Whether stakeholder capitalism pays financially remains one of management’s most studied questions. Evidence shows a small but context-dependent positive effect, often concentrated among family firms, and typically non-linear. Research points to inverted U-shaped relationships: investing up to a moderate level boosts performance through risk reduction, but overinvestment is penalized by markets, as shown in data privacy performance (Vlachos et al., How to optimize your company’s approach to data privacy, Harvard Business Review, 2020). Similarly, walking the CSR talk is insufficient; firms benefit most when they substantially exceed communication with genuine action. Stakeholder capitalism also brings significant costs: a one-standard-deviation ESG improvement raises SG&A by 6.4%, and ESG costs tend to be sticky. Transitioning is difficult because leaders must manage competing stakeholder demands, requiring paradoxical mindsets that embrace tensions. Yet, ESG adds value by legitimizing firms, reducing litigation and downside risk, enhancing competitiveness, and boosting employee meaning. New evidence shows market-based mechanisms—particularly product-market competition—can further incentivize ESG performance beyond regulatory compliance.