Your portal to
enterprise engagement

Stakeholder Capitalism: A Primer

The concept and principles of Stakeholder Capitalism have existed for decades but there remains confusion about the definition that is either a natural consequence of any new concept or is in some cases an opportunity to poke holes in it. This primer provides a definition for Stakeholder Capitalism as well as a list of the relatively small number of people and organizations whose work has contributed to a better understanding of the virtuous circle of prosperity created by strategically and systematically engaging all stakeholders in the missions and objectives of the enterprise. Despite the recent pronouncements from the Business Roundtable and others, the concepts underlying Stakeholder Capitalism did not come down from on high but rather from the practical efforts of business people trying to improve business. The new Enterprise Engagement Alliance channel has a regularly updated library of shows on the practical implementation of Stakeholder Capitalism to achieve organizational results featuring the perspectives of experts in all areas of business. This article was first published in March 2020 and updated in November 2020.  The concept of Stakeholder Capitalism is completely non-partisan as it does not require government involvement.

By Bruce Bolger 
Despite recent references to Stakeholder Capitalism in the New York Times, Fortune, Forbes, and some academic journals, and bills introduced in Congress by senators Elizabeth Warren, Dem., MA; Mark Warner, Dem., VA, and Rep. Cindy Axne, Dem., ID, advocating for human capital disclosures, the debate around Stakeholder Capitalism rests largely below the public radar, especially during a potential health crisis. As of March 2020, there are only 49 followers on Linked in of the Stakeholdercapitalism hashtag. (There are 235 as of November 2020.) Nonetheless, the topic promises to gain greater traction given that its key proponents are the JUST Capital investment group founded by hedge fund investor Paul Tudor Jones II; the World Economic Council’s Davos Manifesto;  the Business Roundtable, representing the world’s leading companies, the Embankment Project, the International Organization for Standardization, and others who believe that organizations that pursue their goals by addressing the needs of all interested parties will achieve greater and more sustainable results and better experiences.
So what is Stakeholder Capitalism? The problem is that there is no official definition, without which there can be no way to engage in serious debate. In fact, the only official definition we could find, on the web site Investopedia, appears to be the cause of the confusion: “Stakeholder capitalism is a system in which corporations are oriented to serve the interests of all their stakeholders. Among the key stakeholders are customers, suppliers, employees, shareholders and local communities. Under this system, a company's purpose is to create long-term value and not to maximize profits and enhance shareholder value at the cost of other stakeholder groups.”  Contributing to the confusion, the ecomonist Robert Reich references the term with that definition in a 2014 blog post. The business authors Doug Sundheim and Kate Starr reference Stakeholder Capitalism in a recent Harvard Business Review article assuming that everyone already understands the term.There still is no entry on Stakeholder Capitalism on Wikipedia as of March 2020. 

So far, the leading opponents to the concept of Stakeholder Capitalism have based their objections on the Investopedia-based definition, which indeed could lead to the confusion opponents allege by reinforcing the conflicting priorities already common at most organizations. In fact, Stakeholder Capitalism creates wealth the same way ISO 9001 quality standards have improved quality--through the application of a strategic and systematic approach to managing our relationships with all the people critical to success, increasingly known in accounting and human resources parlance as our human capital, or human wealth as some may prefer.
[return to top]

The Definition of Stakeholder Capitalism Consistent With Sound Business Principles

The Enterprise Engagement Alliance at, an organization founded in 2008 that focuses on strategies to achieve organizational goals by fostering the proactive involvement of all stakeholders, has proposed the following definition: “Stakeholder capitalism seeks to create shareholder returns only by creating value for society--customers, employees, suppliers, communities, and the environment."

Stakeholder Capitalism is not about favoring some stakeholders over shareholders, or pitting one stakeholder against another, as critics define it, but about aligning their interests to grow the pie for the benefit of all, as Professor Alex Edmans of the London Business School describes it in his recent book, Grow the PieStakeholder Capitalism has nothing to do with politics, left or right, nor with socialism. Almost all Americans, and citizens of most countries, probably agree that they would rather work for, do business with, invest in, or have organizations located in their communities that value all their people. When implemented as part of a strategic and systematic process, investing in people has a clear return-on-investment.

