many people with different backgrounds, including:

  • Academics in the fields of economics, law, political science and sociology,
  • Business ethics and philosophic scientists,
  • Political parties, labor unions, various communities, environmentalists, and
  • Media and the general public.

In countries with a market economy it is generally agreed that companies should pursue economic profitability. However many people would likewise agree that organizations also have certain social responsibilities. Profitability and responsibility can and should be combined in an ideal world, however it is clear that they are at least partially contradictory.

On the one hand, businesses must make profits for surviving. Specifically, corporations must provide a higher return on their equity capital than would be realized by the shareholders if they deposited their money on a risk-free bank account. The profits that are made create trust from investors and are usually reflected in higher share-prices, which make it easier for the company to realize its goals. The profits are not only a result, but also a source of corporate competitive health and wealth.

On the other hand, companies are networks of parties and people working together towards a shared goal and not merely 'economic machines'. Employees nowadays represent a major part of the value of any company (intellectual capital). To motivate people to work hard for the interests of the company, a level of trust must be built with them. Likewise it is important for trust to develop between the organization and its external environment (customers, suppliers, government, and interest groups). Such trust can only grow from the perceived secure feeling, that the interests of all individuals and stakeholders are taken into account.
 

The Stakeholder Value Perspective

The Stakeholder Value Perspective (also: Stakeholder Values Perspective) emphasizes responsibility over profitability and sees organizations primarily as coalitions which must serve all parties involved.


Stakeholder Value advocates believe that the success of an organization should be measured by the satisfaction among all stakeholders. And they see stakeholder management both as an end/purpose and as a means. They believe that social responsibility is an organizational matter. Also they claim that society is best served by organizations pursuing joint interests and economic symbiosis.


A company is not an instrument of its shareholders. But it is a coalition between various resource suppliers, with the intention of increasing their common wealth. Advocates of this perspective refuse to give shareholders a higher moral claim on the organization than providers of other resources.


Recognizing the moral claims of stakeholders other than the shareholders introduces other values than financial value in the spectrum of what needs to be pursued by the organization. Stakeholder management is not merely instrumental to create shareholder value, but normative. By posessing strongly motivated employees, and by nurturing high levels of trust with all parties surrounding the organization, the pursuing of the joint interests of all stakeholders is not only more fair, but it will also maximize the health of the society.


Stakeholder Value Perspective Forum
  Reconciling Profitability and Responsibility
Here’s a list of ways in which CEOs can deal with the trap of focusing solely on satisfying the shareholders or the stakeholders:
  1. Making all stakeholders of the business realize that win-win situations are key to the success of every bus...
     
 
  High-Commitment High-Performance (HCHP) Leaders
How can CEOs under fierce pressure from capital markets avoid the trap of focusing solely on satisfying the shareholders? In the HBR of July-August 2008, Eisenstat, Beer, Foote, Fredberg and Norrgren of  
   
 

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Best Practices - Stakeholder Value Perspective Premium

Expert Tips - Stakeholder Value Perspective Premium
 

Stakeholder Capitalism (Freeman)

Professor Freeman has recently published a formidable article about this subject in the Journal of Business Ethics (2007-74:303-314). In his article c...
Usage (application): Stakeholder Management
 
 
 

7 Perspectives of Looking at Stakeholders

Ian Mitroff, Emeritus Professor from the University of Southern California, identified seven categories of stakeholder perspectives than can help to d...
Usage (application): Clustering Stakeholders
 
 
 

Doing Well by Doing Good?

Since a long time ago it has been argued whether there is a link between corporate social responsibility and corporate financial performance. Accordin...
Usage (application): The Correlation Between Corporate Social Responsibility and Corporate Financial Performance
 
 
 

The Maturity Stages of Corporate Responsibility

Simon Zadek provides a useful best practice five-stage maturity model of how organizations deal with Corporate Responsibility:
- Defensive: deny ...
Usage (application): Organizational Development, Corporate Responsibility Maturity
 
 
 

Reasons Why People are Doing Voluntary Work

Voluntary work has long been seen as an activity performed mainly by unemployed individuals –mostly women, both in their youth and retired - because t...
Usage (application): Expectancy Theory, Corporate Social Responsibility, Stakeholder Perspective, Volunteers
 
 

Resources - Stakeholder Value Perspective Premium

The Purpose of Business: Stockholder versus Stakeholder Theories

This presentation elaborates on the objectives and purposes of businesses according to different views: those of stockholders and those of stakeholder...
Usage (application): Stakeholder Analysis; Stakeholder Commitment
 

What is a Business For?

Charles Handy is critical of overemphasis on share price as the metric for corporate success. He proposes that the purpose of a business “is not to ma...
Usage (application): Definition of Corporate Succes
 

Strategy, Society and CSR

Presentation about the relationship between CSR and Competitive Advantage. It includes the following sections:
- Business and society are interde...
Usage (application): CSR Strategy, Competitive Advantage, Strategic Corporate Social Responsibility, Strategy and Society
 

The Strategic Role of Public Relations and Communication in Business

Presentation about the role public relations and communications in business strategy implementation and execution. The presentation includes the follo...
Usage (application): Public Relations, Strategic Management, Corporate Responsibility, Stakeholder Management, Stakeholder Analysis
 

The Dawn of Conscious Capitalism

This presentation provides an introduction into the concept of conscious capitalism, and includes the following sections:
1. Introduction
2....
Usage (application): Conscious Capitalism, Value-driven Consumer, Socially Responsible Investing, Corporate Responsibility
 

CSR Implementation and Communication Model (Schmeltz)

Because Corporate Social Responsibility is a value-based concept, it is highly connected with an organization’s values and corporate identity. Actuall...
Usage (application): CSR Communication, CSR Implementation, CSR Strategy, Corporate Identity, Corporate Values, CSR Stages,
 

Introduction Into Welfarenomics

This presentation elaborates on the concept of welfarenomics. The presentation includes the following sections;
1. Contents
2. Welfarenomics...
Usage (application): Welfarenomics
 

Ethics in Corporate Governance

This presentation is about the role that ethics plays in corporate governance.The presentation includes the following sections:
1. What is Corpor...
Usage (application): Ethics, Corporate Governance
 

Introduction to Stakeholder Management

David Butter explains what stakeholders are and their importance for organizations, distinguishing internal from external stakeholders....
Usage (application): Introduction to Stakeholder Management
 
 

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Compare with the Stakeholder Value Perspective:  Shareholder Value Perspective  |  Value Based Management  |  Strategic Intent  |  Ashridge Mission Model  |  Core Competence  |  Clarkson Principles  |  Intrinsic Stakeholder Commitment  |  Stakeholder Analysis  |  Stakeholder Mapping  |  Strategic Stakeholder Management  |  Moral Purpose  |  Seven Surprises  |  Spiral Dynamics


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