What Does “Stakeholder Capitalism” Mean to You?

As more companies embrace stakeholder capitalism, it is important that corporate leaders have a shared understanding of what, exactly, they are embracing. Espousing a commitment to all stakeholders without clarity about what that actually entails puts directors and executives on a collision course with one another when decisions requiring difficult trade-offs among stakeholders’ interests arise—as they inevitably do. It also creates expectations among stakeholders that if unfulfilled will fuel cynicism, alienation, and distrust—the opposite of what most proponents of stakeholder capitalism intend. Meanwhile, shareholders are left wondering what this new ideology means for them. This article is intended as a guide to help corporate leaders define what they mean by stakeholder capitalism and thus reduce the risk of such negative consequences.