The Evolving Paradigm for Sustainable Stakeholder Value Creation

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The way corporations are doing business is changing. Will the current dominant (especially in Anglo-Saxon world) shareholder value maximisation model hold out as a long-term sustainable foundation for corporate governance in the 21st century? In our essay, we explore how the current flux of environmental, socio-political, and corporate governance issues, make adopting an integrated stakeholder approach to business an imperative for all corporations. We examine, what we see as a paradigmatic change in the way the "social contract" of a business enterprise is evolving, and how it would demand future management's responsiveness to value creation for all stakeholders. In the "knowledge" economy of 21st century, given the trend of investments in firm-specific human capital by many technology intensive firms, maximising the returns to employees might become almost as important as shareholder value maximisation. Empowerment in the networked economy will place information in the hands of consumers who will have the instruments to influence the success or failure of enterprises. We are already witnessing the impact of buzz marketing, blogging and other online endeavours through which various stakeholders, from celebrities who endorse a particular brand to the consumer who buys the product, come to influence a company's fortune. Unless institutional mechanisms incorporate wider, and sometimes, competing claims of multiple stakeholders into their strategic choices they could stand to lose in the future marketplace. To illustrate the above issues, we shall focus on the predicament of the health care and the pharmaceutical industry and explore the ideal of the creation of sustainable value for all stakeholders.

Keywords: Corporate Governance, Shareholder, Stakeholder, Agency Theory, Externalities, Institutional Shareholders
Stream: Economic Sustainability
Presentation Type: Virtual Presentation in English
Paper: A paper has not yet been submitted.

Dr. Debasish Talukdar

Student, Post Graduate Diploma in Management Course, Indian Institute of Management Calcutta
Kolkata, West Bengal, India

I am currently pursuing my post graduate diploma in management from Indian Institute of Management Calcutta. I have done my graduation in Medicine and have worked as a practising doctor before embarking on my studies in Management. In future I intend to work on issues at the cross-roads of public policy (especially health) and corporate strategy. I take interest in studying the evolving status of corporations as the pre-eminent and among the most empowered institutions of modern world, especially looking into how the immense capabilities and resources of organisations can be harnessed for the collective benefit of humankind.

Deepak Dhamija

Affiliation not supplied
Kolkata, West Bengal, India

I am currently pursuing my post graduate diploma in management from Indian Institute of Management Calcutta. After completing my engineering, I worked for two and half years with a software firm. While working with profit making sector I voluntarily worked with non-profit organizations. During my internship in management course, I did research behind the reason in recent rise in farmer's suicides in Vidarbha region of India. I also prepared an intervention plan for microfinance organization keeping the above mentioned issue in mind. I am interested in exploring roles played by different members of society in its overall development.

Ref: S08P0158