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Late last year The Wall Street Journal reported on a diplomatic kerfuffle between China and the United States that was caused by a single word: “stakeholder.” It all started in September, when deputy secretary of State Robert Zoellick delivered a major foreign policy address in which he urged China to become a “responsible stakeholder” in the international system. The speech was meant to send a message to Beijing. The only problem was that the Chinese had no clue how to translate the word “stakeholder.” Any decent interpreter could tell you that a stake is a pointy stick, but why China should be holding a stake, and how to do so responsibly, was lost on Chinese officials. Ever since then, diplomats and scholars in the U.S. and China have been lobbing translations back and forth, each with a different spin on the S-word. The U.S. Department of State translates “stakeholder” as a “participant with related interests.” The Chinese government, however, has yet to adopt an official translation. “Stakeholder” is a legal term, but with several shades of meaning. In its most traditional sense, a stakeholder is a person who holds money, or property, on behalf of two or more persons who are contesting the ownership of that property. An escrow agent, for example, would be a stakeholder if he is holding funds subject to a dispute. “Stakeholder” entered the legal lexicon by way of the gambling dens of sixteenth-century England. Back then, wagers were placed on top of wooden stakes while the stakeholder supervised the betting. Long after the actual stakes disappeared from gambling, the word “stake” became a metaphor for the wager itself, as seen in phrases such as “high-stakes” and “raising the stakes.” More recently, “stakeholder” has been broadened to include persons who � unlike escrow agents � find themselves involuntarily holding property subject to multiple adverse claims. A banker, for example, might file a stakeholder action against various parties claiming the right to money on deposit at the bank. But none of this was exactly what Zoellick was driving at. Rather, by referring to “participants with related interests,” the American diplomat was riffing on a much more recent use of “stakeholder” � in corporate law. In recent decades there has been a movement to grant legal rights to “corporate stakeholders” � constituencies other than shareholders that are affected by a corporation’s activities. Stakeholders might include the corporation’s employees and customers, as well as the community where its offices are located. In 1990 the Pennsylvania legislature added a stakeholder provision to its antitakeover law. This provision allows a company’s board of directors to consider the interests of stakeholders when voting on takeover proposals. Other states have followed, and some politicians have even taken up “stakeholder capitalism” as a platform. Although the use of the word “stakeholder” is new in this context, the underlying idea has been around for a long time. In the early days of the U.S., state legislatures would sometimes require that a new corporation accept some duty on behalf of this or that constituency in return for its charter. In 1822, for example, a New Jersey bank charter required the bank to devote some of its money to aiding the fisheries at Amboy. The corporate-law angle, unfortunately, only added to the confusion in Beijing. The director of China’s powerful Institute of International Strategic Studies confidently declared that “stakeholder” means “shareholder.” Nice try, but the whole point of stakeholders is that they are not shareholders; they just have an interest in a business’s performance. So, what to do? Should everyone decide on a common language for business? English has that de facto role, but, as the ruckus over “stakeholder” shows, countries can’t seem to agree on common definitions. Some idealists are even holding out for Esperanto. Unfortunately, there is no word in Esperanto for “stakeholder.”

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