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stakeholdersomeone having an interest or stake in the operations and performance of a firm. Shareholders in a company have an interest in so far as they have invested money in the company and look for a return on that investment in the form of dividends and share appreciation. Employees have a stake since they work in the firm and are dependent on the firm for their jobs and incomes. Customers have a stake since they buy products from the firm and require a stable supply of products that are safe, effective and affordable. Suppliers have a stake as providers of raw materials and services. Finally the broader community has a stake in the firm and looks to the firm to behave as a ‘good citizen’ who will avoid polluting the environment and will help in solving community problems such as inner city decay etc.
Until recent years managers were expected to run companies largely in the interests of shareholders; however in recent years firms have been urged to adopt broader responsibilities to all stakeholders.
stakeholdersomeone who has an interest or stake in an organization. In a JOINT-STOCK COMPANY stakeholders include:
- shareholders, who expect reasonable returns on their investment (dividends and share appreciation);
- employees, who expect good wages, job security and working conditions;
- customers, who expect good-quality products at reasonable prices;
- suppliers, who expect regular orders and prompt payment;
- the community, which expects companies to pay taxes and curb their pollution.
Discussions of CORPORATE GOVERNANCE have tended to emphasize the responsibility of salaried managers to act as AGENTS of the shareholders who own the business. By contrast, stakeholder advocates stress the multiple responsibilities of a company and its managers to all stakeholder groups and the need for companies to accept SOCIAL RESPONSIBILITY for their actions. See FIRM OBJECTIVES.
Anyone who might be affected by a decision;anyone who has a “stake”in the outcome of a situation. Local government decisions are typically made with reference to the stakeholders in the community,which could include nearby property owners,employers,employees,tenants,lenders, and community service programs.