World Economic Forum

The World Economic Forum (WEF) occupies a unique niche among international institutions. Its annual meetings at Davos, Switzerland, are regarded as gatherings of the global power elite, and its research projects have an impact on both business and government policy. Although the membership is comprised not of governments but rather of the largest global firms, the WEF provides an important venue for a variety of business, political, and civil society leaders to discuss and construct solutions to global problems.

The WEF was conceived in Europe in 1971, when the Bretton Woods international monetary system of gold parities and fixed exchange rates was collapsing and European governments were challenging the postwar economic dominance of the United States. With the explicit backing of French Gaullists and other nationalist politicians, European firms were ready to take on their U.S.-based counterparts, which had expanded their global market activity dramatically in the two decades following World War II.

The WEF's creation and subsequent development has been driven by the vision and energy of its founder and leader for four decades, Klaus Schwab. After chairing a meeting of European business leaders under the patronage of the European Commission and European industrial associations in January 1971 in Davos, Switzerland, to “discuss a coherent strategy for European business to face challenges in the international marketplace” (Pigman, 2006, p. 7), Schwab, then a professor of business policy at the University of Geneva, founded the European Management Forum to institutionalize the event as an annual summit of European business leaders. Schwab had made a name for himself in management in the 1960s by applying Harvard management techniques to the implementation of mergers between European firms. He conceived of the European Management Forum (which became the World Economic Forum in 1987) as an opportunity for new kinds of conversations to take place between senior managers of European firms, in which a range of regional and global business, economic, political, and social issues that affected the European business community could be addressed.

Attended by 444 participants from a wide range of western European firms, the initial Davos meeting was modest in size compared to later annual meetings, which by 2010 welcomed more than 2,200 participants. The initial three annual Davos meetings concentrated on how European firms could catch up with U.S. management methods. One of Schwab's primary objectives was to encourage European managers to adopt the stakeholder approach to management. In order to be effective in maximizing a firm's potential, Schwab argued, managers need to take account of the interests of all the stakeholders in the firm: not only shareholders but also customers and clients, employees, managerial staff, and the broader interests of the communities within which the firm is situated, including neighbors in the immediate proximity of [Page 1806]the firm, governments, and fellow users of the environment in which the firm operates. Solving problems—whether they lay within a firm, a civil society organization (CSO), a nation-state, or a region, or were global—could be done most effectively by taking account of the interests of all stakeholders in the relevant issue or problem and by encouraging all stakeholders to participate in the problem-solving process.

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