Most of the early proponents of these practices were or are for the most part business people simply in search of a smarter way of doing business.They had no more glorious goals than to develop practical applications that organizations of any size could apply to their business to improve sustainable performance and achieve better experiences for everyone involved, including customers, employees, dsitribution partners, vendors, and communities.
The EEA's Stakeholder Capitalism definition largely parallels the quality people management principles of the International Organization for Standardization published in 2012, and embodied in ISO 10018 quality people management standards published in 2015. The principles appear in a Wikipedia definition for Enterprise Engagement published in 2009. These basic principles are now embedded in over 60 ISO business management standards, including the widely followed ISO 9001 standards: the need for the CEO to lead a strategic and systematic approach to achieving the goals of any business practice or standard by involving and addressing the needs of all stakeholders. The focus is on achieving goals with the support of all stakeholders, not on hoping that by focusing on all stakeholders, performance will follow. This is a critical distinction. 
Enterprise Engagement and ISO 10018 quality management standards were developed to provide a roadmap for the practical implementation of a strategic and systematic approach to achieving goals by fostering the proactive involvement of all people, Stakeholder Capitalism is a broader concept focused on the achievement of better and more sustainable results for all stakeholders in a way that creates a virtuous circle of more wealth by more strategically investing some of it in people as well as other assets. The more money employees have in purchasing power, as the business visionary Lee Iacocca once said, the more of them will be able to buy our products. The ISO and other practices and implementation processes provide the practical roadmap for any organization recognizing that Stakeholder Capitalism cannot be faked or used as a PR tactic, in the same way ISO standards has assisted with total quality management. 
Stakeholder Capitalism, ISO standards and other advocates for addressing the needs of all stakeholders base this support on the principle supported by research and logic that organizations will achieve greater and more sustainable results by systematically engaging all stakeholders in the mission than if they apply an ad hoc, reactive approach to the interests of people in achieving their goals. This systematic and proactive approach was applied to tackle the severe manufacturing quality program in US industry during the 1980s and 1990s. Greater prosperity and improved experiences for all stakeholders is a virtuous byproduct of this approach, not its sole purpose, for without profits there are no resources for investment. Companies run this way actually comply with Milton Friedman's focus on the shareholders, but in a more sustainable manner than the short-termism that often results from efforts to maximize shareholder value. To our knowledge, Friedman did not specify the type of investor whose needs should be addressed, those looking for the short- or long-term gain?

[return to top]

