Why is the owner of a business the most important stakeholder?  I am doing coursework on Cadbury's. Thank you very much as this is very helpful for me. Thank you!

2 Answers

jimjimjimmy's profile pic

jimjimjimmy | (Level 2) Adjunct Educator

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According to the Stanford Research Institute, a stakeholder of a business is a member of the "groups without whose support the organization would cease to exist." Clearly, then, the relationship between a stakeholder and the business that they support is mutually affecting. It is in the stakeholder's best interest that the business do well, and it is in the interest of the business to reward stakeholders in order to secure future support. Generally, stakeholders are split into three categories: a) Primary b) Secondary and c) Excluded. Primary stakeholders are usually members of the business itself, this being customers, employees, stockholders, and so on. Business owners would fall under this category. Next, there is secondary stakeholders. Secondary stakeholders are individuals who are external to the business. These are members who do not directly engage with the business but who are nonetheless affected by the business' actions. This includes indigenous communities, media groups, and the general public. Finally, there are excluded stakeholders, which refers to children and/or members of the public who are not affected or interested in the business' actions. A business owner would contrast greatly with an excluded stakeholder in relation to any given business since the relationship between a business and its stakeholders is mutually rewarding and mutually damaging. A business owner is the most important member of a business because a business owner is the individual who is most involved in their business, and since stakeholders are defined by their degree of involvement, a business owner is the most important member. 

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krishna-agrawala's profile pic

krishna-agrawala | College Teacher | (Level 3) Valedictorian

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Before we discuss this question in detail, it will be useful to develop some clarity on nature of ownership of a business. A business may be owned solely by an individuals, or by several partners, or by a large number of shareholders. When a business is owned jointly by several people either as partners or as shareholders extent of ownership has considerable influence on the importance of the business to the individual. Also the extent to which a person is involved in management of the business affect his or her interest in the business. A small shareholder in a big company who holds just a few shares in the company for short term gains, is not likely to have the same kind of interest as another shareholder who is also the managing director of the company. Also importance of a company to the owner is also dependent on other businesses owned by the same person. Thus if a businessman running a big business also owns another small company, both these companies are not likely to be equally important for him or her.

Having thus clarified the nature of ownership, we can now state that an owner of a business is an important stakeholder in a business as the business affects his earnings and wealth. When an owner manages a business, the performance and conduct of the business also affects the reputation of the owner. In this way the importance of the business increases further. The importance of a business for the owner is also related to the ease with which owner can close one business and start another. A customer can easily switch his or her loyalty from product of one company to another, but a businessman cannot close down one business and start another. Thus the owner is stuck with a business for a long time.