Stakeholders Matter: A New Paradigm for Strategy in Society is an important book. It ushers in a new wave of scholarship in management theory. The new era that is upon us obliges us tell a new story about business, as an institution that is firmly set in society, rather than apart from it. The authors take globalization, mega-change due to information technology, and the emergence of new and innovative business models as normal to this new era. The old way of thinking about business as a purely economic and instrumental tool for the benefit of financiers is no longer useful. The new narrative of business must be told in stakeholder terms to allow for the diversity of business forms that we are seeing in the twenty-first century.

When the authors claim that a new paradigm has emerged for strategic management, they are being too modest. Their proposals do no less than rewrite the contract between business and society. First of all, they broaden the notion of business as the engine of economic activity by focusing on value creation for stakeholders rather than economic value for shareholders. Business in the twenty-first century must be seen as an institution which creates value for customers, suppliers, employees, communities, financiers and society. Second, one of their key arguments is that this new narrative about business, indeed the new social contract, contains three licenses: (1) license to operate; (2) license to innovate; and (3) license to compete. The combination lays out a new agenda for thinking about the purpose of the firm, its strategic vision and its business model for value creation.