If the talk of a move from a shareholder economy to a stakeholder economy is to be more than just lip service, businesses need to engage meaningfully with a range of stakeholders, and may even need to give them real power. How can we do that when stakeholders and their views are many and diverse?
The need and push for businesses to engage with wider groups of stakeholders is perhaps as old as business itself. Companies are forever urged to be more socially responsible and to consider more than the views of their shareholders and management. Anti-shareholder and anti-predatory business views have gained momentum in the past ten years, reflected in the language and popularity of politicians such as Jeremy Corbyn and Bernie Sanders, and the success of writers such as Kate Raworth and Mariana Mazzucato.
Often explicit, but always implicit, in the rhetoric as well as the more-considered writing, is the exhortation for businesses to engage with stakeholders more meaningfully. What is new perhaps, is the idea – so well expressed by Colin Mayer – that businesses should have social and environmental objectives defined with stakeholders, that are of equal importance to financial objectives, not subservient to them. These must be reflected in their mission, and their governance structure, with boards of directors that balance shareholder and stakeholder interests.
Over twenty-years ago, Ronald Mitchell and colleagues gave us an excellent overview and history of the art of defining who businesses’ stakeholders are, in their massively cited paper in the Academy of Management Review.