There has been a tremendous shift in recent years from shareholder capitalism to stakeholder capitalism. But what is stakeholder capitalism exactly? Stakeholder capitalism is essentially the shift from companies only being responsible for their shareholders and the numbers they report, but also stakeholders—such as their employees, suppliers and distributors, the community they are operating in or around, and moreover society. The shift represents a conscious movement as inequality in the late 20th century and early 21st century has risen sharply.
The movement encompasses whole sectors. From the financial sector to the social enterprise one, stakeholder feedback is becoming part of design processes. This means that research practitioners—the ones studying interventions and how corporations have affected people's lives, have made corporations aware that when they are trying to act socially responsible, they better have some feedback mechanism from stakeholders to prove it.
One of the main ideas surrounding this new age philosophy is that by understanding the needs of stakeholders better and facilitating more feedback from the stakeholder to the business, businesses will in turn operate smoother. This is backed up by the fact that the millennial class and young professionals of today simply won’t accept a pure shareholder mindset. And neither will major news outlets either. The social aspect of the business is too overwhelming to ignore anymore.
As such, stakeholder capitalism and involving community members in new thought processes has become a field in itself—with Masters and Ph.D. candidates studying corporate abuse and looking to make an impact. The feedback that has been garnered from stakeholders on many projects has in turn led to new research methods. Here are three:
1. Understanding local perspectives
For a long time, it was the work of businesses and even non-profits to set social goals for themselves, meaning an organization would create an intervention strategy for a local population suffering or in need of something, and then analyze their results based on their own metrics for success, and not the community’s.
For example, let's say a New York organization is engaged in tree planting on the weekends so that they can appear more environmentally friendly. If such an organization measures its success by the number of trees they plant, rather than the effect of the trees planted for communities that live nearby, the local perspective is not included.
Part of the reason this was normative behavior for so long is so the guiding organization doesn’t have to do as much work or follow up on a project.
But this way of doing business has long been replaced by feedback mechanisms to hold organizations accountable for the effect they are having in a community. In the past five years especially, there has been a major emergence of including local perspectives into the design of an intervention, thus altering the theory of change. This is especially true in developing economies.
2. Building new systems out for measurement
In turn, involving stakeholders in actual research methods, strategies, and a more horizontal process has led to entirely new systems of measurement. Feedback loops show how a local community is reacting and behaving in accordance with new technology, and thus measuring success has gone from a strictly numerical value of what was given to a population to how these individuals are actually using and feeling about how they are being helped.
3. New long term visions and goals
Today, this is clearly the case with technology, new mobile applications, and new databases for people to use to their advantage. Researchers don’t just focus on adoption rates and how many people are using a new App, they focus on the user experience and attitude towards something that is new in the marketplace. In turn, this feedback loops generate new results and information that gets put back into the hands of people designing applications so they can do a better job the next time they create something.
Overall, new feedback loops on user experience and whether or not users or consumers or participants in society reject or accept an intervention has become increasingly imperative to study. This is not only because organizations are seeking to create the best products and services for the communities they serve, but because now that everyone is using a feedback model, competition has grown. This means companies who don’t do consumer or stakeholder research are going to be outperformed by the ones who know how important feedback is to research and think about.