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.

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After many business leaders had committed decades to maximizing short-term shareholder returns, the Business Roundtable’s August 2019 Statement on the Purpose of a Corporation1 declaring that companies should serve the interests of all stakeholders — not just investors, but also customers, employees, partners, suppliers, and society at large — signaled a major shift. This change represents a key challenge, and not just for the nearly 200 CEOs of major companies who signed the Roundtable’s statement.

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.

To help executives do this work, we present a framework in which long-term shareholders are separated out from other stakeholders. It’s based on our experience working with boards of directors on stakeholder issues that affect the value of the company. The framework has been tested in workshops for specific corporate boards and in a program for high-performance boards at IMD. In both contexts, it has helped directors recognize five common traps and develop strategies to integrate shareholders’ interests with those of other stakeholders, turning the emerging support for stakeholder capitalism into reality. It builds on research and thinking that we and others have done about the benefits of balancing those interests2 and about how top management and boards should avoid undermining the corporate culture by extracting value from some stakeholders to achieve short-term gains.3

In this article, we look at the five traps and describe how leaders can avoid them, citing examples of companies that have struggled and those that have fared better. In particular, we highlight the experience of Royal DSM, a Dutch biotech sustainability trailblazer with a market capitalization of about $22.2 billion, which shows how the approach we propose can play out over multiple iterations.



1. Business Roundtable, “Statement on the Purpose of a Corporation,” Aug. 19, 2019,

2. H.J. Smith, “The Shareholders vs. Stakeholders Debate,” MIT Sloan Management Review 44, no. 4 (summer 2003): 85-90.

3. P. Strebel and S. Cantale, “Is Your Company Addicted to Value Extraction?” MIT Sloan Management Review 55, no. 4 (summer 2014): 96.

4. J-P. Jeannet and H. Schreuder, “From Coal to Biotech: The Transformation of DSM With Business School Support” (Berlin Heidelberg: Springer Verlag 2015); and B. Leleux and J. van der Kaaij, “Darwinians at the Gate: Sustainability, Innovation, and Growth at DSM,” IMD case study IMD-3-2355 (Lausanne, Switzerland: IMD, 2013).

5. P. Strebel, “Big Business Models Are Back-to-Front: Create Long-Term Value by Putting Shareholders at the Back-End of Cash Flow Distribution,” The European Business Review, January-February 2019, 69-70.

6. E. Yardeni, J. Abbott, and M. Quintana, “Corporate Finance Briefing: S&P 500 Buybacks and Dividends,” Yardeni Research, March 27, 2020,

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8. T. Poletti, “Netflix Finally Admits the Obvious: Competition From Apple and Disney Will Hurt,” MarketWatch, Oct. 19, 2019,

9. A. Gregg and C. Davenport, “Boeing Had a Best-Selling 737 and a Growing Global Market. Now After Two Crashes, Its Reputation Is at Risk,” The Washington Post, March 12, 2019.

10. W. Horobin and A. White, “How ‘Digital Tax’ Plans In Europe Hit U.S. Tech,” The Washington Post, Dec. 3, 2019.

11. House of Commons, Business, Energy and Industrial Strategy and the Work and Pensions Committees, “Carillion: Second Joint Report,” HC769 (London: House of Commons, May 16, 2018).

12. J. Armitage, “Phones 4U Owner BC Partners Walks Away with £18 Million Profit,” Evening Standard, Sept. 18, 2014,

13. R.L. Swarns, “Drug Makers Drop South Africa Suit Over AIDS Medicine,” The New York Times, April 20, 2001,

14. “DSM Celebrates 30 Years as a Listed Company,” DSM press release, Feb. 6, 2019,

15. Royal DSM N.V. Annual Report 2002, Feb. 11.

16. Bloomberg, “Activist Hedge Fund Third Point Buys $3.5 Billion Stake in Nestle, Eyeing Opportunities in Europe,” Japan Times, June 26, 2017,

17. D. Vidalon, “Pernod Ricard Vows to Lift Margins After Activist Elliott’s Arrival,” Reuters, Feb. 7, 2019,

18. Jeannet and Schreuder, “From Coal to Biotech.”

19. D. Proctor, “Hitachi Acquires ABB Power Grids Business in $11 Billion Deal,” Power, Dec. 17, 2018,

20. P. Strebel, “The Change Pact: Building Commitment to Ongoing Change” (London: Financial Times/Prentice Hall, 1998).

21. Jeannet and Schreuder, “From Coal to Biotech.”

22. S. Strom, “At Chobani, Now It’s Not Just the Yogurt That’s Rich,” The New York Times, April 26, 2016,

23. “2019 Sustainability Report,” Chobani, n.d.

24. Strebel and Cantale, “Is Your Company Addicted to Value Extraction?”

25. K. Ziegler, “Digitizing Coffee Agronomy Training & Monitoring,” TechnoServe, Dec. 15, 2017,

26. E. Fry, “This Former Chemical Company Went ‘Green’ and Its Stock Took Off,” Fortune, Sept. 12, 2017,

27. A. Beard and R. Hornik, “It’s Hard to Be Good,” Harvard Business Review 89, no. 11 (November 2011): 88-96.

28. “The Redmond Doctrine: Lessons from Microsoft’s Corporate Foreign Policy,” The Economist, Sept. 12, 2019.

29. Jeannet and Schreuder, “From Coal to Biotech.”

30.DSM Commences €1 Billion Share Buy-Back and Announces Regular Repurchase to Cover Share Plans and Stock Dividend,” DSM press release, March 14, 2019,

31. A. Lowenstein, “Ten Ways Leading Companies Turn Purpose Into Strategy,” EY Beacon Institute, Sept. 19, 2019,

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