MIT Sloan Management Review Article on How to Reconcile Your Shareholders With Other Stakeholders

Identify which stakeholders will create long-term value for shareholders — and avoid the value-destroying traps associated with others.

How are leaders supposed to manage the trade-offs between conflicting stakeholder interests? Consider, for example, the tension between the interests of short term shareholders and the need to support a robust societal response to pandemics or other crises that can threaten a company’s business model. Those who have pursued long-term growth strategies that benefit a broad set of constituents understand that they must focus rigorously on their companies’ long-term value. Specifically, it’s important to assess which stakeholders create — and which deplete — long term shareholder value. This enables companies to avoid value-destroying traps and develop win-win compacts with value-creating stakeholders.

About the Author

Paul Strebel is professor emeritus of governance and strategy at IMD in Lausanne, Switzerland. Didier Cossin is professor of finance and governance at IMD and director of its Global Board Center. Mahwesh Khan is a research associate at IMD.

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