The difference between market and non-market stakeholders.
Market stakeholders engage in economic transactions as the company carries out
the primary responsibilities to the public with its goods and services. They invest in the
firm and receive potential dividends and capital gains. Creditors of these companies may
lend money for a return on principal and interest. Employees contribute skills in return
for wages, salary, benefits and a opportunity for personal fulfillment and satisfaction.
Suppliers supply raw goods, energy, services and other inputs in return for payments.
Wholesalers, distributors and retailers help transport product from plant to store for
Nonmarket stakeholders are the community, various levels of government,
nongovernmental organizations, the media, business support groups, or the general public
who are not directly affected by the economic exchange of the company. Managers, who
are employees of the firm, are directly affected by the company's decisions, receive
compensation for their role with the company and get opportunities for professional
advancement, social status and power over others. They can benefit from the success of a
company or be hurt by failure. Top executives, agents of the company who are
responsible for acting on behalf of a company, integrate stakeholder interests for the
good of the company rather than on their own interests.
Stockholders have an interest in the company. In return for their investment, they
receive dividends and eventually, capital appreciation. The overall economic health of
the company directly affects these people financially as their wealth and retirement
security can be at stake. Customers are interested in gaining fair quality for their choice
in purchasing the company's goods or services. Suppliers also like to receive
compensation for providing goods and services. Employees provide time and effort and
receive compensation and the chance to develop their skills.
Stakeholders have four types of power in order to make a desired outcome or
event happen: voting power, economic power, political power and legal power. With
voting power, stakeholders have a legitimate right to cast a vote. However, this power is
directly proportionate to the percentage of shares they own with the company. They have
the opportunity to vote on such things as mergers and acquisitions, who makes up the
board of directors, and other issues that may come up during annual meetings.
Customers, suppliers and retailers have economic power over a company.
Suppliers can withhold supplies or refuse to fill orders if a company fails to meets its
contractual duties. Customers can refuse to purchase products or services if a company
fails to act properly. They can also boycott products if they believe the products are too
expensive, poorly made or unsafe. Employees can refuse to work under certain
conditions, such as unsafe working conditions--this is known as a strike or slowdown.
Business in Society