Stakeholder Capitalism Rises Despite Recent Pushback
Bain & Company: Companies That Do Well by Stakeholders Do Better for Shareholders
Cisco and Business Roundtable CEO Doubles Down on Stakeholder Capitalism
Harvard Business School Spotlights Stakeholder Capitalism Founder
South Korean Business Event Highlights Stakeholder Capitalism
Film Star Matthew McConaughy a Stakeholder Capitalism Advocate?
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Bain & Company report demonstrates the connection between stakeholder and shareholder success....Cisco and Business Roundtable CEO reasserts commitment to stakeholder capitalism...Harvard Business School spotlights stakeholder capitalism advocate......South Korea business conference highlights stakeholder capitalism...Commitment to “stakeholder capitalism” caught the attention of actor and investor Matthew McConaughey.
Bain & Company: Companies That Do Well by Stakeholders Do Better for Shareholders .png)
In a recently published report by Zach First, a Bain partner, a study of “companies in the S&P 500 over a 10-year period, examining those that created the highest value for stakeholders―customers, employees, suppliers, and their communities―and those that created the highest financial value...we found that, on average, those that outperformed on both dimensions also had the highest shareholder returns.”
He admits that “correlation won’t put chicken-or-the-egg debates over stakeholder capitalism to rest anytime soon, but this much is evident: The best strategies align the ambitions and desires of stakeholders to create value for shareholders―and vice versa. And while metrics for measuring customer satisfaction, employee engagement, supplier relations, and community impact used to be elusive, they’re now available and increasingly standardized. That makes it possible not only to measure and manage different types of stakeholder value but also to determine which will produce the greatest results and allocate resources accordingly.”
Cisco and Business Roundtable CEO Doubles Down on Stakeholder Capitalism
Before departing his post as publisher of Fortune magazine, Alan Murray interviewed CISCO and Business Roundtable CEO Chuck Robbins. The question to Robbins: “A lot of people...can testify to what some of that pushback has been. Where is stakeholder capitalism today, in your view?”
Replies Robbins: “Well, I still think it’s important. What I struggle with is the following: If we create an environment that’s good for our employees, that’s a good thing. If we create an environment that creates healthy communities, that’s a good thing. If we also create an environment that has positive returns for our shareholders, positive outcomes for our customers, positive outcomes for our partners, what’s bad about that? I just don’t understand. No, I think the question of how you go about it is what’s being challenged, and the question of quotas and things of that nature, I think are legitimate discussions to have. But focusing on ensuring that we fulfill our purpose statement as a company to power an inclusive future for all. And we live it, and we believe it, and we walk it and it’s through our technology through which we connect people around the world who have never been connected before, and they find themselves with an opportunity to be educated, to actually receive certain types of health care to, and now after the pandemic, they can actually get jobs where they are and work from where they are. And then the community service stuff that we do, we think, why would we not want a healthy community?”
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The Harvard Business School’s Institute for Business in Global Society recently profiled R. Edward Freeman, calling him the father of stakeholder capitalism.
In the article, author Glen Justice writes, “Consider America in 1984. Ronald Reagan was president. Apple launched the MacIntosh personal computer. The Dow Jones was in a decade-long climb. In a few short years, filmmaker Oliver Stone would introduce the world to Gordon Gekko, the fictional Wall Street bad boy. Against that backdrop, the young academic R. Edward Freeman wrote a book, Strategic Management: A Stakeholder Approach, which argued that companies should focus on employees, customers, communities, and other stakeholders rather than merely on shareholders. Building on the work of scholars before him, Freeman laid the foundation for what is now commonly called “stakeholder capitalism. It was not a popular idea. As Freeman put it, ‘no one cared.’”
Editor;s note. Freeman’s work is included in the stakeholder management curriculum of the Enterprise Engagement Alliance.
“He really is the father of stakeholder capitalism,” Kip Tindell, former CEO of The Container Store,” says in the article. “There's nobody I would rather talk to about this topic than him. I have spent a zillion hours talking to him about it, but there's still something refreshing and new every time.”
Says Freeman, “The whole story of business, that business is just about the money, doesn't really work anymore. If it ever did, it certainly doesn't work today. Nobody is arguing that what we really need to do to address these societal issues is bear down on shareholder value.”
Justice quotes Freeman as saying in a 2013 TEDx talk, “Entrepreneurs don’t start businesses to maximize profits. They start businesses because they’re on fire about something. They’re on fire about an idea.”
On implementing the concept of stakeholder capitalism, he advises in the article, “The best way to start is to figure out what your purpose is. Focusing on who you are, who you're doing it for, who your stakeholders are—those are the things that can tell you which societal issues really resonate with the company and its business model.”
According to Justice, “Freeman has always acknowledged that companies need to increase revenue and build shareholder value, but he argues that the best companies take a more holistic approach. ‘The interest of shareholders is dependent on how well you deal with customers and suppliers and employees and communities,’ he explains. ‘I'd even venture to say the amount of money you can make is a function of how you deal with those other stakeholders.’”
South Korean Business Event Highlights Stakeholder Capitalism
Demonstrating the growing international reach of stakeholder capitalism, the Governance Center in South Korea featured a session by Kim Jong-dae, an honorary professor at Inha University, on "Understanding Stakeholder Capitalism from an ESG perspective and Responding to the Board of Directors." According to an article in Maeil Business Newspaper, “Professor Kim explained the concept of stakeholder capitalism and emphasized the role of the board of directors to improve sustainable management and corporate value. Stakeholder capitalism, unlike existing shareholder-centered market capitalism, is considered a key concept of sustainable management, as it must create value for all stakeholders, including shareholders.” Professor Kim suggests, "The board of directors should also play a role in monitoring and controlling companies to contribute to the creation of social values, including shareholder value."
Film Star Matthew McConaughy a Stakeholder Capitalism Advocate? 
In this clip on Yahoo finance produced in 2020 that recently appeared in Google Alert, film star Matthew McConaughey says, “I'm all for making money — I have good money. I'm all for fame — I'm happy to be famous. But I'm inspired by looking at people like a [CEO] John Mackey with Whole Foods or Marc Benioff at Salesforce that go, ‘Hey, I have an idea that's really good to do, even if it was for nonprofit, but let's make profit off of it.”
McConaughey adds: “I want to make money off this. I want to get rich off this. And how can we parlay that to being something like, ‘Oh, and it's good for the most amount of people.’”
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