Corporate Purpose, The New Paradigm, and Unintended Consequences

A panel discussion with Colin Mayer, Mats Isaksson, Martin Lipton, and Ron Gilson at the Millstein Center’s Counter-Narratives Conference.

Editor’s Note: This post is part of an ongoing multi-part series covering the Millstein Center’s March 1, 2019 conference, “Corporate Governance ‘Counter-narratives’: On Corporate Purpose and Shareholder Value(s).”

By Brea Hinricks

In his recent book, Prosperity: Better Business Makes the Greater Good, Oxford Professor Colin Mayer lays out a framework for radically reconceptualizing business for the 21st century. At the core of his argument is the idea that the purpose of business is not solely to make profits, but to “produce profitable solutions to the problems of people and planet, and in the process it produces profits.”

Mayer’s proposed law and policy reforms, which he detailed in his remarks at the Millstein Center’s March 1, 2019 conference, Corporate Governance “Counter-narratives”: On Corporate Purpose and Shareholder Value(s), would aim to incentivize companies to create and deliver on a corporate purpose that transcends profit alone. (We discuss Colin’s presentation in greater detail here.)

Mayer debated these ideas during a panel discussion with Mats Isaksson, Head of the Corporate Affairs Division at the OECD, Martin Lipton, a founding partner of Wachtell, Lipton, Rosen & Katz LLP, and Ron Gilson, Professor of Law at Columbia Law School and Stanford Law School. (A full recording of Mayer’s remarks and this panel discussion is available here.)

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Colin Mayer’s ‘Prosperity’ and the Future of the Corporation

Editor’s Note: This post is part of an ongoing multi-part series covering the Millstein Center’s March 1, 2019 conference, “Corporate Governance ‘Counter-narratives’: On Corporate Purpose and Shareholder Value(s).”

By Brea Hinricks


In the more than fifty years since the enshrinement of the Friedman doctrine as fundamental business canon, the conventional view has been that the singular purpose of a corporation is to increase profits (and therefore, shareholder value) to the maximum extent possible within the rules of the game. Oxford Professor Colin Mayer (and more than 30 other academics who collaborated with him on the British Academy’s Future of the Corporation project) would like that to change.

Under the Friedman doctrine, corporations have been a source of great economic prosperity and growth, but also great inequality and environmental degradation. As companies have become increasingly focused on profits and detached from a broader public purpose, Mayer says, they have engendered in society a “profound, pervasive, and persistent” distrust of business leaders and corporations.

In his work on the Future of the Corporation and in his recent book, Prosperity: Better Business Makes the Greater Good, Mayer seeks to determine how business needs to change over the coming decades in order to address this distrust, ameliorate inequality and environmental impacts, and grapple with the many other social, political, and economic challenges we face today. Mayer presented his views at the Millstein Center’s March 1, 2019 conference, Corporate Governance “Counter-narratives”: On Corporate Purpose and Shareholder Value(s). (A full recording is available here.)

Mayer proposes an alternative, alliterative, and, to some, radical theory of the purpose of business: rather than producing profits for their own sake, “[t]he purpose of business is to produce profitable solutions to the problems of people and planet, and in the process it produces profits.” While this “counter-narrative” is certainly a significant departure from the Friedman doctrine, Mayer argues that it is hardly a novel concept. He points out that corporations were originally established under Roman law to undertake public functions such as collecting taxes, minting coins, and building infrastructure. It is only over the last 60 years that the Friedman doctrine and shareholder primacy have taken hold, and public purposes have become detached from the corporation.

The purpose of business is to produce profitable solutions to the problems of people and planet, and in the process it produces profits.

Continue reading Colin Mayer’s ‘Prosperity’ and the Future of the Corporation