Stakeholder Capitalism, the Fourth Industrial Revolution (4IR), and Sustainable Development: Issues to Be Resolved

Abstract

Stakeholder capitalism is gaining traction among academics and management practitioners in the Fourth Industrial Revolution. The World Economic Forum (WEF) embraced stakeholder capitalism as the key principle guiding the summit’s subject and the organizations’ focus at its 50th annual meeting in Davos 2020. In addition, the Business Roundtable issued a new declaration that articulates the corporation’s new purpose, which was endorsed by 181 chief executive officers (CEOs), who pledged to lead their companies for the benefit of all stakeholders. In this context, the study analyzed and reviewed the stakeholder capitalism theory to better understand the challenges that will need to be addressed if it is embraced as a philosophy to guide corporate management in the Fourth Industrial Revolution. The study, using the document analysis technique, concludes that embracing stakeholder capitalism can lead to the achievement of sustainable development and the various sustainable development goals. However, it was revealed that there are still several challenges that are linked to the ideas of stakeholder capitalism that need to be addressed before it can become a core ideology for corporate management. For instance, the issues around: stakeholder capitalism and positive contributions; the fact that meeting stakeholder expectations may not guarantee long-term viability; the challenge of balancing the needs of companies and stakeholders; the definition of a “stakeholder”, which is not clear in theory; the purpose and character of the company and the duties of managers, which are also unclear; and there is a lack of a theoretical base to describe the company’s behavior, among the other issues that were raised. As a result, when embracing stakeholder capitalism as a major element that will deliver healthy capitalism and sustainable development, it is critical to understand these significant flaws.