The shareholder versus the stakeholder approach

Seminar paper from the year 2019 in the subject Business economics - Business Management, Corporate Governance, grade: 1,3, Pforzheim University, language: English, abstract: This essay deals with the importance and interests of different stakeholders and tries to identify how they affect the success of a business. Firstly, the essay will compare the shareholder and stakeholder theory and afterwards, the importance of employees, customers, creditors, suppliers and social stakeholders will be discussed. Further, this essay illustrates the drivers and changes of trust in a company.

It is often assumed that shareholders are the most important stakeholder group in any business. However, there are two main competing theories that argue how a company should be run: the shareholder approach and the stakeholder approach. On the one hand, the shareholder approach claims for profit maximisation of the shareholder as the only objective of business. On the other hand, the stakeholder approach suggests satisfying the interest of various stakeholders. In practice, shareholder models have dominated in the past. However, corporate scandals and the financial crisis have raised doubts about that model and led to a loss of trust.