Corporations are only possible because of the state, and so they must be held account by society.
“ In past generations, Students at Harvard Business School, Yale School of Management, and other similar institutions would almost certainly learn that “there is one and only one social responsibility of business—to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception fraud.”.
regarding corporate purpose. The statement suggested that—again, contrary to Milton Friedman—corporations should no longer striveto increase shareholder value. Corporations should also consider, the statement suggests, the needs of the corporation’s customers, employees, suppliers, and communities generally. Increasing shareholder value is still a goal, naturally. But this is the final point in the Business Roundtable’s statement, rather than first and foremost, as previously presumed.
A corporation is, after all, a legal institution offering a certain benefit to entrepreneurs—limited liability. A state’s laws grant individuals, provided they file certain forms in certain state offices, the ability to conduct business in the name of a fictional person. The business’ liabilities are then limited, in all but very rare cases, to that fictional person. This protects the personal wealth of entrepreneurs.
This leads to the question of corporate purpose. Given that limited liability is a benefit granted to individuals by a society—specifically, by a state, through its laws—why shouldn’t the very laws which create the institutionbeneficiaries to consider the corporation’s customers, employees, suppliers, and communities generally, rather allow themIn the U.S., corporate law already requires corporate bylaws to contain certain provisions for the protection of shareholders.
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