What are internal and external stakeholders?

By Aashna. Haryani2 min read · Posted Mar 31, 2025

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Stakeholder image Dylan Gillis, 2018, via Unsplash

What are stakeholders?

A stakeholder is an individual who has a vested interest in the company. A stakeholder can impact or be impacted by an organization’s day-to-day functioning, operations, and overall performance. Organizations can have internal and external stakeholders.

Who are internal stakeholders?

Internal stakeholders can be considered as those whose interest aligns directly with the actions and decisions taken by the organization. Some examples of internal stakeholders are:

  • Employees: Interested in job security, career growth, working conditions, and benefits
  • Managers and Executives: Focused on strategic goals, business performance, and operational efficiency
  • Owners and Shareholders: Concerned with profitability, return on investment, and long-term sustainability

Who are external stakeholders?

External stakeholders are individuals who are people or groups outside the organization that may be indirectly impacted by the organization’s decisions and actions. External stakeholders can also be known as secondary stakeholders, as they do not work directly with the company. Some external stakeholders are:

  • Customers: Those that buy or use products sold by the organization
  • Suppliers: Those that supply the company with necessary goods and services
  • Regulatory authorities: Government agencies or bodies that are responsible for making regulations
  • Business partners: Other businesses, organizations, or institutions that work together with the company on specific projects or initiatives

Why are stakeholders important?

Stakeholders are important because they help improve organizational engagement, thus leading to success, reputation, and sustainability of the organization. Here are a few other reasons why stakeholders play a significant role across companies:

  • Influence in decision making: Stakeholders are responsible for making tough yet important decisions that shape the future of the organization. Stakeholders also have years of expertise leading to the identification of potential risks, challenges, and roadblocks, allowing the organization to make informed decisions.
  • Access to resources: Stakeholders like investors, suppliers, distributors offer the organization with resources critical to its success, such as funding, information, etc.
  • Innovation and improvement: Stakeholders, internal or external, have years of expertise and experience relevant to the field of the organization, making them treasure troves of fresh perspectives, new technologies, and innovative ways of problem solving.
  • Building trust and reputation: Organizations that actively engage with their stakeholders tend to build stronger relationships and trust. This can enhance an organization’s reputation and credibility, making it easier to attract customers, investors, and partners.

Stakeholders are essential to the success of any organization. Providing valuable insights, resources, and expertise that drive informed decision-making, innovation, and growth are of utmost importance. By actively engaging with both internal and external stakeholders, companies can build trust, enhance their reputation, and ensure long-term sustainability.

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Aashna. Haryani

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