Stakeholder Capitalism | Warren A. Stephens | Stephens

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This Is Capitalism

What’s Better Than Stakeholder Capitalism? | Insights from Warren A. Stephens

May 18, 2022

I recently participated in the Future of Capitalism Summit at Wake Forest University. One of the takeaways from the event was that Millennial and Gen Z adults are much more in favor of “stakeholder capitalism” than their Generation X and Baby Boomer elders. Is this merely a matter of preference, or is there a correct choice — and what would be the correct choice?

Stakeholder capitalism can be defined as each company striving to meet the needs of every person and entity it touches, from employees and shareholders to other companies along its value chain to residents in communities where the company operates, in a manner that benefits society. Another, more succinct definition, is: companies trying to do more than just turn a profit.

For starters, simply making any business profitable, and keeping it profitable over the long term, is incredibly difficult. More importantly, people disagree about nearly everything, including what they believe to be true and good. A further complication is that the prevailing values of society tend to change over time.

Therefore, going by our first (somewhat long-winded) definition, any company that does its very best to achieve the goals of stakeholder capitalism is highly likely to fail. In many ways, this is like asking a person to satisfy the needs of everyone they interact with, at all times, which is next to impossible. But this in itself does not make stakeholder capitalism bad.


After all, in principle, attempting to improve society is a worthy goal, and indeed something each of us should embrace on an individual level. In fact, that is the main issue with stakeholder capitalism. It imposes onto companies what is inherently a mission of individual values, with no clear way to determine when and how the goals are achieved. In other words, who decides?

Establishing objective metrics and certification criteria may well become part of the ecosystem for stakeholder capitalism, similar to how it has for ESG (environmental, sustainability, and governance) as well as for B Corporations. However, skepticism abounds about whether ESG and B Corp ratings are reliable indicators of anything real.

Perhaps the strongest evidence of the results of stakeholder capitalism is the court of public opinion. For better or worse, this effectively means social media. Based on the conversations dominating Twitter, TikTok, Facebook, and even LinkedIn, there has yet to be a successful navigation of this terrain without falling prey to political strife. Consider the saga of Elon Musk.

The most common result appears to be that these companies inadvertently incur the wrath of people who perceive their actions to be disingenuous, lackluster, or attacking cherished social values. Any of these results risks becoming distractions or outright obstacles to running the actual business. That in turn puts livelihoods in jeopardy — a relevant concern in this economy.


As for the more succinct definition of stakeholder capitalism, companies certainly can do much more than just turn a profit. They can produce goods and services that enhance quality of life for their customers. They can create inclusive cultures that their employees find fulfilling. And they can operate ethically so that the government does not put a chokehold on free enterprise.

I have a personal stake in this approach. Stephens is a diversified financial services firm that works closely with a wide array of businesses and business owners in North America and Europe. So it is with firsthand experience that I say the people at this company, and our clients, care deeply about having a positive impact on the world.

Now it is worth noting what companies in our capitalist society have done, very recently, other than just turning a profit. These include inventing and distributing life-saving COVID-19 vaccines, as well as enabling the people of Ukraine to maintain internet access during the prolonged Russian invasion.

Health, communication, and work are all essential for many people to have a sense of purpose. Enabling these things is well within the scope of companies, and they directly benefit all stakeholders. As long as capitalism continues to contribute to society in this manner, it has great potential to prove its worth to the younger generations.

About the Expert

Warren A. Stephens

Chairman, President and Chief Executive Officer, Corporate

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