VIDEO
  • CSR

Stakeholder Approach to Leadership

Leading with meaning and business with purpose



Wednesday 07 September 2016



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In the 32 years since R. Edward Freeman introduced the concept of Stakeholder Theory, as a framework for business, a whole slew of corporate bad practice has passed under the bridge – most recently the Libor rate fixing and the VW emissions scandals come to mind.

In this engaging video Freeman explains why, despite the ongoing bad news, he remains optimistic – buoyed by the rise of many genuinely ethical companies that are driven by passion and innovative fire rather than by money and profits alone.

Stakeholder theory, originally proposed by Freeman in his book Strategic Management: A Stakeholder Approach, suggests, rather than focusing on the traditional pursuit of profit, the purpose of a business is to create as much value as possible for all of its stakeholders: customers, suppliers, employees, communities, financiers and shareholders.

Companies that develop a stakeholder approach to leadership and innovate to keep the interests of these stakeholders aligned and going in the same direction, creating value for all, will enjoy sustainable long-term success.

Freeman talks of a revolution about ideas, and the need to tell a new story about business. There are three flaws in the current story which says business is about money, that business and ethics are inevitably contradictory, and thirdly that people are merely motivated by self-interest. The new story we need is one about business having a broader purpose fired by passion and adding value to build an imagined better world. Working together to create value together.

He goes on to advise what we need to do as individuals by getting involved and as organizations by creating a challenging business culture that uses conflict and push-back to put ethical purpose at the centre of business, at least at the same level as the pursuit of money and profit.

Freeman believes that entrepreneurs and business can change the world if we adopt the right story about capitalism.

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