Shareholder vs. Stakeholder: What's the difference?

SHAREHOLDERS VS STAKEHOLDERS WHAT IS THE DIFFERENCE?

Over time, the word shareholder and stakeholder has been used, interchangeably with the notion that they mean the same thing. Though there is a little resemblance in the spelling but have different pronunciation and meaning.

Without wasting much time let’s look at the meaning of shareholder and stakeholder and the some of the things that make them different as well as their similarities.

A shareholder is any person , company or other institutions that owns at least one share of a company’s stock. Shareholders are the owners of the company by way of contributing their shares in the company or having part of the share of a company.  Shareholders have the potential to profit if the company does well, they also have the potential to lose if the company does poorly. A shareholder can also be referred to as a ‘stockholder’.

On the other hand, a stakeholder is any individual or group of individuals who have a strong interest (a stake) in the organisation and what it does. Examples of a stakeholder includes the employees of an organisation, customers of an organisation, the government of the country in which the company is located, suppliers to the company, lenders or creditors to the company, local communities where the company operates and the general public.

As you would notice from the definition of a stakeholder, these set of people mentioned in the examples of a stakeholder, they are people who in one way or the other have an interest in the activities of the company, because they stand to benefit one way of the other from the company. For instance the employees have interest in the activities of the company even though they might not have share with the company, but they need the company in order to earn a living.

The local community also have an interest in what the company does because the organisation can engage in community development, which is part of the corporate social responsibility. 

Now let’s see some of the differences between a Shareholder and a stakeholder;

SHAREHOLDERS VS. STAKEHOLDERS

• Shareholders have the right to vote on certain issues in the organisation while a stakeholders most times don’t have that right.
• Shareholders are stakeholders in a company but stakeholders are not always shareholders.
• A shareholder owns part of a company by investing his shares, while a stakeholder is just interested in the performance or activities of a company for reason other than stock.

SIMILARITIES BETWEEN SHAREHOLDERS AND STAKEHOLDERS

They both have an interest in the performance of the organisation or company.

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