Is Business Broken?

Shareholder Primacy vs. Stakeholderism: 5 Years Later (Pt 2)

Oct 24, 2024
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INSIGHT

Stakeholder Management vs Shareholder Value

  • Stakeholder management has been often used as a management tool, not a governance theory, lacking clarity and organization.
  • Shareholder value maximization succeeded partly due to its clear underlying theory, measurable goals, and regulatory support.
INSIGHT

Misconceptions About Stakeholder Capitalism

  • Critics see stakeholder capitalism as distracting from shareholder value, but they are often interdependent.
  • Advocates underestimate how hard it is to align diverse stakeholder interests long term due to trade-offs.
INSIGHT

Positivity of Shareholder Value

  • Shareholder value is a positive, measurable concept linked to growth and returns; stakeholder value often arises from negative consequences.
  • Greed and corporate malfeasance complicate the perception of shareholder value vs. stakeholder concerns.
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