Opponents Focus on an Illogical Definition of Stakeholder Capital

Almost all opponents to Stakeholder Capitalism base their objections on the Investopedia definition, which is markedly different than that of the Enterprise Engagement Alliance and other proponents. The focus of Stakeholder Capitalism is not on equally addressing or balancing the needs of all stakeholders—as Investopedia define it—but on achieving organizational results by engaging and addressing the needs of all stakeholders: a difference of a few words makes an enormous difference.
For instance, management consultant Steve Denning writes recently in a Forbes piece entitled “Why Stakeholder Capitalism Will Fail”: “Stakeholder capitalism, with its call to balance the claims of different stakeholders on a case-by-case base, was an invitation to allow innumerable decisions in this morass of differing viewpoints, values, attitudes and ambitions, to be made by different people at different levels in the organization.” Stakeholder Capitalism is not about trying to “balance the claims of different stakeholders on a case-by-case basis.” In fact, what Denning writes better describes the current state at most organizations: an ad hoc, reactive approach to addressing the needs of stakeholders rather than one that is strategic and proactive. Stakeholder Capitalism is not about focusing on the needs of addressing all stakeholders, as Harvard Law School professors also recently mis-defined it in a Harvard Law School blog, its about focusing on addressing the needs of all stakeholders whose engagement is required to achieve sustainable organizational results. 
This fundamental definition and nomenclature confusion is most apparent in Denning’s article because he inadvertently supports Stakeholder Capitalism in an arttcle meant to question it. He says that Stakeholder Capitalism misses a better option, what he calls: “customer capitalism. The most successful firms today are those that pursue what Peter Drucker long ago saw to be “true North” for a corporation: 'there is only one valid purpose of a corporation: to create a customer.' Generating fresh value for customers is the foundation for generating benefits for all the stakeholders. To be sure, Drucker also saw that there were many other things firms needed to take care of, including safety, integrity, legality, sustainability, and inspiring workplaces, but the overriding goal, the raison d’etre of the firm, which all its forces of a firm must single-mindedly support, if the firm to survive, is to create customers.” 
Denning is correct, except that in the nomenclature of ISO and quality management nomenclature, organizations are made up of both internal and external customers comprised not just of the purchaser but the “internal customers” who need the support of all other stakeholders to deliver those promises. As noted below, Drucker's work helped lay the foundation for Stakeholder Capitalism, as he was among the first to recognize the connections between everyone in the enterprise.
[return to top]

The Contributors to Stakeholder Capitalism Principles

Below is a list of people and organizations who have over the years promoted the principles of addressing the needs of all stakeholders in the formulation and implementation of organizational management strategies, mostly at a practical level for their employers and/or clients. Stakeholder Capitalism and the field of Enterprise Engagement are not to be confused with tactical strategies related to employee and customer engagement or experience. Therefore, many worthy advocates for employee and customer engagement are not included in the list below unless their work focuses on the alignment of these activities toward a common organizational brand, purpose, and objectives. If we have missed anyone, let us know.
The concept of addressing the needs of all stakeholders so well articulated by Edward W. Demings' "14 principles" published decades ago, is unique in that it focuses on having a strategic and systematic approach to engaging and enabling all stakeholders in a way that fosters alignment and eliminates the silos so prevalent in most organizations. While every organization needs specialists in employee and customer engagement, a key principle of Stakeholder Capitalism is that the CEO and C-suite will achieve better results in terms of sustainable performance and better experiences through the application of a strategic and systemic approach to aligning all interests toward common goals. 
Although most of the people and organizations selected for this list have not or might not call themselves proponents of Stakeholder Capitalism, the principles stated or demonstrated in their research, work, or the nature of their business emphasizes the importance of a strategic and systematic approach to addressing the needs of all stakeholders that is the foundation of Stakeholder Capitalism and which to this day remains siloed at most organizations. While the world's business leaders only recently discovered these principles, the people and organizations below worked to develop the framework for their practical application, even if only Klaus Schwab of the World Economic Forum and the JUST Capital organization actively use that term. The ecomonist Robert Reich refereences the term with what we consider and incorrect definition in a 2014 blog post. The business authors Doug Sundheim and Kate Starr reference the term in a recent Harvard Business Review article without providing a definition. 

The people/organizations below are listed in an approximate timeline. Please note that there are too many CEOs who have practiced Stakeholder Capitalism over the decades to name, so we have highlighted a few of the most notable advocates. None are known to have used that term as a way of describing their business practices.
Edward W. Deming. The quality management guru’s “14 Points for Management,” published in 1982, called for organizations to address the needs of all internal and external customers (what today we call stakeholders) to achieve quality management goals. 
Klaus Schwab.  The Founder and Executive Chairman of the World Economic Forum may be among of the first people to use the term Stakeholder Capitalism about 50 years ago. WEF recently updated its original Davos Manifesto to clearly advocate for business strategies that address the needs of all stakeholders.
Peter Drucker. The highly popular 20th-century management consultant and business author whose set of tenets included a focus on “customer satisfaction, employee engagement and development, innovation, social responsibility and financial strength,” the foundational principles of Stakeholder Capitalism.
Tom Peters. His book, “In Search of Excellence,” also published in 1982, touted a leadership style based on the Seven S Framework, including: "Strategy, Structure and Systems, and Staff, Style, Shared Values and Skills."
Leonard Schlesinger and James Heskett, Harvard Professors, whose research on the Service Value Profit Chain was among the first to identify the link between customer and employee engagement and organizational results.

