Stakeholders vs. Shareholders

Stakeholders vs. Shareholders

Shareholders and stakeholders are two business terms commonly used. Although the words are related, they are not similar in the way people use them interchangeably. There are distinct differences between the two times, and the difference is used to manage shareholders and stakeholders in an organization. One similarity is that in a corporation, a shareholder is always a stakeholder. However, not all stakeholders are shareholders. The difference arises in how the two are related to the organization and their priorities (Pearlson, Saunders, & Galletta, 2016). The purpose of this paper is to differentiate shareholders with stakeholders, especially on privacy and ethical consideration in information management.

Shareholder

A shareholder can be a person or a company that owns shares in a private or public institution. Shareholders are part of the members of a corporation. They have a financial interest in an operation related to the institution. Shareholders have the right nominate directors, sell their shares, buy new shares, receive dividends, vote for members of the board, access information on publicly traded companies, and sue the company for fraud activities (Pearlson, Saunders, & Galletta, 2016). These rights, however, depend on different institutions.

Stakeholders

A stakeholder can be an individual group or organization that is directly affected by the outcome of organization operations. Stakeholders are interested in the success of a project. Those who qualify to be stakeholders in a company include line managers, senior management, resource managers, project leaders, consultant of a project, team members of a project, subcontractors of the given project, and consumers of the project. This means that stakeholders can be external or internal members of a corporation (Pearlson, Saunders, & Galletta, 2016). Generally, stakeholders are people who are affected by a project when in progress and after completion.

The difference in terms of privacy and ethical considerations

According to the stockholder theory, managers act ethically to meet the interest of the shareholders. Shareholders invest their money in a company and expect dividends after a certain period or at the end of a project. Their enthusiasm is, therefore, taking into consideration when a company is making a decision. They also have the right to access the private information of a company so they can understand the benefits of investing in a company. On the contrary, the stockholder theory has very little about the stakeholders. This group only works according to the rules and regulations of a company (Smith, 2003).

However, corporate social responsibility theory (CSR) is urging companies to consider stakeholders when making a decision. CSR explains that stakeholders are affected to affect business projects; hence, their voice needs to be had (Smith, 2003). For instance, when constructing a road, pedestrians and drivers have a say on how the construction schedule should be drafted so that their normal activities may not be affected.

In summation, stakeholders and shareholders are two different people. Shareholders are interested in the financial results of a project while the stakeholders are affected by the activities of a company. In terms of ethical and privacy considerations, shareholders are highly valued than the stakeholders.

References

Pearlson, K. E., Saunders, C. S., & Galletta, D. F. (2016). Managing and using information systems, binder ready version: a strategic approach. John Wiley & Sons.

Smith, H. J. (2003). The shareholders vs. stakeholders debate. MIT Sloan Management Review, 44(4), 85-90.