Stakeholder vs. Investor

Question

What is the difference between stakeholder and investor? According to the Oxford advanced dictionary, both of them invest money on something, but is there any difference?

Answer 1

I usually find the subtle difference between the terms stakeholder and investor in the context of software development or project management.

In general, stakeholders are people (or entities, organizations) that can gain something or lose something by involving in a project. The important point that makes stakeholders different from investors is the benefits for stakeholders doesn't have to always be financial gain. It might be a better system. It might be their creditability. Though money usually gets involved.

On the contrary, the term investor is rather specific in this context. Investors invested in the project with their money (usually called funding or capital), and they specifically expect to gain financial returns.

In short, when both terms are used in the same context to emphasize the difference, an investor can be considered a stakeholder, but not all stakeholders can be considered an investor.

Answer 2

stakeholder :A person or organisation with a legitimate interest in a given situation, action or enterprise.

Whereas an investor contributes money to a project in anticipation of making a profit, a stakeholder need only have a legitimate interest in it. For example, as a homeowner I have an interest in whether an airport in built next to my land since the noise from the airport will be a negative externality and could reduce the value of my home. So while I have not invested in the airport construction project I am a stakeholder in the decision to approve it.

In the typical business usage of stakeholder, stakeholders are given a say or a vote in a decision while those who may be affected but are not given a vote are merely affected parties.

It's also interesting to note that the original meaning of the word was a neutral, mutually trusted party who held the stakes for a wager (in essence an escrow account manager) but that the meaning has changed in recent years. Again from Wiktionary:

The last definition essentially contradicts the historic definitions and hence the word has become a contronym. The last definition refers to one who has an interest in an issue, whereas the initial definitions refer to one who does not have an interest in the property held. The last definition has gained significant use since the 1990s, especially when discussing corporate governance.