Corporate stakeholders refer to individuals or organizations who share common interests or goals within a company. In this light, they embody part of corporate governance whose mandate is to formulate processes, rules, and systems that guide corporate activity. Key stakeholders include shareholders, managers, directors, government agencies, creditors and employees. On the other hand, free riding is a concept that occurs when people are reaping benefits in ventures they have not invested ( Allen, 2017) . Corporate stakeholders differ regarding management and responsibility which determines if the stakeholders play an active role or benefits from the efforts of others ( Armstrong, Blouin, Jagolinzer, & Larcker, 2015) . Apparently, shareholders are the real owners of a company though they do not run it, they provide capital and also appoint directors who employ managers to run the company, consequently a company uses this capital to formulate this work plan and increase productivity.
Managers have the most patinent duties in a leadership role, decision making, advisory, and appointment of the company’s workforce. These roles influence the performance of every department of a company, the manager’s account for the funds allocated for various projects keenly and the profits made in every financial year ( Armstrong et al., 2015) . On the other hand, directors are responsible for accountability and oversight in the mode of management and financial expenditure of the company. In this light, when a company lacks accountability for investors as well as clients, a company is likely to experience loses due to the withdrawal of key stakeholders such as customers ( Rose, 2014) . Moreover, government agencies such as policy-making bodies and auditors play regulatory roles which also consequently protect the company in case of any challenges.
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Primarily, a company structure is an aggregation of critical stakeholders whose role cannot be dismissed lightly. In essence shareholders, directors, managers, employees, the government, clients, and even unions are hence not free riders. Each plays an active role in the economic sector and, therefore, deserves to retain their position in an economy.
References
Allen, W. T. (2017). Our schizophrenic conception of the business corporation. In Corporate Governance (pp. 79-99). Gower.
Armstrong, C. S., Blouin, J. L., Jagolinzer, A. D., & Larcker, D. F. (2015). Corporate governance, incentives, and tax avoidance. Journal of Accounting and Economics , 60 (1), 1-17.
Rose, P. (2014). Sovereign shareholder activism: How SWFs can engage in corporate governance.
