Stakeholder

Definition

A stakeholder is any individual or group that has an interest in the success and functioning of a company. This includes shareholders, employees, customers, suppliers, and the broader community.

5 Must Know Facts For Your Next Test

1. Stakeholders can be internal (employees, management) or external (suppliers, customers).
2. Shareholders are a type of stakeholder with a financial interest in the company.
3. Effective corporate governance often requires balancing the interests of various stakeholders.
4. Stakeholder theory suggests that companies should consider the impact of their actions on all stakeholders, not just shareholders.
5. Conflicts can arise between different stakeholders' interests, requiring careful management and negotiation.

Review Questions

• What distinguishes a shareholder from other types of stakeholders?
• Why is it important for a company to balance the interests of different stakeholders?
• Can you give examples of both internal and external stakeholders?

Related terms

Shareholder:

An individual or entity that owns shares in a corporation and thus has partial ownership.

Corporate Governance:

The system by which companies are directed and controlled, focusing on the relationship between management, board members, shareholders, and other stakeholders.

Stakeholder Theory:

A theory suggesting that businesses should consider the interests and well-being of all their stakeholders in decision-making processes.