Crowdfunding Can Enable A Shift To A More Accountable And Sustainable Stakeholder Economy
14th September 2016
During her launch campaign, new Prime Minister Theresa May highlighted the need for creating an economy that works for everyone by creating a stakeholder society.
She said, “transient shareholders - who are mostly companies investing other people’s money - are not the only people with an interest when firms are sold or closed.”1
The public discourse suggests that May made this statement due to the recent belief that “big business” does not necessarily work for everyone due to wide dissemination of aggressive tax avoidance, overseas takeovers and the Victorian style working practices of a small number of retailers.
The concept of stakeholder capitalism is one which serves the needs of a number of different parties, as opposed to just the owners and senior management of companies.
Whilst changing policy to facilitate this is likely to take place over a period of time, and face many obstacles, this can be introduced at a grassroots level by increased adoption of debt and equity crowdfunding.
Enabling employees and other stakeholders to lend money to, or invest in companies facilitates a shift to a local cluster base, that when joins up forms a global economy.
At Crowd2Fund, we have been able to demonstrate this to great success, enabling individuals to lend to and invest in companies which they believe have a prosperous future which they want to be involved in.
What Is Stakeholder Capitalism?
Stakeholder capitalism is borne out of the belief that the classical model of capitalism only serves the interests of a small number of business owners and shareholders, rather than society at large.
Stakeholder capitalism attempts to remedy this by allowing for employees, customers, suppliers and citizens at large to have an interest in how companies are run.
An example of this include companies in Germany with over 500 employees being likely to have one third of the supervisory board elected by the workforce.2
Historically, the UK has had a rich history of stakeholder capitalism model, with Barclays, Llloyds and Cadburys all having Quaker origins - meaning that their mission statements were to serve their communities and stakeholders, as opposed to their owners.
A current example of stakeholder capitalism in the UK is John Lewis, which is run as a Partnership. All members of staff who work in the company allows for all employees to take part in a profit share, and have a say in decision making processes.3
Why Do We Need To Return To Stakeholder Capitalism Values?
The still relatively recent financial crisis of 2008, and the UK public’s decision to Brexit on June 23 of this year indicates that the current model of capitalism is not working for society at large.
Returning to a stakeholder type model is likely to give all participants a voice and a vested interest in how companies are run.
How Can Platforms Like Crowd2Fund Enable A Stakeholder Led Economy?
The stakeholder vision laid out by Theresa May is likely to take a prolonged period of time to cultivate.
Citizens can take action now to be more engaged with how companies are run by investing in debt and equity crowdfunding businesses. Doing so will allow them to have more transparency about how they are run, and will likely result in a greater sense of corporate social responsibility from participating companies.
The industry has grown significantly in recent years, with P2P crowdfunding volumes reaching £1,490 million in 2015, and with equity reaching £332 million.
This indicates that the demand for people to have a financial interest in the companies they transact with is on the rise. Additionally, this trend is likely to extrapolate further with the emergence and spending power of Generation Y, who are more likely to challenge the traditional orthodoxy.
An example of how this model can work can be demonstrated by tracking the success of Silo, the UK’s first zero waste restaurant on Crowd2Fund. The company’s entire ethos is based on running an ethical and sustainable business. Therefore, it made perfect sense for them to engage with the public at large through selling shares to them directly. In the 18 months since they raised £48,000 for a 5% share in their company.
In the intervening period the company has received press coverage across the mainstream media, and has built up an army of dedicated ethical foodies who share their photos avidly on social media.
Companies would also be able to benefit from this new crowdfunding led model of stakeholder capitalism due to having exposed visibility (due to their campaigns being online), brand advocates and by being able to bring on board feedback from outside of their workforce.
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