Stakeholder vs Shareholder Concept - A Level Business

A stakeholder is anyone with an interest in the business, internal (like employees) or external (like suppliers). A shareholder owns a share of the company, seeking dividends or capital appreciation.

In the 70s and 80s, the traditional approach focused solely on maximizing shareholder value through dividends and capital appreciation, with managers serving only shareholders.

The modern approach emphasizes that managers must consider all stakeholders. The pursuit of profit can lead to negative externalities, affecting third parties like the community (noise/air pollution), ethics (exploitation of suppliers), or employees (unfair wages, lack of training).

Modern managers consider all stakeholders in their decision-making to achieve mutually beneficial long-term results, moving beyond just keeping shareholders happy.

CSR approaches range from doing the bare minimum requirements to prioritizing long-term stakeholders, to making stakeholder satisfaction a corporate objective or even part of the mission statement, potentially ahead of profit. These concepts should be considered alongside Carroll's CSR pyramid.