The Forum for People Performance Management and Measurement, a research group at the Medill School of Marketing Communications from 2001-2009, that undertook multiple research studies indicating the link between customer and employee engagement and financial results.

Don Peppers and Martha Rogers. These two authors and creators of Pepper & Rogers, one of the first agencies in the customer experience space in the 19th century, were among the early advocates of connecting the customer and employee brand. 
Wegman’s. Few organizations have a longer track record of applying the principles of Stakeholder Capitalism.
Herb Kelleher. The deceased CEO of Southwest Airlines was among the early CEOs to recognize the benefits of addressing the needs of all stakeholders in order to generate sustainable profits. 
Marcus Buckingham and Curt Coffman. Their best-selling book, “First Break All the Rulessold millions of copies since being published in 1999 advocating, among other groundbreaking principles, that organizations could achieve better results by better engaging managers and employees in organizational goals. (This is perhaps one of the highest-selling business books whose wisdom remains rarely applied.)
The Gallup Organization at A fundamental principle of the company’s concept of Human Sigma is that “employee and customer experiences must be managed together, not as separate entities.” 

John Mackay. The founder of Whole Foods built its success on the principals of Stakeholder Capitalism displayed throughout each location in word and image. 
McBassi & Company and Laurie Bassi. Bassi's company created the Good Company Index that tracked organizational results based on the level of customer, employee, and community engagement. Her company created the Engaged Company Stock Index for the Enterprise Engagement Alliance at that outperformed the S&P 500 for six straight years.
The Enterprise Engagement Alliance at This organization was founded in 2008 to help create a formal approach to achieving organizational results by fostering the proactive involvement of all stakeholders. It’s books, “Enterprise Engagement: The Roadmap,”  and “Enterprise Engagement for CEOs,” focus specifically on a practical approach to achieving organizational goals based on a strategic and systematic approach to engaging all stakeholders.
EGR International at and Jeffrey Grisamore. EGR is the first agency known to us to position itself as a provider of Enterprise Engagement services in 2009 to help organizations achieve key goals and to put together a variety of tactical tools to make that happen. 

Kenneth Frazier. The Merck CEO has based his outstanding success on the principles of Stakeholder Capitalism.
ISO (International Organization for Standardization.) The IS0 Quality People Management principles published in 2012, and the Annex SL and ISO 10018 quality people management standards, provide a framework for achieving goals by addressing the needs of all stakeholders in a systematic way. 
Inward Consulting and Allan Steinmetz. Steinmetz, formerly an advertising executive, was another early pioneer in the concept of connecting employee and customer engagement through his advisory company, Inward Consulting.

Hubert Joly. The Best Buy CEO used the principles of Stakeholder Capitalism to turn around the company after the great recession and emergence of Amazon. 
JUST Capital at and its founder Paul Tudor Jones II. JUST Capital is an outreach group formed specifically to advocate for what it now calls Stakeholder Capitalism. Separately, it created the first Exchange Traded Fund based on the work of Laurie Bassi's Good Company Index, which, at least before the March 2020 meltdown, was outperforming standard stock indices.
Larry Fink and Blackrock. The chairman of one of the world’s largest investment companies was one of the first business leaders to support a more sustainable form of capitalism. 
Calvert. This is one of the first leading investment firms to focus on Environmental, Social and Governance investing. 
Denise Yohn. This former marketing executive is one of the first-known brand specialists focusing on the importance of linking the customer and employee experience.
Business Roundtable at This coalition of about 180 of the world’s largest companies recently changed its guiding principles to promote business practices that address the needs of all stakeholders. 
Cravety, Ed Bodensiek, and Greg Kilhstrom. Cravety is another one of the first agencies to focus on addressing the link between employee and customer experience. Its founder practically applied these principles for employers before setting out to do it for others.

