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Academic World Increasingly Explores Stakeholder Capitalism

Recent papers published by Oxford University, New York University Stern Business School, Stanford University, London School of Economics, Amrita School of Arts and Sciences in India, University of Sydney, Australia, and in other countries signal heightened interest in the “S” of Environmental, Social, Governance, increasingly used interchangeably with Stakeholder Capitalism. 
Here are excerpts from and links to recent papers published on Stakeholder Capitalism from universities around the world. 
Oxford University: What Stakeholder Capitalism Can Learn From Jensen and Meckling
This paper, published in an Oxford University Journal and written by Alex Edmans, Profession of Finance at the London Business School, discusses the theories of researchers Michael Jensen and William Meckling and to a lesser extent Milton Friedman, and their relationship with Stakeholder Capitalism. The articles discusses the impact of agency, defined by the famed researchers as costs that arise from management pursuing their own interests rather than those of the shareholders. 
“Agency costs don’t just arise when the CEO ignores shareholder value directly, but also material stakeholder issues that ultimately affect shareholder value. A company with a reputation for mistreating its employees or customers will fail to attract or retain them. A new enterprise with no reputation will have incentives to provide warranties to customers or long-term contracts to key employees, similar to the promises contained in a debt covenant. It’s not at all in shareholders’ interest for companies ‘to pursue unbridled self-interest across an entire society,’ no matter how eye-catching this claim is. Even if some shareholders, unlike pension funds, are exclusively concerned with shareholder value, they’ll still care about stakeholder welfare.” 
New York University Stern Business School: How to Make Stakeholder Capitalism Work
Hans Taparia, Clinical Associate Professor of Business and Society, writes: 
“Top business schools and promoters of ‘Conscious Capitalism’ claim that serving the interests of all stakeholders is good for business and will generate better returns over the long run. This claim makes intuitive sense. A business that doesn’t serve the interests of its customers, suppliers, employees, or community is likely to be a business in decline, stakeholder theorist Edward Freeman has argued. But what happens if that business wields such concentrated market power that those very customers, suppliers, and employees have limited options to buy, sell, or work? Users of social media, for example, are restricted to one or two platforms to stay connected to their wider communities. Commodity farmers and textile manufacturers often have access to no more than one buyer for their goods. Underskilled workers often find opportunity only within a narrow band of industries and employers. Economists describe these situations as market failures. Such concentrated corporate power constricts the choices of other stakeholders and enables corporations to ignore or even harm them while generating outsize profits.”
This same article appeared in a Stanford University publication earlier this year. 
London School of Economics. Employees: The Missing Link Between Stakeholder Capitalism’s Pledges and Metrics
Lutfey Siddiqi, CFA, visiting professor-in-practice at the London School of Economics and an Adjunct Professor at the National University of Singapore, writes: 
“Once again, I was struck by the absence of a critical link between the top-down macro perspective on what needs to be done and the bottom-up micro strategy of how it should be done. Stakeholder Capitalism, apart from being a theory of change, is also a narrative of change. And an important constituent that needs to be energized by the narrative is the employee of large organizations – the intrapreneurs who fight the good fight from within their companies, fostering change further up the hierarchy. It is important that pledges and suggested metrics are concordant with the narrative of Stakeholder Capitalism as it applies internally to specific organizations, firm-by-firm, industry-by-industry. Every employee must feel engaged and directed by a sense of purpose that they have had an opportunity to co-create.” 
The Straits Times, Singapore: Stakeholder Capitalism Is Having Its Day in the Sun
Quoting multiple professors and entrepreneurs, Chua Mui Hoong, Associate Editor, writes in an opinion piece: “Covid-19 is spurring a rethink of values and pushing businesses to go beyond profits to consider their impact on people and the planet. While decades old, Stakeholder Capitalism might see a new dawn.” 
Amrita School of Arts and Sciences, India: Are Corporates Renouncing Shareholder Capitalism and Moving Towards Stakeholder Capitalism?
Arun K., Department of Commerce and Management, Amrita School of Arts and Sciences and
Dr. Shekar Babu PhD, Professor & Founding Head, Department of Management, Amrita Vishwa Vidyapeetham, write: “In order to promote responsible and sustainable businesses for current and future generations, the researchers believe that the fine balance among stakeholders is the true constant and this balance can be achieved through communication and the principle of stakeholder communication can be a meaningful principle of Stakeholder Capitalism. The researchers through a systematic review of literature and elucidation of major narratives, map the stakeholders of Indian corporates using annual reports and to confirm the resurgence of Stakeholder Capitalism.” 
The University of Sydney
Click here for a series of talks on different aspects of Stakeholder Capitalism. 

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