Corporate Social Responsibility
Stakeholder refers to a person or group of persons who have an equity within an organization and either are affected or have the capacity to affect an organization (Chandler, 2017). Stakeholders are important since they contribute directly or indirectly to its existence. Stakeholders influence the operations of an organization and are divided into three categories: organizational, economic, and societal (Chandler, 2017). Organizational stakeholders are those who are internal to the firm and who are directly involved in processing products and services. They include the directors, managers, and employees and they constitute the firm’s primary concern. The economic and societal stakeholders are external to the firm and they interact with the organization due to economic and social concerns respectively. The business organizations of an organization rely on the stakeholders to perform optimally and achieve set objectives.
Stakeholders are legitimately involved in the operations of an organization in the long and medium-term goals. They recognize opportunities in the firm and take risks with the overall target of meeting own interests. Stakeholders are responsible for the sustainability of an organization as they are involved in strategies aimed at solving social and environmental problems (Haugh & Talwar, 2010). On the other hand, stockholders own a share of the organization and may receive dividends when the business is profitable. They form a separate entity from the organization and have limited liability although they also affect the business operations by appointing board members to oversee all ventures (Symes, 2011). Stockholders, unlike stakeholders, own a part of the organization through shares, which they either maintain to reap dividends from or sell at a profit, if a buyer exists in the market.
Chandler, D. B. (2017). Stakeholder Theory. In Strategic corporate social responsibility: Sustainable value creation (4th ed.). Thousand Oaks: Sage Publications.
Haugh, H. M., & Talwar, A. (2010). How Do Corporations Embed Sustainability Across the Organization? Academy of Management Learning & Education, 9(3), 384-396. doi:10.5465/amle.2010.53791822
Symes, S. (2011, September 19). What Is the Role of Stockholders in the Corporate Hierarchy? Retrieved from https://smallbusiness.chron.com/role-stockholders-corporate-hierarchy-24493.html