Being market oriented has been in vogue since the late 1980s, but is it really the preferred way for firms to operate internationally today? Not really! Firms need to focus on a number of stakeholders beyond customers and shareholders.

Interestingly, this widespread recognition of stakeholder interests is, at least partially, is a result of the corporate scandals and ethical lapses by several firms in recent years (e.g., Enron). Some would argue that these firms ran into trouble because of their business strategies that were focused on the creation of short-term shareholder value.

The stakeholder perspective was first introduced in the 1980s to explain why businesses have responsibilities beyond the maximization of shareholder value to include the interests of non-stockholding agents. Stakeholder issues refer to corporate activities that are of concern to one or more stakeholder groups. Examples include the fairness of product information, gender discrimination, employee compensation, transparency of company reports and audits, and the environmental impact of products.

Given the corporate scandals in the last decade, coupled with a focus on customers as the primary stakeholder group, firms cannot be only market oriented in their quest to achieve superior performance. With its primary focus on customers, market orientation ignores other critical stakeholders (e.g., employees, shareholders, suppliers, regulators and local communities) that are very influential globally.

This broadening of being market oriented to now focusing on multiple stakeholders has important implications for firms. For example, Wal-Mart, the world’s largest retailer, maximized its customer orientation but now needs a stakeholder orientation to continue achieving superior performance. Wal-Mart has become the focus of a national anti-sprawl movement, bringing together environmentalists, local businesspeople and residential homeowners. While a strong market orientation has fueled Wal-Mart’s growth, a strong stakeholder orientation is needed to navigate present difficulties and preempt future challenges.

A stakeholder view is better

Arguing for a focus on stakeholders without objective evidence is of course a tough task. So, let’s put some numbers into the argument. In this case, 151 multinational corporations drawn from the Dun & Bradstreet directory were used to examine stakeholder orientation, market orientation and financial performance.

The findings show that a focus on a set of six stakeholders (i.e., customers, employees, shareholders, suppliers, regulators and local communities) leads to greater financial performance than a focus on being market oriented (with its focus on customers and shareholders). The obvious implication is that caring for a wider array of stakeholders than customers will translate into increased financial performance. The importance that should be placed on each stakeholder globally can be seen in the accompanying figure (the results can range from 0 to 100 percent, with a greater percentage indicating greater importance of a stakeholder group). 

The findings also encourage leaders to coordinate activities aimed at generating, disseminating and responding to information about a variety of stakeholders. These activities (e.g., satisfaction surveys, information bulletins and specific initiatives aimed at tackling stakeholder issues) are usually managed by individual departments that are more or less in charge of a specific stakeholder group (e.g., marketing for customers, purchasing for suppliers, human resources for employees, investor relations for shareholders).

Importantly, similarity often exists in practices across departments in a firm to keep aware of and address the demands of the various stakeholders. By combining stakeholder practices of an organization’s functional departments, businesses can manage and act upon stakeholder information much more systematically and efficiently. Such stakeholder focus and integration within the firm will lead to greater global success (assuming the product or service being sold has an edge in the global marketplace, of course!).

		Tomas Hult is professor of international business and director of the International Business Center (a federally funded national resource center) in the Eli Broad Graduate School of Management at Michigan State University. He is also executive director of the Academy of International Business and cofounder of Hult Ketchen International Group, LLC. Dr. Hult can be contacted at This e-mail address is being protected from spambots. You need JavaScript enabled to view it .