Definition
Stakeholder Capitalism is a system in which corporations are oriented to serve the interests of all their stakeholders. Among the key stakeholders are customers, suppliers, employees, shareholders, and local communities.
Why It Matters
Stakeholder capitalism is the ‘long-term realignment’ of corporate power; it recognizes that a company’s durability depends on serving the interests of its employees and community as much as its shareholders, shifting the focus from quarterly profits to sustainable value.
Core Concepts
- Beyond Shareholder Primacy: Rejects the idea that the sole purpose of a corporation is to maximize shareholder value (Friedman Doctrine).
- Long-term Value Creation: Emphasizes long-term sustainability over short-term quarterly profits.
- Social and Environmental Responsibility: Integrating ESG (Environmental, Social, and Governance) metrics into business performance.