Stakeholder capitalism strategies and opportunities for corporate governance

Abstract

Stakeholder capitalism is the notion that a company focuses on meeting the needs of all of its stakeholders: customers, employees, partners, the community, and society as a whole. In August 2019, 183 of the 206 Business Roundtable (BR) companies signed the BR Statement of the Purpose of a Corporation advocating stakeholder capitalism beyond the traditional shareholder capitalism. The major research question of this paper is whether companies who have committed to stakeholder capitalism are fulfilling their commitments and to provide some recommendations to their boards. We closely study the scrutiny from institutional investors and stakeholder capitalism report developed by KKS Advisors and TCP (2020). The findings show that the BR company signatories have failed to deliver fundamental shifts in corporate purpose to stakeholder capitalism (Bebchuk & Tallarita, 2020; Goodman, 2020). However, non-BR companies, primarily public benefit corporations (PBCs) and B corporations, have implemented stakeholder capitalism strategies and offer innovative stakeholder opportunities for corporate governance. The boards of BR companies should advocate for a more affirmative duty to stakeholders and consider converting corporate structures to develop stakeholder capitalism. Future research should continue to investigate this corporate governance opportunity.