What Is a Non-Market Stakeholder?

Corporations shape our economic and social landscape.

Corporations shape our economic and social landscape.

In the modern world, corporations shape our economic as well as social landscape. They influence the products and services we use, provide jobs and can boost or damage economic prosperity. Parties that are influenced by corporations are broadly referred to as stakeholders. Market stakeholders are those who elect to engage in economic transactions with the company. All other stakeholders are considered non-market stakeholders.

Stakeholder Differences

Non-market stakeholders include all persons and establishments involuntarily impacted by the corporation. Market stakeholders, on the other hand, are those who voluntarily do business with the company. Suppliers, consumers, shareholders, lenders and employees are market stakeholders. In reality, defining voluntary economic engagement is not always so easy. A cancer patient may realistically have no choice but to use a certain drug. In macroeconomic analysis, however, all economic transactions are considered voluntary acts in the market. When trying to draft a list of stakeholders, it is easier to list market stakeholders, since a business transaction defines these relationships, and consider all other parties non-market stakeholders.

The Community

Companies can make their environment a better or worse place to live. Everything from the noise coming out of a turbine to the smoke emitted from a chimney will impact the community. While this impact can be minor and local, it can sometimes reach across continents. Contamination of oceans, for example, can impact practically all living creatures on earth. Not all of a business' impact on non-market stakeholders must be negative, however. A company might elect to repair the road it frequently uses or illuminate the streets around its office building, thereby benefiting the local community.

Governments

Both federal and local governments constitute non-market stakeholders. Even though there is a flow of cash between corporations and governments, the relationship is considered non-market. Paying taxes isn't a voluntary commercial transaction, but mandated by law. While companies transfer cash to governments, they may also receive tax returns, subsidies or other forms of financial aid. In addition, companies use the infrastructure built and maintained by governments, such as roads, bridges and waste collection facilities. This results in wear and tear as well as other indirect expenses for the government. Businesses also rely on government funded entities, such as the police and fire departments.

Other Stakeholders

Other non-market stakeholders include the media, industry groups and non-profit organizations. The relationship between corporations and the media can have both a commercial and non-commercial aspect. The company may pay for advertising spots on a TV channel, while also being featured in the news. In such a case, the ad sales division is a market stakeholder, while the editorial/news division is a non-market stakeholder. Non-profit entities such as charitable organizations may receive logistic or financial help from businesses, but this is not a commercial exchange and makes the recipient a non-market stakeholder. Industry groups or associations must often work with member corporations and also constitute non-market stakeholders.

About the Author

Hunkar Ozyasar is the former high-yield bond strategist for Deutsche Bank. He has been quoted in publications including "Financial Times" and the "Wall Street Journal." His book, "When Time Management Fails," is published in 12 countries while Ozyasar’s finance articles are featured on Nikkei, Japan’s premier financial news service. He holds a Master of Business Administration from Kellogg Graduate School.

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