What is a Non-Shareholder Constituent?

The non-shareholder constituencies Bagley was referring to are the actual “Stakeholders.” A corporate stakeholder is a party that can affect or be affected by the actions of the business as a whole. The stakeholder concept was first used in a 1963 internal memorandum at the Stanford Research institute. It defined stakeholders as “those groups without whose support the organization would cease to exist.” The theory was later developed and championed by R. Edward Freeman in the 1980s. Since then it has gained wide acceptance in business practice and in theorizing relating to strategic management, corporate governance, business purpose and corporate social responsibility (CSR) (Geoff, 2010). A stakeholder is any individual or organization that is affected by the activities of a business. They may have a direct or indirect interest in the business, and may be in contact with the business on a daily basis but do not own a part of the company like a shareholder.

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