Can Shareholder-Owned Corporations Maximize Profits Without Harming Their Stakeholders?

18 Pages Posted: 5 Jan 2023

See all articles by Jill A. Brown

Jill A. Brown

Bentley University

Gerald F. Davis

University of Michigan, Stephen M. Ross School of Business

Robert A. Phillips

York University - Schulich School of Business

Sandra Waddock

Boston College - Carroll School of Management

Date Written: July 1, 2022

Abstract

Can shareholder-owned corporations maximize profits without harming their stakeholders? This was the central question of the first QUASI (Questions and Unanswers About Social Innovation) webinar. The ‘Yes’ side argues that 1) firms are conditioned to avoid harming stakeholders, 2) firms with the best stakeholder relations offer higher overall value, and 3) a shareholder primacy view of business that puts 'profits above people' is old news and no longer accepted business practice. The ‘No’ position argues that we live in a golden age of corporate wrongdoing in which corporate actions provide an endless buffet of products and practices that make the world worse. The bright spot is that public corporations appear to be mostly doomed as an economic vehicle in the US. ‘It depends’ emphasizes the idea that there is actually no such creature as a shareholder-owned corporations, because the corporation actually 'owns' itself. Shareholders merely own a legal financial instrument with a limited set of rights and virtually no responsibilities. Finally we ask ‘Well, so what?’ suggesting that perhaps the question itself needs to be reframed because it relies on a set of questionable assumptions about the ownership and nature of the firm, business as usual continuing, ethical responsibilities and practices, company purpose, flawed performance metrics, and the reality that companies—and all of us—are actually stakeholders to Gaia.

Keywords: Social Responsibility, Ethics, CSR

Suggested Citation

Brown, Jill A. and Davis, Gerald F. and Phillips, Robert A. and Waddock, Sandra, Can Shareholder-Owned Corporations Maximize Profits Without Harming Their Stakeholders? (July 1, 2022). Rutgers Business Review, Vol. 7, No. 2, pp. 102-119, 2022, Available at SSRN: https://ssrn.com/abstract=4317237

Jill A. Brown (Contact Author)

Bentley University ( email )

175 Forest St
Waltham, MA 02452
United States

HOME PAGE: http://https://faculty.bentley.edu/details.asp?uname=jbrown

Gerald F. Davis

University of Michigan, Stephen M. Ross School of Business ( email )

701 Tappan Street
Ann Arbor, MI 48109-1234
United States
734-647-4737 (Phone)
734-936-0282 (Fax)

Robert A. Phillips

York University - Schulich School of Business ( email )

4700 Keele Street
Toronto, Ontario M3J 1P3
Canada

Sandra Waddock

Boston College - Carroll School of Management ( email )

140 Commonwealth Avenue
Chestnut Hill, MA 02467
United States

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