Shareholder versus Stakeholder

There was a very interesting reference in the April issue of the Harvard Business Review in an article titled “The Myth of Shareholder Capitalism” on page 24. The article discusses the role of directors and how historically directors’ biggest concern was toward shareholder profits. The reference was from a 2007 article in the “Journal of Business Ethics” in which 31 of 34 directors said “they’d cut down a mature forest or release a dangerous, unregulated toxin into the environment in order to increase profits.”

The Baldrige Criteria focuses a number of questions on determining what all stakeholders want and need and how an organization identifies those wants and needs. Stakeholders include employees, shareholders, the community, partners, and other entities. This broader view of whom an organization can impact might help prevent directors from focusing so narrowly on just profit.

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