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Stakeholder capitalism

On the flipside of shareholder value is stakeholder capitalism. The theory of stakeholder capitalism asserts that the welfare of workers and the local community take priority over the economic interest of shareholders.

This phenomenon thrives in countries like France, Germany, Japan and the Scandinavian countries, where the culture and legal systems prioritise employee- and community-wellbeing over shareholders’ financial need.

Typically, as a result, shareholders are satisfied with a lower appreciation of share price and less regular or generous dividend payments. They are also happy to pay taxes to fund the welfare systems. It is easy to identify these countries by their funding system healthcare and higher education, the length and conditions of maternity and paternity leave, and concessions for work-life balance.

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This article is from the free online course:

Strategy as a Process and Measures of Success: An Introduction

Coventry University