This essay deals with the importance and interests of different stakeholders and tries to identify how they affect the success of a business. Firstly, the essay will compare the shareholder and stakeholder theory and afterwards, the importance of employees, customers, creditors, suppliers and social stakeholders will be discussed. Further, this essay illustrates the drivers and changes of trust in a company.
It is often assumed that shareholders are the most important stakeholder group in any business. However, there are two main competing theories that argue how a company should be run: the shareholder approach and the stakeholder approach. On the one hand, the shareholder approach claims for profit maximisation of the shareholder as the only objective of business. On the other hand, the stakeholder approach suggests satisfying the interest of various stakeholders. In practice, shareholder models have dominated in the past. However, corporate scandals and the financial crisis have raised doubts about that model and led to a loss of trust.
Table of Contents
1 Introduction
2 Shareholder theory
3 Stakeholder theory
4 Important stakeholders
4.1 Employees
4.2 Customers
4.3 Creditors and suppliers
4.4 Societal stakeholders
5 Trust
6 Conclusion
Objectives and Core Topics
This essay explores the competing corporate governance models of the shareholder approach and the stakeholder approach, examining how these theories influence business management, corporate success, and the establishment of trust. It investigates the primary motivations of these theories and assesses the importance of various stakeholder groups in the modern business landscape.
- Comparison of shareholder and stakeholder theory
- Evaluation of key stakeholder groups (employees, customers, creditors, suppliers, and society)
- Analysis of corporate trust and its primary drivers
- The link between stakeholder engagement and competitive advantage
- Impact of the financial crisis on corporate governance perspectives
Extract from the Book
1 Introduction
It is often assumed that shareholders are the most important stakeholder group in any business. However, there are two main competing theories that argue how a company should be run: the shareholder approach and the stakeholder approach. On the one hand, the shareholder approach claims for profit maximisation of the shareholder as the only objective of business. On the other hand, the stakeholder approach suggests satisfying the interest of various stakeholders.
In practice, shareholder models have dominated in the past. However, corporate scandals and the financial crisis have raised doubts about that model and led to a loss of trust (Bottenberg et al., 2016).
This essay deals with the importance and interests of different stakeholders and tries to identify how they affect the success of a business. Firstly, the essay will compare the shareholder and stakeholder theory and afterwards, the importance of employees, customers, creditors, suppliers and social stakeholders will be discussed. Further, this essay illustrates the drivers and changes of trust in a company.
Chapter Summaries
1 Introduction: This chapter provides an overview of the two conflicting corporate theories and outlines the scope and objectives of the analysis.
2 Shareholder theory: The chapter details the focus on profit maximization and shareholder wealth as the primary objective of corporate management.
3 Stakeholder theory: This section introduces the broader approach of considering the interests of all stakeholders to achieve better organizational performance.
4 Important stakeholders: This chapter categorizes and examines the specific roles and interests of employees, customers, creditors, suppliers, and societal groups.
5 Trust: The chapter explores the impact of corporate scandals and the financial crisis on public trust in companies and identifies key drivers for building future trust.
6 Conclusion: The concluding chapter synthesizes the findings, highlighting the necessity of balancing diverse stakeholder interests for long-term business success.
Keywords
Shareholder theory, Stakeholder theory, Corporate governance, Profit maximisation, Trust, Competitive advantage, Corporate social responsibility, Employees, Customers, Creditors, Suppliers, Societal stakeholders, Financial crisis, Triple Bottom Line, Management strategy
Frequently Asked Questions
What is the core focus of this work?
The work examines the debate between shareholder-oriented and stakeholder-oriented management models and how they impact a company's long-term success and trustworthiness.
What are the central thematic areas?
The central themes include the comparison of management theories, the identification of key stakeholder groups, and the analysis of how these groups influence corporate reputation and stability.
What is the primary goal of this essay?
The primary goal is to determine how various stakeholder interests interact with a company's operations and to evaluate why a balanced stakeholder approach is increasingly vital for modern business success.
Which scientific methodology is applied?
The essay utilizes a literature-based analysis, comparing established economic theories and referencing empirical studies, such as the Edelman Trust Barometer, to support its arguments.
What is covered in the main section of the document?
The main section covers the conceptual foundations of the shareholder and stakeholder theories, followed by detailed analyses of specific stakeholder groups and the critical factor of corporate trust.
Which keywords best characterize the research?
Key terms include Shareholder theory, Stakeholder theory, Corporate governance, Trust, Competitive advantage, and Corporate Social Responsibility.
How does the author view the role of shareholders?
While historically prioritized as the sole objective for profit, the text suggests that in the current climate, focusing exclusively on shareholders can lead to risks, conflicts, and loss of trust.
Why is the example of the Edelman Trust Barometer significant?
It demonstrates a shift in global public opinion, suggesting that a "stakeholder society" is replacing the traditional "shareholder society" in terms of what defines a reputable and credible company.
- Quote paper
- Anonym (Author), 2019, The shareholder versus the stakeholder approach, Munich, GRIN Verlag, https://www.grin.com/document/498235
