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What is a Stakeholder?

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  • Written By: Ken Black
  • Edited By: Bronwyn Harris
  • Last Modified Date: 08 October 2014
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A stakeholder is anyone who has a specific interest, more than likely documented but perhaps not, in the outcome or success of a project or business. Most commonly, this refers to people such as shareholders and creditors, who have money invested in the endeavor. However, a stakeholder can also be employees of the company and even family of employees. Informally, stakeholders can even be fans of a sports team.

A shareholder is a stakeholder simply because he or she has invested money in a company. Therefore, that person expects to see a good return on the investment. This may not only include the value of the stock increasing over time, but it may also include getting quarterly dividend payments based on profitability.

In some cases a stakeholder, who is also a shareholder, will be part of the body in charge of corporate governance. A shareholder may have a representative on the board of directors for the company. Further, most of those holding common stock will have the option of voting on various issues as shareholder meetings.

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Creditors are in another category of stakeholders. These individuals have the possibility of losing all or most of their investment, should a company not be able to maintain operations. While creditors will get paid before any other shareholder, except the employees themselves, this is no guarantee. If a company goes bankrupt, an asset sale may help them recover most of their money, but this also is not guaranteed. A stakeholder who falls into the category of a creditor can be someone who holds bonds issued by the company, or a bank who has authorized a more traditional loan.

Perhaps those with the most to lose are those stakeholders whose livelihoods depend on the company. Ironically, this group is often not considered when talking about stakeholder types. However, very few have as much to lose when a company performs poorly as the employees themselves. While some shareholders and creditors may have more substantial amounts of money invested in a company, chances are they are not basing their livelihoods on its success, though some may be. Given this situation, it could be argued that employees are the stakeholders with more to lose than anyone else.

Most stakeholders become involved with a company because it needs those business resources. While this is typically thought of as capital for expansion and hiring, a business resource can also be the workers themselves. Of course, the company must give up something in order to acquire these resources. In some cases, partial ownership is given. In the case of creditors, interest payments are made. In other cases, money for work performed is paid.

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Fiorite
Post 2

@ Submariner- So essentially a stakeholder is anyone who has an invested interest in something. Is this right?

submariner
Post 1

A stakeholder is also a person or group who has an interest in disaster mitigation and conflict resolution. The group or entity will be affected by the outcome or lack of response to a situation.

An example would be what to do about the hypoxic dead zone in the Gulf of Mexico. There is an almost 8,000 square mile area at the delta of the Mississippi that is suffering from oxygen depletion severe enough to kill all marine life in the area. If one were to perform a stakeholder analysis, he or she would find that there are many different groups of people affected by the problem and any potential solution to the problem.

Stakeholders affected by the problem are anglers who lost access to the fisheries, the EPA, which is responsible for resolving the issue, gulf residents who cannot fish or swim because of the algae blooms, and the taxpayers who have to pay for solutions. Stakeholders in the solution are corn and dairy farmers up river who create most of the pollutant, anyone affected by the new rules the EPA will surely impose, and the USDA.

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