Difference between Stakeholder View vs Shareholder Driven View on Corporate Governance

Running head: STRATEGIC MANAGEMENT
STRATEGIC MANAGEMENT
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Introduction
The principle of stakeholder has gained recognition in the domain of corporate
governance in the last few years (Bottenberg, Tuschke and Flickinger 2017). It can be stated as
the refinement of a large number of limited access of business corporation who ultimate is to
easily promote the economic interest of the shareholders. The stakeholders generally cover a
larger section or group that is employees, communities and another kind of people. Various
economist round the globe has been attracted by the kind of relationship between corporate
governance and human capital (Tricker and Tricker 2015). Their ultimate goal is the method by
which various firms can be owned and controlled. The last section deals with the way by which a
firm can be owned or controlled.
The coming pages of the report mainly deal with the difference in view from the side of
stakeholder and shareholder. An idea has been provided regarding corporate governance and
interest of stakeholders. After that case of a mandatory employee, representation has been
discussed in details. The German case with respect to corporate governance has been discussed
in details. The last section of the report mainly deals with Gucci story where a proper idea has
been provided regarding between shareholder and stakeholder.
Discussion
Stakeholder vs Shareholders
Each and every organization around the globe raise or gathers capital by providing shares
to the normal public. Shareholders can be stated a person who has bought a certain number of
shares either from the primary market (West 2016). There are mainly two types of shareholders
that are equity shareholders, preference shareholders.

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A stakeholder can be easily stated as a party which can easily influence the various
activities of the organization. The company management is then accountable to a large number
of accountability to various shareholders. There are mainly two types of stakeholders that are
internal stakeholders and external stakeholders (Kraakman and Hansmann 2017). Internal
stakeholders comprise of owners, employees and trade unions. While external stakeholder
comprises of suppliers, creditors, customer and lastly society.
Shareholders can be defined as a person who has invested a large amount of money by
easy purchasing of a large number of shares. While stakeholder can be easily stated as a party
who comes up interest which is affected by the action of the organization by the direct and
indirect way. The thing should be taken into account that scope of stakeholder is much wider
while comparing shareholder (Mason and Simmons 2014). Stakeholders generally represent the
entire kind of micro-environment of business while a shareholder is all about company’s share
for paying prices. So many time shareholders are termed as owners of any organization.
Stakeholders are not owners of the company instead of this they are parties with which one needs
to deal with within the given company.
Corporate governance and stakeholder interest
The fact cannot be ignored that the interest of various stakeholders lies in the
maximization of profit. Stakeholders come up with time horizon, discount rates and propensities
of various risks. The current strategy of corporate management can easily change its behavior
which is used for maximizing profit (Aguilera et al 2015). The proper working of various
financial markets generally allows us to easily overcome a certain number of difficulties. The
proper possibility of trading shares creates a flexibility, permitting various portfolio allocation as

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per the need or requirement. In the end, the last thing can be taken into aspects like maximization
of discount of corporate profits. The growth of insider’s interest can easily have led to slowing
down firm growth which can easily lead to higher wages, profitability, and efficiency. This can
be considered to be a disadvantage to outsiders who can easily be helpful for the growth of the
firm. It can easily take place due to a higher number of employment and greater supply of
various goods and services (Denis 2016). The ultimate result of the larger number of
unemployment along with lowering the standard of employment. It can be easily applied to a
larger number of firms with comes up with lower productivity and lower wages.
The case of mandatory employee representation
The matter of employee representation can be seen in corporate governance depends on
the balance of two possible effects. The degree of involvement of an employee in various
corporate governance can be considered to be beneficial for the overall productivity and proper
value-added a creation (Stout and Blair 2017). It can lead to uneven distribution of
entrepreneurial surplus which can be considered as a disadvantage to employees.
German Case
The most important aspects of various employee representation can be seen in corporate
governance which can easily lead to the success of the German Model. The major effect which
can be an improvisation of employees during hard times. Without any kind of specific German
aspects various kinds of corporate governance (Ayuso et al. 2014). Without any kind of German
aspect of corporate governance, it can be difficult for improving work time with any kind of
unchanged wages. Positive past performances of the German economy can be easily explained