What stakeholder capitalism is and what it isn’t

Reconciling long-term value with corporate responsibility.
Image: ©World Economic Forum/Pascal Bi
Stay up to date:
Corporate Governance
- Stakeholder, as opposed to shareholder, capitalism, continues to grow in relevance as a way of linking business to wider societal issues.
- Critics have accused the concept of being used as a cosmetic marketing tool and of related ESG metrics lacking clarity.
- Well-defined stakeholder capitalism, however, lays the foundations for reconciling long-term value with corporate responsibility.
The debate between stakeholder capitalism and shareholder capitalism has increasingly become central to discussions about the future of business. To understand this debate, it is important to first clarify the terms. Shareholder capitalism, which dominated the 20th century, asserts that the primary goal of a company is to maximize profits for its shareholders: the owners of the company. This model drove economic growth, but often overlooked broader social and environmental impacts.
Stakeholder capitalism, by contrast, sees companies as part of a larger social fabric. It calls on businesses to consider the interests of all stakeholders – employees, customers, suppliers, communities and the environment – rather than just shareholders. This principle was the foundation of my decision to establish the World Economic Forum in 1971. I believed as a young professor for business policy that capitalism needed to evolve to serve the broader interests of society, while creating long-term value for companies.
Today, this approach is more relevant than ever. Citizens no longer see companies merely as economic entities. They expect businesses to address societal challenges such as inequality, ecological sustainability and community well-being. This is not an ideological shift, but reflects the pragmatic reality that businesses perform better in the long term when they meet these expectations. Companies that follow this approach attract top talent, who seek purpose in their work, and gain the trust of discerning customers, who prefer brands that reflect their values.
However, we must not forget that entrepreneurial activity remains the ultimate source of prosperity. Without the innovation, risk-taking and value creation of businesses, it would not be possible to raise living standards, create jobs and drive progress. Stakeholder capitalism emphasizes this fundamental role of entrepreneurship by highlighting the long-term vitality of the enterprise rather than prioritizing short-term profits.
At the same time, stakeholder capitalism has faced criticism – not only from ideological opponents, but also from companies that have used it as a marketing tool, making lofty promises about social and environmental responsibility without fulfilling them. This “greenwashing” has eroded trust. To address this, Environmental, Social, and Governance (ESG) metrics were introduced to measure non-financial performance as rigorously as financial results.
While well-intentioned, ESG frameworks have often been burdened by over-regulation and ideological influences, making them unnecessarily complex. Instead of fostering clarity, they sometimes created confusion and superficial compliance. The solution lies in a balanced approach: Clear, reliable and globally accepted measurement systems are needed – not to overburden companies, but to provide management and citizens with the foundation for informed decisions about corporate responsibility.
The true challenge is not stakeholder capitalism itself, but the conflict between short-term gains and long-term success. Companies that prioritize the latter recognize the broader context in which they operate. Stakeholder capitalism does not abandon capitalism; it evolves it – making it a smarter, more inclusive approach to prosperity.
Ultimately, a shared commitment is required. It is the responsibility of businesses to fulfil their role as social organisms, and of citizens to hold them accountable. Stakeholder capitalism is a realistic response to the challenges of our time. Entrepreneurial action remains the foundation upon which we can build a better, more sustainable future for all.
Accept our marketing cookies to access this content.
These cookies are currently disabled in your browser.
Don't miss any update on this topic
Create a free account and access your personalized content collection with our latest publications and analyses.
License and Republishing
World Economic Forum articles may be republished in accordance with the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International Public License, and in accordance with our Terms of Use.
The views expressed in this article are those of the author alone and not the World Economic Forum.
Related topics:
Forum Stories newsletter
Bringing you weekly curated insights and analysis on the global issues that matter.
More on Stakeholder CapitalismSee all
Rodrigo Tavares
March 13, 2025
Johannes Lenhard and Oliver Nixon
March 13, 2025
Kweilin Ellingrud and Kevin Russell
March 6, 2025
Mark Esposito and Eduardo Araral
February 7, 2025
Amitabh Behar
January 20, 2025
Arsalan Mahtafar
January 7, 2025