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Stakeholder Capitalism: A Primer

Stakeholder Capitalism is a growing worldwide reform movement that creates returns for investors by creating value for employees, customers, supply chain and distribution partners, communities and the environment. It is based on both research and common sense that organizations can do well by shareholders by doing good for people and the environment. 

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 clarifies the definition for Stakeholder Capitalism as well as provides a brief history and 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 and a healthier environment 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 consisting of panel discussions with experts in all areas of business and academia on the practical implementation of Stakeholder Capitalism to achieve organizational results. This article was first published in March 2020 and most recently updated in November 2021. The concept of Stakeholder Capitalism is completely non-partisan as it does not require government involvement. Click here for an EEA Youtube show conversation on Stakeholder Capitalism between Bruce Bolger, EEA founder and R. Edward Freeman, Professor of Business Administration at the Darden School of the University of Virginia, both early advocates of the field. 

See the footer for information about the activities of Enterprise Engagement Alliance at or contact Bruce Bolger at 914-591-7600, ext. 230 or

By Bruce Bolger 
For those following the topic, there's a lot of talk about Stakeholder Capitalism, but ask the average business person if he or she has heard of it, and the usual response is "sort of" or "maybe." Despite recent references to Stakeholder Capitalism in the New York Times, Fortune, Forbes, the Economist, Financial Times, 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. In March 2020, there were 49 followers on Linked in of the Stakeholdercapitalism hashtag. As of November 2021, there are only about 505 followers.

Nonetheless, the topic promises to gain greater traction given that its key proponents include the influential: JUST Capital advocacy group founded by hedge fund investor Paul Tudor Jones II; the World Economic Forum with its Davos Manifestoits newly published Stakeholder Capitalism Metricsand the recently published book by its founder, Klaus Schwab, aptly named Stakeholder Capitalism; the Business Roundtable, representing the world’s largest companies; the Embankment Project founded by the Rothschild family, EY, and others, which has become the Coalition for Inclusive Capitalismthe International Organization for Standardization; Conscious Capitalism, one of the earliest proponents; B Lab, another early adocate; the Economics of Mutuality Foundation, a group recently formed by the Mars family, and the new Council for Inclusive Capitalism, supported by the Vatican. The financial publication Barron's, with its 100 Most Sustainable Companies annual report, has also become a major advocate. 
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.The only definition we could find, on the web site Investopedia, appears to be the cause of 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.

To opponents on the right, this definition sounds like Democratic Socialism in disguise; to those on the left, corporate speak. So far, the leading opponents to the concept of Stakeholder Capitalism have based their objections on the Investopedia definition, which indeed could lead to the confusion opponents allege by reinforcing the conflicting priorities already common at most organizations. Every day is a balancing act for CEOs facing demands from all stakeholders, not all of whom have the same interests. In fact, Stakeholder Capitalism better aligns stakeholder management and 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.
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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, uses this definition: “Stakeholder Capitalism seeks to create shareholder returns 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, because government involvement is not required. It's about a people-focused path to sustainable profitability. 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, but it's also better for shareholders.

When implemented as part of a strategic and systematic process, investing in people has a clear return-on-investment. In 2020, the Barron's List of Sustainable Companies once again outperformed the stock market for the fourth year in a row. Similarly, the JUST Capital ETF, managed by Goldman Sachs had outperformed the S&P 500 through the end of 2020 since its inception 27 months earlier. It tracks companies based on the priorities of Americans surveyed annually on their priorites, which include: workers, prosperity, and the planet. Both funds are following a similar trajectory as the six-year Enterprise Engagement Alliance Engaged Company Stock Index study conducted by McBassi & Co., publisher of Good CompanyBetween 2012 and 2018, when the study was ended, the ECSI outperformed the S&P 500 by over 37%. The ECSI tracked the stocks of about 40 companies with high levels of customer, employee, and community engagement using metrics from 13 independent sources. Alex Edmans, the Grow the Pie author, shares his research of "100 Best Places to Work" companies and found they consistently outperformed market returns over more than two decades. His findings recently were confirmed by other researchers

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, distribution partners, vendors, and communities.

While it can involve worker ownership through Employee Stock Ownership Plans, if business principles so desire, Stakeholder Capitalism is not to be confused with Democratic Socialism. It is purely voluntary, other than disclosures required of US public or large companies in the European Union.
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 people engagement standards published in 2015 and recently updated. 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 quality management 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 people engagement 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 shareholders and all stakeholders in a way that creates a virtuous circle of prosperity by more strategically investing in people and the environment, the latter of which is outside the scope of Enterprise Engagement. 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 in the same way ISO standards have assisted with total quality management when sincerely applied. Stakeholder Capitalism cannot be faked or used as a public relations tactic.
Stakeholder Capitalism, ISO standards and other advocates for addressing the needs of all stakeholders base this conviction on the principles 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. This systematic and proactive approach was applied to tackle the severe manufacturing quality program in US industry during the 1970s and 1980s. 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 at the expense of other stakeholders. 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?

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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 defines it—but on achieving organizational results by engaging and addressing the needs of all stakeholders toward a common purpose: a difference of a few words makes the distinction.
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 based on a common purpose. 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 when he meant to challenge 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, and Drucker for that matter, organizations are made up of both internal and external customers comprised not just of the purchaser but the “internal customers”, supply chain partners, and communities, whose support is needed 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 all parties or stakeholders in the enterprise.
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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 the term remains unknown to many. 

The people and organizations below are listed in an approximate timeline. Please note that there are too many CEOs who have practiced Stakeholder Capitalism principles 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."

R. Edward Freeman. His book, "Strategic Management: A Stakeholder Approach," promoted the benefits of addressing the needs of all stakeholders, a concept that came to be known as Stakeholder Theory

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 and Conscious Capitalism The founder of Whole Foods built its success on the principals of Stakeholder Capitalism displayed throughout each location in word and image. 

B-Lab. An organization that audits and certifies sustainable companies.
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 by Bruce Bolger 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. ISO 30414 human capital standards published in 2020 provide a framework for effective employee management and reporting. 
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. 
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 profit from the principles of Stakeholder Capitalism, 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.
Learning and Certification: The Enterprise Engagement Alliance 2.0 education program, the only learning and certification platform for boards, executives, and managers seeking to understand the implementation principles of Stakeholder Capitalism, human capital management and measurement, and ROI of engagement. For more information, contact Bruce Bolger at or 914-591-7600, ext. 230. 

ESM at, an online trade publication founded in 2008 that features news, profiles, research, and more on the field of Enterprise Engagement, the implementation process for Stakeholder Engagement, and the buyer's guide and resource directory. This includes a comprehensive resource library on Stakeholder Capitalism, human capital management, measurement, and ROI of engagement. 

RRN at, an online trade publication founded in 1996 that features news, profiles, research and more on rewards, recognition, gifting and brand media, and 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. This features a comprehensive resource library on brand media, rewards, recognition, incentives, gifting and more.

The Enterprise Engagement Alliance Human Capital Management and ROI of Engagement Youtube channel featuring one-hour and 30-minute panel discussions with experts on multiple topics on Stakeholder Capitalism, Human Capital Management reporting and measurement, and engagement tactics. 
A CEO's Guide to Engagement Across the Enterprise cover
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.) 

•  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 human capital management, reporting, and ROI of engagement practices for themselves or their clients, including Brand Alignment audits for brands and Capability audits for solution providers to make sure their products and services are up to date.
•  C-Suite Advisory Services—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 focuses on helping organizations focused on people sell to the right buyer and on assisting engagement solution providers seeking an exit or merger. 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.

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