Difference Between Internal Stakeholders and External Stakeholders (With Table)

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The economy of the world is based on the varied sectors or types of businesses that are running worldwide. Large business groups need a very large exposure and environment for working compared to that of small business owners. And even a slight change in the company affects many others directly or indirectly. A company includes various members that comprise to form a stakeholder, and the person or other factors that affect the complete organization is known to be stakeholder who is further consisting of internal stakeholder and external stakeholder.

Internal Stakeholders vs External Stakeholders 

The difference between Internal Stakeholder and External Stakeholder is that the internal stakeholder is defined or stated as any group of people or a single person that is a part of the organization, whereas comparatively, on the other hand, the external stakeholder is defined or stated as the person or group of person who is not a part of the organization but still gets affected by the slightest change in the organization.

Internal Stakeholders are the ones that will have to face a direct impact on themselves with any possible decision made by the company. They are mostly aware of the internal matters about the company that is going on. They are the primary responsibility of the company to be looked upon. They have much interest in the ongoing business. 

External Stakeholders are the ones that don’t have to face the direct impact of the decision made by the company or the organization. As they are not affected directly, they don’t take much interest in the business. Also, they are not aware of internal matters. Unlike internal stakeholders, they are only aware of the public information. 

Comparison Table Between Internal Stakeholders and External Stakeholders

Parameters of ComparisonInternal StakeholdersExternal Stakeholders
DefinitionIndividual member or group members of any company or organization Person or group who isn’t the member but is readily affected by the company indirectly
Impact DirectIndirectly
Who are they?Individuals working for the organizationIndividuals or groups influenced by their work
Employment Given YesNo
Responsibility by the EmployeesDirectly or primaryIndirectly or secondary
Consists OfEmployee, its owner, investors, management, board, and many othersCustomer, rivalry, government, society, creditors, supplier, retailer, and many others
Knows AboutInternal matters of the companyPublicly available information

What is Internal Stakeholders?

Internal stakeholders are the single person or the group of several members that are part of the company or the organization. Some of the members known to be part of the company or organization as internal stakeholders are – employees of the company, management, directors, owner, and many others.

The varied activities performed by the company directly affect these above-mentioned members. The interest of the members of the company is more as any decision made will affect them too. Internal stakeholders sometimes are also known as the primary stakeholder.

The company or the organization is directly liable towards its internal stakeholders. They are also aware of the internal matters taking place within the company. They employ their internal stakeholders in their organization.

What is External Stakeholders?

External stakeholders are the one single individual or any group of people that is not a part of any organization or any company but still gets affected by the changes or decisions made within it. Some of the members known as the external stakeholders for any company are – customers, suppliers, creditors, government, retailers, other rival companies, and many others.

The activities performed within the company do not affect the members of the external stakeholder directly. Although they might be looking forward to the success of the company but still got indirectly affected. External stakeholders are also called secondary stakeholders because the company is not primarily liable for them.

Theses members although aren’t a member of the respective company or organization but manage them externally and they are mostly aware with the information that is available publicly.

Main Differences Between Internal Stakeholders and External Stakeholders

  1. The internal stakeholder can be defined as the person or group of any person that is a part of any organization is called as internal stakeholder whereas comparatively, on the other hand, the external stakeholder can be defined as the person or the group of person even though they are not a part of any organization but gets affected by any changes in it is called as an external stakeholder.
  2. The impact of the internal stakeholder falls directly, whereas comparatively, on the other hand, the impact of the external stakeholder falls indirectly.
  3. Internal stakeholders are the persons that usually work for the organization, whereas comparatively, on the other hand, the external stakeholder is the people that are influenced by the actions of the company.
  4. The given organization or the company usually hires those individuals whereas comparatively, on the other hand, the given organization doesn’t provide such benefits or employment to them.
  5. The responsibilities persist by the company towards their internal stakeholder is mainly primary whereas comparatively, on the other hand, the responsibilities persist by the company towards their external stakeholder is secondary.
  6. The example for the internal stakeholders consists of their employees, management, board, directors, owner, and others whereas comparatively, on the other hand, the example for the external stakeholders consists of their suppliers, retailers, creditors, customers, rivalry company, society, and many others.
  7. The members of the internal stakeholders know maximally about the internal matters of the company or the organization, whereas comparatively, on the other hand, the members of the external stakeholder know about the information that is publicly available about the company or the organization.  

Conclusion

To summarize the given terms in a simple manner is that they both are critical members of any respective organization or any company. Both the internal stakeholder as well as the external stakeholder plays a crucial role in building up any company. The work done inside the company is executed by the internal stakeholders while all the work done indirectly or external work is done by the non-members of the company but still are the major part for the company they are external stakeholders.

The examples for internal stakeholders are – their management team, board, directors, employees, while the examples for the external stakeholders are – customers, government, creditors, suppliers, and many others. Any changes or modification in the internal stakeholder directly affects the company while any modification in the external stakeholders affects the company but indirectly.  

References

  1. https://www.tandfonline.com/doi/abs/10.1080/01446190701821810
  2. https://www.sciencedirect.com/science/article/abs/pii/S026378631930866X
  3. https://www.proquest.com/openview/2c1ba4858e25e10a8c835d5bf247db64/1?pq-origsite=gscholar&cbl=18750&diss=y
  4. https://www.sciencedirect.com/science/article/abs/pii/S026378631830142X
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