A Comparative Analysis of Capitalism of Shareholders and Stakeholders
Keywords:
Shareholders’ capitalism, Stakeholders’ capitalism, COVID-19.Abstract
Shareholder capitalization is a system driven by the interests of shareholders and it is concerned with short-term profit maximization, whereas stakeholder capitalization is a system that concerns the interest of all the stakeholders equally and is focused on long-term value creation. The stakeholder capitalism declaration surpasses prior statements and establishes a contemporary benchmark for corporate accountability. In this research, the author will go through a detailed analysis of shareholders' capitalism and stakeholders' capitalism. This research tends to majorly deal with the comparison between shareholders' capitalism and stakeholders' capitalism and in addition, the impact of COVID-19 on both the former and latter will be elucidated. COVID-19 has adversely affected the
concept of capitalism, by creating a corporate debt crisis which led to supply and production failure. Shareholders' capitalism only deals with the benefit of the shareholders, but stakeholders' capitalism is a holistic approach that ensures the benefit of "people and planet". Thus, this paper focuses on making necessary findings that will substantiate the need to shift from shareholder capitalism to stakeholder capitalism for a better society to obtain economic stability.
References
Mark J.Roe, Political preconditions to Separating Ownership from Corporate Control, 53 STAN.
L. REV. 539, 545 (20000).
Dodge vs Ford Motor Co. 170 N.W. 668 (Mich.1919)
“The true industrial idea is not to make money. The industrial idea is to express a serviceable idea,
to duplicate a useful idea, by as many thousands as there are people who need it.” henry ford, my
life and work: an autobiography of henry ford AT 92 (1922)
Mary Johnstone-Louis et al., “Business in times of crisis,” Oxford Review of Economic Policy,
, Volume 36, Number S1, pp. S242–55, academic.oup.com
Kate Taylor, “Retail giants like Walmart, Amazon, and Kroger are firing shots over rivals’
minimum wages. Here’s who actually pays $15 an hour,” Business Insider, February 20, 2021,
businessinsider.com; Courtney Connley, “Amazon, Facebook and 8 other companies that have
committed to raising their minimum wage,” CNBC, May 25, 2019, cnbc.com.
Ted Ideas, “How can you ensure your workers are not just surviving—but thriving? A CEO shares
a new approach,” blog entry by Dan Schulman, May 29, 2020, ideas.ted.com.
Minda Zetlin, “PayPal grew its profits 28 percent—by raising workers’ wages,” Inc., January 10,
, inc.com; Jeff Kauflin, “PayPal CEO Dan Schulman explains his strategy for investing in
employees’ financial health,” Forbes, October 15, 2020, forbes.com.
Jonathan Shieber, “Swedish battery manufacturer Northvolt receives a $14 billion order from VW,”
TechCrunch, March 15, 2021, techcrunch.com
Christopher F. Schuetze, “On factory floors, a chime and flashing light to maintain distance,” New
York Times, January 12, 2021, nytimes.com.
“Knorr Sustainability Partnership”, Unilever, unilever.com.
Business Roundtable. "Business Roundtable Redefines the Purpose of a Corporation to Promote
‘An Economy That Serves All Americans’."
https://www.weforum.org/press/2020/01/stakeholder-capitalism-a-manifesto-for-a-cohesive-and-
sustainable-world.
World Economic Forum. "World Economic Forum 50th Annual Meeting in Davos: Defining
Stakeholder Capitalism,https://www.weforum.org/press/2019/10/world-economic-forum-50th-
annual-meeting-in-davos- defining-stakeholder-capitalism/
World Economic Forum. "Davos Manifesto 2020: The Universal Purpose of a Company in the
Fourth Industrial Revolution,https://www.weforum.org/agenda/2019/12/davos-manifesto-2020-
the-universal-purpose-of-a-company- in-the-fourth-industrial-revolution/
International Portal for Sustainability Reporting. "Measuring Stakeholder Capitalism: World’s
Largest Companies Support Developing Core Set of Universal ESG Disclosures, https://www.
sustainability-reports.com/measuring- stakeholder-capitalism-worlds-largest-companies-support-
developing-core-set-of-universal-esg-disclosures/
Nasdaq. "Executives Embrace Stakeholder Capitalism at Davos, https://www.nasdaq.com/articles/
executives- embrace-stakeholder-capitalism-at-davos-2020-01-22
Brutoco, R.L. (2020). Perspectives: Stakeholder capitalism and COVID-19. Accessed May 10,
, retrieved from http://www.montecitojournal.net/
Wiseman, O. (2020, March 24). COVID-19 is a litmus test for stakeholder capitalism. Accessed
May 8, 2020 retrieved https://www.city-journal.org/contributor/oliver-wiseman.
Institute for Innovation and Public Purpose (2020) Stakeholder capitalism during and after COVID-
, UCL IIPP Covid-19 Briefing Papers 01 (April 2020).
Ibid
Stakeholder Capitalism vs Shareholder Capitalism: Are we at a pivotal moment? https://
multiviewcorp.com/blog/stakeholder-vs-shareholder-capitalism-are-we-at-a-pivotal-moment.
Jensen, Journal of Applied Corporate Finance 2001, 14 (3), 8, 9-11; also Sternberg, Corporate
Governance: An International Review 1997, 5 (1), 3, 4.
See Friedman/Miles, Journal of Management Studies 2002, 39 (1), 1, 15, who identify this problem
and try to develop a more specific theory.
Goodpaster, Business Ethics Quarterly 1991, 1 (1), 53, 63.
Fabian Brandt and Konstantinos Georgiou, Shareholders vs Stakeholders Capitalism, 2016,
pg no. 57.
Aneesha Khanna, A paradigm shift: Shareholder capitalism to stakeholder capitalism,
https://www.tpci.in/indiabusinesstrade/blogs/a-paradigm-shift-shareholder-capitalism-to-
stakeholder-capitalism/.
