Stakeholder Theory Quotes

Economics may not fundamentally be about value creation in real business. At its best it may be an idealized and abstract view of markets built around the goals of prediction, not around the way that actual business works. It is clearly useful for many purposes, but perhaps not for solving the problems of understanding business in the twenty-first century.

We saw that four different voices respond to this crisis by suggesting differing pathways forward: the first three are the retro-voices, which suggest returning to the global field structure of Field 1 (autocratic and state-driven: regulation, law and order), Field 2 (market-driven: deregulation), or Field 3 (stakeholder negotiation-driven: dialogue), respectively. The fourth voice, however, suggests that there is no way back. Retreat is impossible because circumstances have changed. This is why we need to go forward to the next evolutionary stage of the global economy (ecosystem-driven: seeing and acting from the emerging whole).

Stakeholder analysis can often feel like you are searching for enemy soldiers in a tunnel without the benefit of night-vision goggles,

Over the past thirty years the orthodox view that the maximisation of shareholder value would lead to the strongest economic performance has come to dominate business theory and practice, in the US and UK in particular.42 But for most of capitalism’s history, and in many other countries, firms have not been organised primarily as vehicles for the short-term profit maximisation of footloose shareholders and the remuneration of their senior executives. Companies in Germany, Scandinavia and Japan, for example, are structured both in company law and corporate culture as institutions accountable to a wider set of stakeholders, including their employees, with long-term production and profitability their primary mission. They are equally capitalist, but their behaviour is different. Firms with this kind of model typically invest more in innovation than their counterparts focused on short-term shareholder value maximisation; their executives are paid smaller multiples of their average employees’ salaries; they tend to retain for investment a greater share of earnings relative to the payment of dividends; and their shares are held on average for longer by their owners. And the evidence suggests that while their short-term profitability may (in some cases) be lower, over the long term they tend to generate stronger growth.43 For public policy, this makes attention to corporate ownership, governance and managerial incentive structures a crucial field for the improvement of economic performance. In short, markets are not idealised abstractions, but concrete and differentiated outcomes arising from different circumstances.