Primary Stakeholders vs Secondary Stakeholders: Difference and Comparison

The engagement of stakeholders and partners is widespread in the worlds of trade, economics, and business. Among these, two regularly used terms, main and secondary stakeholders, are frequently used.

The function of a stakeholder is rather straightforward, but the distinction between the two categories of stakeholders is critical to comprehend if one desires to enter the world of trade and industry.

This article focuses on the key distinctions and differences between primary and secondary stakeholders to help you classify them and emphasize the importance of their roles in the development of a company or organization.

Key Takeaways

1. Primary stakeholders have a direct relationship with an organization and can significantly impact or be impacted by its decisions, while secondary stakeholders are indirectly affected by the organization’s actions.
2. Examples of primary stakeholders include employees, customers, and shareholders, whereas secondary stakeholders can include competitors, regulators, and local communities.
3. Engaging with primary stakeholders is crucial for an organization’s success and long-term growth. Understanding and considering secondary stakeholders’ interests can help maintain a positive reputation and avoid potential conflicts.

Primary Stakeholders vs Secondary Stakeholders

In commerce, primary stakeholders are individuals and entities involved in self-interest and the company’s profit. These stakeholders have financially invested an amount within business operations. Secondary stakeholders are individuals and entities involved in the social impact created by a company. They are not directly involved in the finances of the organization but can have a significant influence.

Participants, groups, and entities participating in a business’ overall transactions are considered primary stakeholders. This indicates that they have a financial stake in the functioning of a company.

Primary stakeholders are those who have a direct stake in the operations of a company or organization. Typically, these stakeholders put their money into the company directly.

Shareholders, workers, consumers, suppliers, vendors, and business associates are just a few examples of major constituents.

Secondary stakeholders are far less essential than the stakeholders involved, but they are not entirely unimportant, therefore, firms must attempt to maintain them.

Many secondary stakeholders, such as states and tax agencies, may, nevertheless, become major stakeholders as a result of their authority and influence over the corporate organization.

A firm must make a note of the interests of such external shareholders and maintain contact with them to guarantee that they are satisfied to the greatest degree possible in the company’s best interests.

Comparison Table

Parameters of Comparison	Primary Stakeholders	Secondary Stakeholders
Primary Nature	Can have a direct influence on a company’s business activity.	Can have an impact over an organization’s business activity.
Identification	Are critical for just an organization’s ability to continue operating.	Those stakeholders must be fulfilled by the company. They are indirectly affecting the company’s contribution.
Importance	1. They are extremely crucial for an organization’s continuing survival as these stakeholders are key to its success. 2. An organization must ensure that it successfully maps its key stakeholders in order to satisfy customer needs and act in accordance with their requests.	1. Secondary stakeholders are significant to a business as they have an impact on its identity and how the brand or organization is perceived by the market.  2. Sometimes secondary stakeholders act as the company’s public public relations community and help maintain the reputation of the organization during crisis and recession periods.
Functions	They primarily maintain the company or organization’s sales, shares and profit	They contribute to the company’s finances and assist the primary stakeholders in balancing the organization.
Examples	Shareholders, workers, administrators, customers, and suppliers.	Governments, news organisations, lobbying organisations, and labour unions etc.

What is Primary Stakeholders?

Primary stakeholders rely on an organization for revenue and risk and ensure that they are individuals who facilitate the work and get a wage or strong investment entities.

As a result, major patrons are referred to as such since their expenditures are time-sensitive, and their actions may have a tangible impact on how well an organization functions daily.

Whether they contributed cash to help your business development or are workers who rely on your salaries to cover their costs, primary stakeholders may have had a huge stake in your firm.

Your choices might have an impact on your earnings. If the company decides to grow, the primary stakeholders expand with it.

Investors and lenders may regard this as a danger to their profits, but employees may see it as a positive if it improves their chances.

People who have remained loyal to the firm, especially those in positions of power, maybe considered major shareholders.

If they have a creditor or investor who has believed in your firm from the start, that lender would be called the major core stakeholder since the individual has a consistent role as an investment in the company.

Examples of primary or core stakeholders include; Shareholders, workers, administrators, customers, and suppliers.

What is Secondary Stakeholders?

Individuals, groups, or entities who are engaged in an integrated cultural transaction that affects the organization indirectly are referred to as secondary stakeholders.

Secondary stakeholders are not participating in a company’s monetary transactions.

The paradigm of secondary stakeholders is less straightforward than that of major stakeholders.

There are many secondary stakeholders in just about any particular company, and identifying them might be difficult even if they are proactively voicing their concerns.

Secondary stakeholders may not have narrow interests in an organization’s continuing operations, yet they can nevertheless have a significant impact on its decisions.

Furthermore, while secondary stakeholders are seldom necessary for an organization’s survival or achievement of immediate goals, they can nevertheless wield power over that.

This section of stakeholders involves structures like governments, news organizations, lobbying organizations, and labour unions.

Secondary stakeholders have quite enough clout to have an impact on the business’s future. Competitors, for example, might steal out the market share by producing higher-quality items at a lower cost.

Labour unions can exert pressure on the firm to improve workplace practices for its employees. If the company does not follow the law and regulations, the government or regulator may shut down the business.

If there are any rumours in the industry, media groups can defame the firm as well as the merchandise.

Main Differences Between Primary Stakeholders and Secondary Stakeholders

1. Primary stakeholders are considered more important than secondary stakeholders.
2. Primary stakeholders demand success and invest only for gain, whereas secondary stakeholders invest for the greater good and public relations as well.
3. Primary stakeholders include workers, administrators, customers, and suppliers, whereas secondary stakeholders consist of governments, news organizations, lobbying organizations etc.
4. Primary stakeholders invest more time and capital in nurturing the organization than secondary stakeholders.
5. Primary stakeholders are radical and outspoken in nature, whereas secondary stakeholders are composed and neutral in nature. The organization makes sure not to get into the bad side of secondary stakeholders as they maintain the company’s reputation.

References

1. https://www.investopedia.com/terms/s/stakeholder.asp#:~:text=The%20primary%20stakeholders%20in%20a,%2C%20governments%2C%20and%20trade%20associations.
2. https://www.managers.org.uk/~/media/Files/Campus%20CMI/Checklists%20Managerial/Stakeholder%20analysis%20and%20management.ashx#:~:text=The%20list%20of%20secondary%20stakeholders,trade%20unions%20community%20groups%20landlords.

Last Updated : 21 August, 2023