Abstract - Stakeholder Capitalism, Corporate Governance and Firm Value
We consider the advantages and disadvantages of stakeholder-oriented firms that are concerned with employees and suppliers as well as shareholders compared to shareholderoriented firms. Societies with stakeholder-oriented firms have higher prices, lower output, but greater firm value than shareholder-oriented societies. In some circumstances, firms may voluntarily choose to be stakeholder-oriented because this increases their value. Consumers that prefer to buy from stakeholder firms can also enforce a stakeholder society. Competition between stakeholder and shareholder firms in the context of globalization is not desirable for stakeholder firms but is for shareholder firms.
University of Pennsylvania, Wharton School