What is a stakeholder, and what is the underlying insight of stakeholder theory?

A stakeholder is any individual or group with an interest in an organisation's decisions or activities — and the insight is that a firm cannot operate without regard for the system it operates in.

The definition is deliberately broad: it is interest in a decision or activity that makes someone a stakeholder, not a contract, not ownership, not proximity. That sweeps in employees, customers, suppliers, lenders, owners, the state, neighbouring residents, NGOs, and — in the versions that matter for environmental questions — future generations.

The contrast that gives the term its bite is with the shareholder view, on which the firm's obligations run to its owners and everything else is a constraint or a cost. Stakeholder theory denies that the firm is a closed system with one principal: it is embedded in a web of relationships, and the resources it depends on — trust, a licence to operate, skilled labour, a functioning legal order — are supplied by people who are not its shareholders.

From that follows the practical claim: an organisation that ignores the system it acts within is not being hard-nosed, it is mis-modelling its own situation. The interests of stakeholders are not external ethical constraints bolted onto the business; they describe the conditions under which the business can continue to exist.

Go deeper:

• Wikipedia: Stakeholder theory — Freeman's theory, its variants and the standard criticisms of it.
• Wikipedia: Stakeholder (corporate) — the concrete groups usually counted, including the contested ones such as future generations.