Stakeholder Capitalism isn't a revolution nor a PR schtick. It's a practical approach to organizational management that enhances performance and experiences in a sustainable and measurable way. 

Master the Principles of Enterprise Engagement to Achieve Organizational Goals and Enhance Your Career

  • Profit from a new strategic and systematic approach to engagement to enhance your organization’s brand equity; increase sales, productivity, quality, innovation, and safety, and reduce risks.
  • Get trained to become a Chief Engagement Officer for your organization.
  • Learn how to create Sustainability or Integrated Reports for Your Organization or Clients.
Resources: The Brand Media Coalition, the only guide to the story-telling power of brands and where to source them for business, event, promotional gifting, and rewards and recognition. Enterprise Engagement Solution Provider Directory. The only directory of engagement solution providers covering all types of agencies and tactics as well as insights on how to select them.
Communities: The  Enterprise Engagement Alliance and Advocate and the  Brand Media Coalition free resource centers offering access to the latest research, news, and case studies; discounts, promotions, referrals, and commissions, when appropriate to third-party solution providers from participating coalition solution provider members.
A CEO's Guide to Engagement Across the Enterprise cover
In Print: 
Enterprise Engagement for CEOs:The Little Blue Book for People-Centric Capitalists
This is the definitive implementation guide to Stakeholder Capitalism, written specifically to provide CEOs and their leadership teams a concise overview of the framework, economics, and implementation process of a CEO-led strategic and systematic approach to achieving success through people.  (123 pages, $15.99)

Enterprise Engagement: The Roadmap 5th Edition
The first and most comprehensive book on Enterprise Engagement and the new ISO 9001 and ISO 10018 quality people management standards. Includes 36 chapters detailing how to better integrate and align engagement efforts across the enterprise. (312 pages, $36.) 

10-minute short course: click here for a 10-minute introduction to Enterprise Engagement and ISO standards from the learning platform.

•  The International Center for Enterprise Engagement at, offering: ISO 10018 certification for employers, solution providers, and Enterprise Engagement technology platforms; Human Resources and Human Capital audits for organizations seeking to benchmark their practices and related Advisory services for the hospitality field.ISO 10018 Cerfified. Quality People Management
•  The Engagement Agency at, offering: complete support services for employers, solution providers, and technology firms seeking to profit from formal engagement practices for themselves or their clients, including Brand and Capability audits for solution providers to make sure their products and services are up to date.
•  C-Suite Advisory Service—Education of boards, investors, and C-suite executives on the economics, framework, and implementation processes of Enterprise Engagement. 
•  Speakers Bureau—Select the right speaker on any aspect of engagement for your next event.
•  Mergers and Acquisitions. The Engagement Agency’s Mergers and Acquisition group is aware of multiple companies seeking to purchase firms in the engagement field. Contact Michael Mazer in confidence if your company is potentially for sale at 303-320-3777.

Enterprise Engagement Benchmark Tools: The Enterprise Engagement Alliance offers three tools to help organizations profit from Engagement. Click here to access the tools.
•  ROI of Engagement Calculator. Use this tool to determine the potential return-on-investment of an engagement strategy. 
•  EE Benchmark Indicator. Confidentially benchmark your organization’s Enterprise Engagement practices against organizations and best practices. 
•  Compare Your Company’s Level of Engagement. Quickly compare your organization’s level of engagement to those of others based on the same criteria as the EEA’s Engaged Company Stock Index.
•  Gauge Your Personal Level of Engagement. This survey, donated by Horsepower, enables individuals to gauge their own personal levels of engagement.

For more information, contact Bruce Bolger at, 914-591-7600, ext. 230.

Enterprise Engagement Resources
Engagement Solutions



Marketing Innovators