A shareholder is simply an individual, organization, or company that legally own share(s) of stock in a joint-stock company. By owning shares of stock, a company’s shareholders collectively own the company itself and therefore have the right to vote on decisions that affect how the company is run. This usually means the shareholders as part owners will push for company actions that increase their own financial returns.
Definition: A company that uses the shareholder approach to conducting business typically views the impact of business operations on profit. In addition, the length of concern for changes in business operations is usually short-term; such as focusing on meeting quarterly or annual results.
To make an analogy, stakeholder and shareholders are like sparkling white wine and champagne. All champagne is sparkling white wine, but not all sparkling white wine is champagne. Similarly, all shareholders are stakeholders, but not all stakeholders are shareholders.
A stakeholder is anyone that can be affected by a company’s actions, objectives, and policies. This includes both internal stakeholders, such as employees and managers, and external stakeholders, such as shareholders, suppliers, customers, surrounding communities, creditors, the government, to name a few.
The term’s common use came about only after R. Edward Freeman published his book Strategic Management: A Stakeholder Approach in 1984.
Definition: A company that uses the stakeholder approach to conducting business typically views the impact of business operations on a wide range of issues; including, but not limited to: profit, reputation, employees, supplies, customers, shareholders, the environment, and the communities where the company conducts business. The length of concern for changes in business operations is usually short-term and long-term; such as understanding the need to meet business objectives on a quarterly or annual basis, but also appreciating the need to focus on the impact on the company beyond just an annual time-frame.
As successful companies use sustainability and CSR more in frequently, stakeholder-oriented business models will also become more common.