{"id":48714,"date":"2021-04-06T14:30:25","date_gmt":"2021-04-06T14:30:25","guid":{"rendered":"https:\/\/staging-mondaycomblog.kinsta.cloud\/?post_type=pm&p=48714"},"modified":"2026-05-18T12:30:51","modified_gmt":"2026-05-18T17:30:51","slug":"stakeholder-theory","status":"publish","type":"post","link":"https:\/\/monday.com\/blog\/project-management\/stakeholder-theory\/","title":{"rendered":"What is stakeholder theory? A practical guide for managers"},"content":{"rendered":"
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Some project management terms are confusing. \u2018Brainstorm,\u2019 for example. How is a violent storm in your head a helpful way to solve problems? But \u2018stakeholder\u2019 is much simpler. They\u2019re people holding a stake in your project, which means they have skin in the game.<\/p>\n\n

When it\u2019s your game, you need to know how to look after them. In this article, we\u2019ll explain all you need to know about stakeholder theory, including what it is, why it matters, and how you can apply it to your projects.<\/p>\n\n

TL;DR:<\/strong> Stakeholder theory is a business concept that says companies should create value for all stakeholders\u2014not just shareholders\u2014including employees, customers, and the community. For managers, this means actively involving these groups in project decisions to build trust and ensure success.<\/p>\n\n<\/div>\n

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What is the core idea of stakeholder theory?<\/h2>\n

Stakeholder theory is a concept rooted in business ethics<\/a>, first detailed by philosopher R. Edward Freeman. It states that any person or group affected by an organization\u2019s actions is a stakeholder and that long-term success depends on creating value for all of them. This includes everyone from employees and customers to suppliers and the local community.<\/p>\n\n

This approach goes beyond simple stakeholder management<\/a>, which often focuses on mitigating risks posed by stakeholders. Instead, stakeholder theory is about integrity and active involvement. For project managers, it means giving stakeholders full visibility and a genuine opportunity to influence the project\u2019s direction.<\/p>\n\n<\/div>\n

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Stakeholder theory vs. shareholder theory: What's the difference?<\/h2>\n

The main difference lies in the primary focus of the business. Shareholder theory, the more traditional view, argues that a company\u2019s main responsibility is to maximize profits for its shareholders. It\u2019s a financially-driven model focused on prioritizing shareholder value<\/a>.<\/p>\n\n

Stakeholder theory, on the other hand, proposes a broader mission. It suggests that a business must also consider the interests of all its stakeholders. This includes employees, customers, suppliers, creditors, and even the wider community. The goal is to create shared value and achieve sustainable success by balancing the needs of all parties involved.<\/p>\n\n<\/div>\n

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Why is stakeholder theory important for your business?<\/h2>\n

Adopting stakeholder theory isn\u2019t just about ethics; it\u2019s good for business. By considering a wider range of interests, companies can build stronger relationships, enhance their reputation, and foster long-term loyalty.<\/p>\n\n

Key benefits include:<\/p>\n