# Stakeholders: Definition, Types, and Examples

> **Definition**
>
> A stakeholder is someone with a vested interest in a company.

## What Is a Stakeholder?

A stakeholder is an individual or a group of individuals with an interest, often financial, in the success of some venture. The primary stakeholders in a corporation include its [investors](https://www.investopedia.com/terms/i/investor.asp), employees, customers, and suppliers.

With increasing attention on [corporate social responsibility](https://www.investopedia.com/terms/c/corp-social-responsibility.asp), the concept of stakeholder has been extended to include communities, governments, and [trade associations](https://www.investopedia.com/terms/c/chamber-of-commerce.asp).

### Key Takeaways

*   A stakeholder has a vested interest in a company and can affect or be affected by its operations and performance.
*   Stakeholders may include [investors](https://www.investopedia.com/best-online-brokers-4587872), employees, customers, suppliers, communities, governments, and trade associations.
*   An entity’s stakeholders may be internal or external to the organization.
*   The public may also be construed as a stakeholder in some cases.

![Stakeholder](https://www.investopedia.com/thmb/GMbifDPHmYg_4XB8Dkdkz9dyiVY=/1500x0/filters:no_upscale():max_bytes(150000):strip_icc()/stakeholder-48bc2baca5784572a0485b10cc14cb5a.png)

*A shareholder is a specific type of stakeholder that owns stock in a public company. — Investopedia*

## How Stakeholders Work

Stakeholders can be internal or external to an organization. Internal stakeholders are people whose interest in a company comes through a direct relationship, such as employment, ownership, or investment.

External stakeholders don't directly work for or with a company but are affected by the actions and outcomes of the business. Suppliers, creditors, and public interest groups are all considered external stakeholders.

> **Fast Fact**
>
> Stakeholder capitalism is a business concept that maintains companies should serve the interests of all of their stakeholders, not only their shareholders.

## Stakeholder Examples

### Internal Stakeholder

Investors are internal stakeholders who are significantly affected by a company and its performance. If, for example, a [venture capital](https://www.investopedia.com/terms/v/venturecapital.asp) firm decides to invest $5 million in a technology [startup](https://www.investopedia.com/terms/s/startup.asp) in return for 10% equity and significant influence, the firm becomes an internal stakeholder of the startup. The return on the venture capitalist firm’s investment hinges on the startup’s success or failure, meaning that the firm has a [vested interest](https://www.investopedia.com/terms/v/vestedinterest.asp).

### External Stakeholder

External stakeholders don't have a direct relationship with the company but may be affected by its operations. When a company goes over the allowable limit of carbon emissions, for example, the town in which it's located is considered an external stakeholder because its residents may be harmed by the increased pollution.

External stakeholders in some cases can have a direct effect on a company. The federal government, for example, is an external stakeholder. A policy change on carbon emissions affects the operations of any business that burns a significant amount of fossil fuel.

## Issues Concerning Stakeholders

A common problem is that the interests of various stakeholders may not align. In fact, they may be in direct conflict.

For instance, the primary goal of a corporation, from the perspective of its shareholders, is often considered to be the maximization of profits to enhance [shareholder value](https://www.investopedia.com/terms/s/shareholder-value.asp). Labor costs are unavoidable for most companies, but a company may seek to keep them under tight control. This is likely to upset another group of stakeholders—its employees.

The most efficient companies successfully manage the interests and expectations of all of their stakeholders.

## Stakeholders vs. Shareholders

All stakeholders are bound to a company by some type of vested interest. A [shareholder](https://www.investopedia.com/terms/s/shareholder.asp) is a stakeholder with a financial interest in a company due to their ownership of a company's stock. However, shareholders can sell their stock; they don't necessarily have a long-term need for the company and can usually get out at any time and reduce their losses.

Other stakeholders are more dependent on a company's long-term success. For example, when a company is having a difficult financial quarter, the vendors in its [supply chain](https://www.investopedia.com/terms/s/supplychain.asp) stand to lose business if the company scales back production. Employees of the company, meanwhile, would be at risk of losing their jobs.

## What Are the Different Types of Stakeholders?

Some of the most notable types of stakeholders include a company's shareholders, customers, suppliers, and employees. Some stakeholders, such as shareholders and employees, are internal to the business. Others, such as the business’s customers and suppliers, are external to the business but are still affected by its actions.

## Are Some Stakeholders More Important Than Others?

When a business goes bankrupt, stakeholders get reimbursed for their capital investment in a specific order. Secured creditors are first in line to be repaid. They're followed by unsecured creditors, preferred shareholders, and finally owners of common stock (who may receive pennies on the dollar, if anything).

## What Are the Stakeholders in a Business?

Stakeholders in a business include any entity that has a vested interest in the company’s success or failure.

First, there are the owners of the business. These can include hands-on owners as well as investors who have passive ownership. If the business has loans or outstanding debts, the creditors (including banks and bondholders) will be the next set of stakeholders in the business.

The employees of the company are another group of stakeholders, along with the suppliers who rely on the business for at least a portion of their income. Finally, customers are stakeholders who purchase and use the goods or services that the business provides.

## The Bottom Line

Stakeholders are individuals, organizations, or other entities that have a vested interest in the success or failure of a company or other endeavor. Stakeholders can be internal or external, depending on their relationship with a company, and they can include investors, shareholders, employees, suppliers, customers, communities, trade associations, and even governments.

> **Article Sources**
>
> 1.  United States Code: Office of the Law Revision Counsel. "[11 USC 507: Priorities](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title11-section507&num=0&edition=prelim)."
>     
> 2.  Investor.gov. "[Investor Bulletin: Bankruptcy for a Public Company](https://www.investor.gov/introduction-investing/general-resources/news-alerts/alerts-bulletins/investor-bulletins-84)."