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<\/a>Whatever happened to the social view of the corporation? It still survives in some quarters, stoutly defended by a few academics, and some hint of it can also be found in the antitakeover statutes of the 1990s, intended to allow corporate boards to take into account non-shareholder constituencies (really, employees and communities) when fighting off a takeover offer. But for the most part, both popular culture and academics have now concluded that corporations are to be run for shareholders\u2019 benefit\u2014no more talk of taking into account the needs of multiple constituencies!<\/p>\nMuch credit for this can be given to economic changes. In the 1970s and 1980s, American corporations faced stiff competition from abroad and economic stagnation at home, and the idea that they could play a prominent social role while staying competitive seemed improbable. Sclerotic corporate management came in for particular criticism, and the image of the \u201cbusiness statesman\u201d common in the 1950s disappeared. New business and legal theories also played a role, as management was reconceived as the \u201cagent\u201d of the corporation\u2019s “owners”\u2014its shareholders\u2014and share price seen as the best measure of whether these agents were doing their job.<\/p>\n
By the turn of the twenty-first century, the conventional wisdom was that the corporation existed for its shareholders\u2019 benefit. So ingrained is this view today that businesspeople who aim to combine profit with social mission have begun inventing new business entities to fulfill their visions, the low-profit limited liability company (L3C) and benefit corporation (B Corp) being the two most notable recent developments. It\u2019s too early to tell whether these new legal forms will flourish; but they testify to the enduring desire for a business form with a purpose beyond shareholder enrichment.<\/p>\n","protected":false},"excerpt":{"rendered":"
What is the purpose of a corporation? Today, the standard answer is that a corporation\u2019s purpose is to benefit its shareholders \u2013 academics speak of the \u201cshareholder primacy norm,\u201d and many talk of corporate managers\u2019 task as \u201cshareholder wealth maximization.\u201d Even apparently selfless corporate acts, such as charitable donations, are justified as ultimately benefiting shareholders<\/p>\n","protected":false},"author":5,"featured_media":105,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[22,8],"tags":[],"coauthors":[21],"class_list":["post-44","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-corporate-responsibility","category-faculty-authored","masonry-post","generate-columns","tablet-grid-50","mobile-grid-100","grid-parent","grid-33"],"yoast_head":"\n