Stakeholder theory is an idea about how business really works. It says that for any business to be successful it has to create value for customers, suppliers, employees, communities and financiers (shareholders, banks etc.) it says that you can’t look at any one of those stakeholders in isolation, their interest has to go together and the job of a manager or entrepreneur is to figure out how the interests of customers, suppliers, communities, employees and financiers go in the same direction. Now, think about how important each of these groups is in order for a business to be successful, think about how a business that has lost its edge with its customers – that it has products/services that its customers don’t want as much or that they don’t want at all – that’s a business in decline. Think about a business who manages suppliers in a way that the suppliers don’t make them better, the suppliers just take orders and sell stuff, but the suppliers aren’t trying to make a business more innovative, more creative that is a business that is probably in decline. Think about a business who’s employees don’t want to be there every day, who aren’t using 100% of their effort, energy and creativity to make the business better – that’s a business in decline. Think about a business that is not a good citizen in the community that routinely ignores or violates local custom or law that doesn’t pay attention to the way of life in the community and doesn’t pay attention to issues of corporate responsibility of its sustainability and of its effects on civil society – that’s a business that is soon to be regulated and to decline. And think about a business that doesn’t create a value, doesn’t create profits for its financiers: its shareholders, banks and others – that’s a business in decline. So stakeholder theory is the idea that each one of these groups is important to the success of a business in figuring out where their interests go in the same direction is what managerial task and entrepreneurial task is all about. So stakeholder theory says if you just focus on financiers you miss what makes capitalism tick, which is that shareholders, financiers, employees, suppliers, communities can together create something that no one of them can create alone.