Renewal Inside: Companies as Respected Institutions

Abstract

For several decades, shareholder value maximization has been considered the main goal that companies should pursue. The quest for deeper ethical roots in capitalism, new societal needs, and CEOs who highlight different strategic views for companies are broadening the scope of the firm's goals. Moreover, the global financial crisis calls for a reflection on how to make capitalism work better, creating simultaneously economic prosperity and social value. This paper focuses on the role of firms in society and their contribution to renew capitalism. I argue that firms are not only mechanisms for value creation, but also social institutions that are indispensable for economic growth and social progress. As institutions that aim at their long-term survival, companies and senior business leaders need to be respected by customers, employees and investors. In this paper, I explain why society needs respected companies, why this notion can help improve capitalism and how to develop and assess those companies.

Keywords: Corporate governance, company mission, company purpose, respected companies