Distinguish Between Shareholder and Stakeholder in a Business Context. Comment on the Influence of Shareholders on the Management of a Company and Its Allocation of Rewards.
Introduction
This paper specifically tries to distinguish between shareholder and stakeholder in business context. Firstly, there will be analysed main ideas of stakeholder theory, main principles of it. Secondly, the importance and characteristics of stakeholder interdependence will be shown. Thirdly, clear identification of main stakeholder groups and relationship between those groups will be outlined. In order, to distinguish shareholders from other stakeholders there will be paragraph analysing identity of this group. This analysis is followed by exceptionally important rights of shareholders which are giving them power to influence both company’s direction and through this other stakeholders.
Stakeholder theory and concept
According to Freeman stakeholder (1984) can be defined as any individual or group which is affected by or can affect achievement of the organization’s objectives (Freedman and Miles 2006). In this context organization is seen as a grouping of stakeholders and its purpose should be to manage their interests, needs and viewpoints. The fundamental role of stakeholder management is lying on top- level managers. Freeman in whose seminal work (1984) emerged new conception of stakeholder theory has elaborated two principles of this model as follows:
1. The stakeholder - enabling principle. Corporations shall be managed in the interests of stakeholders.
2. The principle of director responsibility. Directors of the corporation shall have a duty of care to use reasonable judgment to define and direct the affairs of the corporation in accordance with the stakeholder – enabling principle.
Freidman and Miles (2006)
So stakeholders are those individuals or groups who depend on the organization to fulfil their own goals and on whom, in turn, the organization depends. In other words, any actors in the environment that is affected by an organization’s decisions and policies or/ and can influence the organization traditionally can be defined
This paper specifically tries to distinguish between shareholder and stakeholder in business context. Firstly, there will be analysed main ideas of stakeholder theory, main principles of it. Secondly, the importance and characteristics of stakeholder interdependence will be shown. Thirdly, clear identification of main stakeholder groups and relationship between those groups will be outlined. In order, to distinguish shareholders from other stakeholders there will be paragraph analysing identity of this group. This analysis is followed by exceptionally important rights of shareholders which are giving them power to influence both company’s direction and through this other stakeholders.
Stakeholder theory and concept
According to Freeman stakeholder (1984) can be defined as any individual or group which is affected by or can affect achievement of the organization’s objectives (Freedman and Miles 2006). In this context organization is seen as a grouping of stakeholders and its purpose should be to manage their interests, needs and viewpoints. The fundamental role of stakeholder management is lying on top- level managers. Freeman in whose seminal work (1984) emerged new conception of stakeholder theory has elaborated two principles of this model as follows:
1. The stakeholder - enabling principle. Corporations shall be managed in the interests of stakeholders.
2. The principle of director responsibility. Directors of the corporation shall have a duty of care to use reasonable judgment to define and direct the affairs of the corporation in accordance with the stakeholder – enabling principle.
Freidman and Miles (2006)
So stakeholders are those individuals or groups who depend on the organization to fulfil their own goals and on whom, in turn, the organization depends. In other words, any actors in the environment that is affected by an organization’s decisions and policies or/ and can influence the organization traditionally can be defined
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