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Session 4: Stakeholders and Triple Bottom Line: 1. What Is Stakeholder Theory? by Edward Freadman

Stakeholder theory proposes that companies should consider the interests of all stakeholders - including employees, customers, suppliers, communities, and shareholders - rather than focusing only on shareholder value. It suggests that business success should be measured by the collective bottom line of human welfare rather than just profits. In contrast, shareholder capitalism prioritizes shareholder interests above other stakeholders. The related concept of the triple bottom line evaluates corporate performance based on three pillars - financial profits, environmental/social impacts, and quality of life considerations.

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333 views2 pages

Session 4: Stakeholders and Triple Bottom Line: 1. What Is Stakeholder Theory? by Edward Freadman

Stakeholder theory proposes that companies should consider the interests of all stakeholders - including employees, customers, suppliers, communities, and shareholders - rather than focusing only on shareholder value. It suggests that business success should be measured by the collective bottom line of human welfare rather than just profits. In contrast, shareholder capitalism prioritizes shareholder interests above other stakeholders. The related concept of the triple bottom line evaluates corporate performance based on three pillars - financial profits, environmental/social impacts, and quality of life considerations.

Uploaded by

Cristina Stan
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd

Session 4: Stakeholders and Triple Bottom

Line
1. What is Stakeholder Theory?
2. Stakeholder theory Vs CSR
3. Why are Stakeholder important?
4. Collective Bottom Line
5. Shareholder Capitalism
6. The triple Bottom Line

A stakeholder is a person (or group of persons) who is potentially concerned by what


an enterprise does or doesn't do directly or indirectly.
● Company owners, company workers, customers, suppliers, creditors,
governments...

1. What is Stakeholder Theory? By Edward Freadman


Edward Freadman: “The quickest way to destroy shareholders value to ignore
stakeholders”.
It is based on the assumption that business can only be considered successful when
they deliver value to the majority of their stakeholder.

It affirms that those whose lives are touched by a corporation hold a right and
obligation to participate in directing it.

Stakeholder theories list a company's stakeholders and ask 3 questions:


- What are their legitimate claims on the business?
- What rights do they have with respect to the company's actions?
- What kind of responsibilities and obligations can they justifiable impose on a
particular business?

2. Stakeholder Theory Vs CSR


Stakeholder theory is the mirror image of CSR.
Instead of starting with a business and looking out into the world….

3. Why are Stakeholder Theory important?


Why are Stakeholder Theory important?
 Organizations operate with the consent of the community
 Communities comprise groups of stakeholders
 Winning the consent of these stakeholders provides a license of operate

Stakeholders mapping (video) → https://www.youtube.com/watch?


v=LFHlal9fwkU
4. Collective Bottom Line
The purpose of the firm is to maximize profit on a collective bottom line, with profit
defined not as money but as human welfare.

5. Shareholder Capitalism
 Shareholder capitalism is a market system in which companies serve the
purpose of their shareholders.
 Stakeholder capitalism is a market system in which companies treat the
interests of all major stakeholders roughly equally, rather than explicitly
favoring investors.
Video→ https://www.youtube.com/watch?v=vD9XJKZmXEs

6. The triple bottom line


Man behind the idea: John Elkington
Basic idea: The success of a business must be measured not only by its profits, but also
by what impact that business activities have on the planet and its people. (3 P´s:
people, planet, and profit)
video→ https://www.youtube.com/watch?v=x9WvCJ3oOL0

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