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For-profit companies are under no obligation to seek profit before all other goals. In the broad sense, they can seek to optimize for any value their sharehold
by wheels 7y ago
For-profit companies are under no obligation to seek profit before all other goals. In the broad sense, they can seek to optimize for any value their shareholders collectively agree to, and in a narrow sense, their leaders are still bound by ethics and laws, and it's reasonable for society to hold them accountable to such.
- capableweb 7y agoI think that sounds a bit naive. A shareholder is typically the one that has economic benefit from the company performing well. You usually become a shareholder because you'd like to increase your economic wealth, otherwise you'd chose a different structure. Usually you have for-profit companies looking out for themselves, and non-profits aiming for a bigger mission that goes beyond profit. Also, unsure of how it works in the US, but usually shareholders are not bound by any ethics as far as I know. Sure, if they would be unethical, people may boycott the company and it would do less profit. But I don't think there are laws saying a shareholder/company needs to be ethical. It's just good business currently to be ethical.
- NeedMoreTea 7y agoIt might sound naive, but look back into the mid 20th century and companies were much more inclined to consider the overall. Including welfare of the workers, the community, the quality of product or service offered etc rather than a blinkered focus on shareholder value. There have been a few interesting pieces in the FT that make something of a mockery of the benefits of focus on shareholder value. Finding that it is usually of short term benefit, but longer-term detriment to the company, and ultimately shareholders.