The Need for an Alternative to Shareholder Value Creation?
International Federation of Scholarly Associations of Management, July 2010
24 Pages Posted: 10 Jul 2010 Last revised: 20 Dec 2011
Date Written: July 10, 2010
This article aims to demonstrate the need for a radical break with the methodological individualism that dominates the fields of economics and management, and especially finance. It advocates the need to try to understand the issues, and the methods that are required to coordinate economic action in order to meet social needs. This coordination is to economics, management, and finance what interaction is to physics. It is through interaction that matter is formed, and it is through interaction that human beings and their projects take shape.
This paper questions methodological individualism and the dominant role played by shareholders. Is it possible to promote social welfare simply by considering it as a result of shareholders value maximization point of view? If not, this implies not only understanding fully the challenges that we face but also being innovative regarding the way in which we coordinate the actions that are necessary to meet those challenges head on, and maybe promote another character as a substitute of shareholder.
There is a key challenge from a societal point of view: how do we find agreement about our commons aims and how do we share our different experiences in such a way that we can manage firms’ performances and prove that we achieve our ambition?
Note: Downloadable document is in French.
Keywords: Methodological Individualism, Shareholder, Value Maximization, Convention, Substitute of Shareholder, Market, Alternative
JEL Classification: A13, B, D23, D70, M14, P17
Suggested Citation: Suggested Citation