Stakeholder

AAA

DEFINITION of 'Stakeholder'

A party that has an interest in an enterprise or project. The primary stakeholders in a typical corporation are its investors, employees, customers and suppliers. However, modern theory goes beyond this conventional notion to embrace additional stakeholders such as the community, government and trade associations.

INVESTOPEDIA EXPLAINS 'Stakeholder'

A common problem that arises with having numerous stakeholders in an enterprise is that their various self-interests may not all be aligned. In fact, they may be in conflict with each other.
The primary goal of a corporate enterprise from the viewpoint of its shareholders is to maximize profits and enhance shareholder value. Since labor costs are a critical input cost for most companies, an enterprise may seek to keep these costs under tight control. This may have the effect of making another important group of stakeholders, its employees, unhappy. The most efficient companies sucessfully manage the self-interests and expectations of its stakeholders.

VIDEO

Loading the player...
RELATED TERMS
  1. Shareholder

    Any person, company or other institution that owns at least one ...
  2. Self-Interest

    Acting in the way that is most personally beneficial. Adam Smith, ...
  3. Retail Investor

    Individual investors who buy and sell securities for their personal ...
  4. Consent Solicitation

    The process by which a security's issuer proposes changes to ...
  5. Best Practices

    A set of guidelines, ethics or ideas that represent the most ...
  6. Corporate Governance

    The system of rules, practices and processes by which a company ...
RELATED FAQS
  1. What is holistic marketing, and how can it be applied in business?

    A business utilizing a holistic marketing approach operates under the strong belief that all aspects of its marketing strategy ... Read Full Answer >>
  2. Do employers use agency theory in labor relations?

    Agency theory is used in business relations to describe the potential problems that occur whenever the agent's interests ... Read Full Answer >>
  3. What is the role of agency theory in corporate governance?

    Agency theory is used to understand the relationships between agents and principals. The agent represents the principal in ... Read Full Answer >>
  4. What's the difference between agency theory and stakeholder theory?

    Agency theory and stakeholder theory are both used to understand and explain various types of relationships in business. ... Read Full Answer >>
  5. How do modern companies assess business risk?

    Before a business can assess or mitigate business risk, it must first identify probable or likely risks to its bottom line. ... Read Full Answer >>
  6. Why has emphasis on corporate governance grown in the 21st century?

    Corporate governance refers to operational practices, management protocols, and other governing rules or principles by which ... Read Full Answer >>
Related Articles
  1. Investing

    Who are Stakeholders?

    “Stakeholder” is used in commerce to describe any party who has an interest in a business or enterprise. Traditionally, stakeholders in a corporation are shareholders, employees, customers and ...
  2. Investing Basics

    The Basics Of Corporate Structure

    CEOs, CFOs, presidents and vice presidents: learn how to tell the difference.
  3. Active Trading Fundamentals

    Evaluating A Company's Management

    Financial statements don't tell you everything about a company's health. Investigate the management behind the numbers!
  4. Personal Finance

    The Ups And Downs Of Initial Public Offerings

    Initial public offerings aren't the best option for every company. Consider these factors before "going public."
  5. Investing Basics

    Knowing Your Rights As A Shareholder

    We delve into common stock owners' privileges and how to be vigilant in monitoring a company.
  6. Options & Futures

    Governance Pays

    Learn about how the way a company keeps its management in check can affect the bottom line.
  7. Investing Basics

    What Owning A Stock Actually Means

    Think owning a stock gives you special privileges with the company? Think again.
  8. Investing

    Acorns: The Perfect Investing Tool For Millennials

    We look at how the Acorns app works, how it makes money, and why is it innovative.
  9. Brokers

    10 Most Famous Public Companies That Went Private

    Here’s a list of the most popular listed companies that went private in recent decades.
  10. Investing

    4 Structured Product Types Wealthy Clients Love

    High-net-worth investors find structured products appealing for a variety of reasons. Here's a look at four types.

You May Also Like

Hot Definitions
  1. Xetra

    An all-electronic trading system based in Frankfurt, Germany. Launched in 1997 and operated by the Deutsche Börse, the Xetra ...
  2. Nuncupative Will

    A verbal will that must have two witnesses and can only deal with the distribution of personal property. A nuncupative will ...
  3. OsMA

    An abbreviation for Oscillator - Moving Average. OsMA is used in technical analysis to represent the variance between an ...
  4. Investopedia

    One of the best-known sources of financial information on the internet. Investopedia is a resource for investors, consumers ...
  5. Unfair Claims Practice

    The improper avoidance of a claim by an insurer or an attempt to reduce the size of the claim. By engaging in unfair claims ...
  6. Killer Bees

    An individual or firm that helps a company fend off a takeover attempt. A killer bee uses defensive strategies to keep an ...
Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!