Management Textbooks Boundless Management Ethics in Business Business Stakeholders
Management Textbooks Boundless Management Ethics in Business
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Management
Concept Version 14
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Internal Stakeholders

Internal stakeholders, primarily employees, owners and managers, are directly involved in the operations and strategy of the organization.

Learning Objective

  • Differentiate between internal and external stakeholders.

Key Points

    • Internal stakeholders are individuals or groups who are directly and/or financially involved in the operational process.
    • External stakeholders are indirectly influenced by the organization's operations.
    • Employees and managers are internal stakeholders impacted by organizational strategy and success, with some influence on the organization's decisions.
    • Owners have a larger impact on organizational management, and take a larger amount of accountability compared to managers and employees.

Term

  • stakeholders

    A person or organisation with a legitimate interest in a given situation, action or enterprise.

Full Text

Stakeholder Theory

Organizational management is largely influenced by the opinions and perspectives of internal and external stakeholders. A stakeholder is any group, individual or community which is impacted by the operations of the organization, and therefore must be granted a voice in how the organization functions. External stakeholders have no financial stake in the organization, but are indirectly influenced by the organization's operations. 

Internal Stakeholders

Internal stakeholders are individuals or groups who are directly and/or financially involved in the operational process. This includes employees, owners, and managers. Each of these groups is potentially rewarded directly for the success of the firm.

Employees

Employees are primary internal stakeholders. Employees have significant financial and time investments in the organization, and play a defining role in the strategy, tactics and operations the organization carries out. Well run organizations take into account employee opinions, concerns and values as primary stakeholders in the strategy, vision and mission of the firm.

Managers

Managers play a substantial role in determining the strategy of the organization, and a significant voice in operational decisions. Managers are also accountable for the decisions made, and act as a point of contact between shareholders, the board of directors and the organization itself.

Owners

Owners (which in publicly traded organizations can include shareholders) are the individuals who hold significant shares of the firm. Owners are liable for the impacts the organization has, and have a significant role in strategy.  Owners often make substantial decisions regarding both internal and external stakeholders.

Stakeholders for a Search Engine

This graphic is a good illustration of the stakeholders involved in a search engine organization. Various groups are impacted by their operations, such as consumers, owners, financiers, governments and advertisers. Owners are directly involved in the process, and thus described as internal stakeholders.

This graphic is a good illustration of the stakeholders involved in a search engine organization. Various groups are impacted by their operations, such as consumers, owners, financiers, governments and advertisers. Owners are directly involved in the process, and thus described as internal stakeholders.
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