The Meaning of Stakeholders
The term "stakeholder" is one most often encountered in corporate literature, although the term can be applied to government and social activist activities as well. A stakeholder can be broadly defined as any person or organization affected by an organization's activities. However, this term is usually applied to identify specific interest groups.
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Significance
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"Stakeholder" was first used at Stanford Research Institute in 1963 to apply to "those groups without whose support the organizations would cease to exist." Since that time, the word has taken on a broader meaning and is used to also include all people, communities and organizations affected by specific activities or initiatives of business, government or non-governmental Organizations.
Types
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The range of groups that may be considered stakeholders in an organization's activities is surprisingly wide-ranging. From a business perspective, stakeholders can include the company's shareholders, employees and customers. But the circle of affected interests can become large when government regulatory agencies are included, along with suppliers, community groups, and social or environmental activist groups--all of which may have an interest, or stake, in a business's success or failure.
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Projects
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Business and other organizations tend to consider the perspectives of shareholders most often when they are about to embark upon a large project or organizational change. For example, if a large department store is considering moving from a well-established location to another some distance away, it is usually in the business' best interest to consider the needs and perspectives of interested parties such as the store's customer base in the community; the store's unionized workers; or community organizations, to name a few.
Strategies
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Many strategies and approaches for considering and reacting to the interests of stakeholders have been developed within corporate circles. The Encyclopedia of Management categorizes these into three main perspectives, which tend to place more or less influence upon the interests of corporate ownership and shareholders. The separation perspective sees corporate management as having a responsibility to owners above all other stakeholders. The ethical perspective stresses social responsibility to non-owner stakeholders, and the integrated perspective seeks to link the long-term interests of owners to the best interests of the many non-owner stakeholders.
Legal Definition
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There is a somewhat less commonly-used legal definition of stakeholder that differs from the others. In a legal context, a stakeholder is a non-interested party who is entrusted with the care of property or money until the rightful owner may be determined. In this definition, a stakeholder may be a court of law that holds property until litigation determines the owner. A stakeholder might also be a trustee holding money or property until a beneficiary comes of age.
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References
- Photo Credit business colleagues preparing for business meeting image by Vladimir Melnik from Fotolia.com
