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[[Category:Legal terminology]]
The term ''stakeholder'' has two distinct uses in the English language:
[[Category:Corporate social responsibility]]
*The traditional usage, in [[law]] and notably [[gambling]], a third party who temporarily holds [[money]] or [[Property (ownership right)|property]] while its owner is still being determined.
*More recently a very different meaning of the term has become widely used in [[management]]. This sees a ''stakeholder'' as a person or organization that has a legitimate interest in a project or entity.
The new use of the term arose together with and due to the spread of [[corporate social responsibility]] ideas, but there are also utilitarian and traditional business goals that are served by the new meaning of the term (see [[Stakeholder concept |stakeholder concept]] and below).
== In law ==
The role of '''stakeholder''' is a very old concept in [[law]]. A stakeholder was originally a person who temporarily holds [[money]] or other [[Property (ownership right)|property]] while its owner is being determined. This is, for example, the situation when two persons [[gambling|bet]] on the outcome of a future event and ask a third, disinterested, neutral person to hold the money (or "stake[s]") that they have wagered (or "staked"). After the event occurs, the stakeholder distributes the stakes to one or both of the original (or other) parties according to the outcome of the event and according to the previously decided conditions. Courts sometimes act as stakeholders, holding property while litigation between the possible owners resolves the issue of which one is entitled to the property. Trustees also often act as stakeholders, holding property until beneficiaries come of age, for example. An "[[escrow]] agent" is one kind of [[trustee]] who is a stakeholder, usually in a situation where part of the purchase price of property is being held until some condition is satisfied. In legal documents, the escrow agent is often referred to as a "mere stakeholder."
== In management ==
In the last decades of the [[20th century]], the word "stakeholder" has become more commonly used to mean a person or organization that has a legitimate interest in a project or entity. In discussing the decision-making process for institutions -- including large business [[corporation]]s, [[government agency|government agencies]], and [[non-profit organization]]s -- the concept has been broadened to include everyone with an interest (or "stake") in what the entity does. This includes not only its vendors, [[Employment|employees]], and [[customer]]s, but even members of a community where its offices or factory may affect the local economy or environment. In this context, "stakeholder" includes not only the directors or trustees on its governing board (who are stakeholders in the traditional sense of the word) but also all persons who "paid in" the figurative stake and the persons to whom it may be "paid out" (in the sense of a "payoff" in [[game theory]], meaning the outcome of the transaction).
'''Example'''
*For example, in the case of a professional landlord undertaking the refurbishment of some rented housing that is occupied while the work is being carried out, key stakeholders would be the residents, neighbours (for whom the work is a nuisance), and the tenancy management team and housing maintenance team employed by the landlord. Other stakeholders would be funders and the design and construction team.
The holders of each separate kind of interest in the entity's affairs are called a ''constituency,'' so there may be a constituency of [[Shareholder|stockholders]], a constituency of adjoining property owners, a constituency of [[bank]]s the entity owes money to, and so on. In that usage, "constituent" is a synonym for "stakeholder."
In the field of corporate governance and corporate responsibility, a major debate is ongoing about whether the firm should be managed for stakeholders, stockholders, or customers. Those who support the stakeholder view usually base their arguments on the following four key assertions:
1) [[Value (economics)|Value]] can best be created by trying to maximize joint outcomes. For example, according to this thinking, programs that satisfy both employees' [[need]]s and stockholders' [[want]]s are doubly valuable because they address two [[legitimate]] sets of stakeholders at the same time. There is even evidence that the combined effects of such a policy are not only additive but even multiplicative. For instance, by simultaneously addressing customer wishes in addition to employee and stockholder interests, both of the latter two groups also benefit from increased sales.
2) Supporters also take issue with the preeminent role given to stockholders by many business thinkers, especially in the past. The argument is that debt holders, employees, and suppliers also make contributions and take risks in creating a successful firm.
3) These [[normative]] arguments would matter little if stockholders had complete control in guiding the firm. However, many believe that due to certain kinds of [[board of directors]] structures, top managers like [[Chief executive officer|CEOs]] are mostly in control of the firm.
4) The greatest value of a company is its image and brand. By attempting to fulfill the needs and wants of many different people ranging from the local population and customers to their own employees and owners, companies can prevent damage to their image and brand, prevent losing large amounts of sales and disgruntled customers, and prevent costly legal expenses. While the stakeholder view has an increased cost, many firms have decided that the concept improves their image, increases sales, reduces the risks of liability for corporate negligence, and makes them less likely to be targeted by pressure groups.
'''Types of stakeholders'''
*People who will be affected by an endeavor and can influence it but who are not directly involved with doing the work. In the private sector, examples include managers who are affected by a project, process owners, people who work with the process under study, internal departments that support the process, the financial department, suppliers, and even customers.
*People who are (or might be) affected by any action taken by an organization or group. Examples are parents, children, customers, owners, employees, associates, partners, contractors, suppliers, people that are related or located near by. Any group or individual who can affect or who is affected by achievement of a group's objectives.
*An individual or group with an interest in a group's or an organization's success in delivering intended results and in maintaining the viability of the group or the organization's product and/or service. Stakeholders influence programs, products, and services.
*Any organization, governmental entity, or individual that has a stake in or may be impacted by a given approach to environmental regulation, pollution prevention, energy conservation, etc.
*A participant in a community mobilization effort, representing a particular segment of society. School board members, environmental organizations, elected officials, chamber of commerce representatives, neighborhood advisory council members, and religious leaders are all examples of local stakeholders.
=== Examples of common stakeholders ===
{| class="wikitable"
! Stakeholder
! Examples of interests
|-
| '''Owners private/shareholders'''
| Profit, Performance, Direction
|-
| '''Government'''
| Taxation, VAT, Legislation
|-
| '''Senior Management staff'''
| Performance, Targets
|-
| '''Non-Managerial staff'''
| Rates of pay, Job security
|-
| '''Trade Unions'''
| Working conditions, Minimum wage
|-
| '''Customers'''
| Value, Quality, Customer Care
|-
| '''Creditors'''
| Credit score, new contracts, Liquidity
|-
| '''Local Community'''
| Jobs, Involvement, Environmental issues, Shares
|}
=== Stakeholder view theory ===
[http://www.sup.org/book.cgi?book_id=4304%204310 Post, Preston, Sachs (2002)], in their theory called [[Stakeholder view]], use the following definition of the term "stakeholder":
"The stakeholders in a corporation are the individuals and constituencies that contribute, either voluntarily or involuntarily, to its wealth-creating capacity and activities, and that are therefore its potential beneficiaries and/or risk bearers."
This definition differs from the older definition of the term stakeholder in [[Stakeholder theory]] (Freeman, 1984) that also includes competitors as stakeholders of a corporation.
== See also ==
*[[Stakeholder analysis]]
*[[Stakeholder pension scheme]] - a type of pension introduced by the UK [[Labour Party (UK)|Labour]] government in 2001.
*[[Stockholder]]
[[Category:Management]]
[[Category:Business ethics]]
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