Impact of Values on Stakeholders: Employees, Customers, Government, Competitors and Society

In a corporation, a stakeholder is a member of “Groups without whose support the organization would cease to exist”, as defined in the first usage of the word in a 1963 internal memorandum at the Stanford Research Institute. The theory was later developed and championed by R. Edward Freeman in the 1980s. Since then, it has gained wide acceptance in business practice and in theorizing relating to strategic management, corporate governance, business purpose and corporate social responsibility (CSR). The definition of corporate responsibilities through a classification of stakeholders to consider has been criticized as creating a false dichotomy between the “shareholder model” and the “Stakeholders model” or a false analogy of the obligations towards shareholders and other interested parties.

Value creation is inclusive

For companies anywhere in the world, creating long-term shareholder value requires satisfying other stakeholders as well. You can’t create long-term value by ignoring the needs of your customers, suppliers, and employees. Investing for sustainable growth should and often does result in stronger economies, higher living standards, and more opportunities for individuals. It should not be surprising, then, that value-creating capitalism has served to catalyze progress, whether by lifting millions of people out of poverty, contributing to higher literacy rates, or fostering innovations that improve quality of life and lengthen life expectancy.

Stakeholder management contributes to corporate governance by helping to handle the multiple and often conflicting stakes held by the complex networks of groups that surround any company. The interactions, coalitions, behaviours, roles, resources, and preferences within and across the various groups composing these networks are highly dynamic. Individual stakeholders have various means of exerting influence, such as rhetoric, ethics, ruling, pressure, coercion, and market mechanisms. In practice, it is often difficult and costly, if not impossible, to identify and meet all the demands of a company’s stakeholders. Consequently, it is crucial for governance to identify, analyze, and assess the meaning and significance of each individual group of generic stakeholders and to determine their respective power in order to be prepared for the conflict that may follow from the prioritizing of competing groups of stakeholders.

Employees

Employees have a direct stake in the company in that they earn an income to support themselves, along with other benefits (both monetary and non-monetary). Depending on the nature of the business, employees may also have a health and safety interest (for example, in the industries of transportation, mining, oil and gas, construction, etc.).

Customers

Many would argue that businesses exist to serve their customers. Customers are actually stakeholders of a business; in that they are impacted by the quality of service/products and their value. For example, passengers traveling on an airplane literally have their lives in the company’s hands when flying with the airline.

Government

Governments can also be considered a major stakeholder in a business, as they collect taxes from the company (corporate income taxes), as well as from all the people it employs (payroll taxes) and from other spending the company incurs (sales taxes). Governments benefit from the overall Gross Domestic Product (GDP) that companies contribute to.

Competitors

Mr. Schantz said that, FedEx and United Parcel services (UPS) are their main competitors in Sweden. He also said that there are times when they meet as a network to organize programs for the community as well as discuss different issues on customers and on CSR. He procited out that, although they are competitors in the courier service industry, they strive to reach a common goal for their customers on CSR issues.

For businesses to do well in the market place for the benefit of customers there is the need for competition between different brands, companies and parties. It gives incentives for self improvement. Business parties and competitors must do so in a mutual and fair manner taking into consideration the welfare of customers.

The concept of CSR should enable DHL and its competitors such FedEx and UPS as efforts on the market to stimulate innovation, encourage efficiency and drive down prices which are fair for the benefits of customers. It must create efficiency for commercial firms to develop new products, services, and technologies. This will give consumers greater selection and better products.

Society

Communities are major stakeholders in large businesses located in them. They are impacted by a wide range of things, including job creation, economic development, health, and safety. When a big company enters or exits a small community, there is an immediate and significant impact on employment, incomes, and spending in the area. With some industries, there is a potential health impact, too, as companies may alter the environment.