Definition of a Stakeholder
A stakeholder is any person, organization, social group, or society at large that has a stake in the business. Thus, stakeholders can be internal or external to the business. A stake is a vital interest in the business or its activities. It can include ownership and property interests, legal interests and obligations, and moral rights. A legal obligation may be the duty to pay wages or to honor contacts. A moral right may include the right of a consumer not to be intentionally harmed by business activities. Stakeholders can:
- Affect a business
- Be affected by a business
- Be both affected by a business and affect a business
A stakeholder is often contrasted against a shareholder, which has an ownership interest in the business. R. Edward Freeman and his book Strategic Management: A Stakeholder Approach (1984) has had a major influence on stakeholder theory.
The concept of a stakeholder does have moral and ethical implications for business governance. If a business only has a duty to its shareholders, then the business may have no moral obligations to any other person, organization or society. On the other hand, if a business has a duty to its stakeholders, then a business must take into account the interests of its stakeholders as well and not focus completely on maximizing the interests of its owners.
Examples of Stakeholders
Let's look at some common stakeholders in a typical business. Remember, the key requirement is that a stakeholder is either affected or affects the business. Consequently, the definition of stakeholder is very broad.