A one-day conference sponsored by LSE in conjunction with Estoril conferences, Nova School of Business & Economics, and CEMS Global Alliance in Management Education.

For the last fifty years shareholder primacy, Milton Friedman’s proposition that the one social responsibility of business is to use its resources and engage in activities designed to maximise shareholder value, has been the dominant view of the purpose of the corporation. In recent years, the Friedman doctrine has increasingly been called into question. In 2019 the CEOs of the US Business Roundtable adopted a new ‘Statement on the Purpose of the Corporation’, declaring that companies should serve not only their shareholders, but also deliver value to their customers, invest in employees, deal fairly with suppliers, and support the communities in which they operation. The British Academy’s ‘Future of the Corporation’ project has recently concluded that the purpose of business should be ‘to profitably solve the problems of people and planet, and not to profit from creating problems’. These statements are not without their critics by commentators who question whether they are sincere or realistic.

In the Financial Times, Stefan Stern has talked about ‘the boardroom’s futile pursuit of purpose’. Jerry Davis, Professor of Business Administration at the University of Michigan Ross School of business has argued: ‘purpose cannot solve the problem of shareholder primacy because shareholder capitalism is inherently corrupting of purpose’. Lucian Bebchuk, Professor of Law, Economics, and Finance at Harvard Law School has written extensively on the illusory promise of stakeholder governance. David Kershaw and Edmund Schuster of LSE distinguish between ‘purpose’ as a driver of corporate strategy and behaviour, and ‘higher or ‘ mission purpose’, which is more aspirational — about ‘making a difference’, ‘giving a sense of meaning’ and ‘drawing support’. Alex Edmans of LBS has talked about ‘delivering purpose and profit’.

Hence the question ‘what really is the purpose of the corporation?’