External Benefit

What is External Benefit?

A benefit arising from a business decision that is received by third parties rather than by the business itself, and for which the business receives no payment. Examples include skills gained through employee training that later benefit other employers, an access road built for a site that the wider community also uses, and improved local amenities funded by a development. Because the business cannot charge for an external benefit, it has no commercial incentive to produce more of it than its own interest requires.

This definition is part of the External Influences on Business Activity chapter in Cambridge O Level Business Studies.

Concepts related to External Benefit

• third party
• Training
• infrastructure