May 06, 2009
Vive la Corporate Différence
Posted by Usha Rodrigues

I'll echo Christine's sentiments: I am thoroughly enjoying this symposium on Religious Faith and Corporate Law.  While it's sparked a lot of questions for me, I'd like to focus on a point that Lyman made: different organizations have different goals.  Lyman observes that the “monistic view that all companies all the time must have the same and singular goal, i.e., to maximize profits or the share price” is “not mandated by law but it is a custom, constrained by markets to be sure, and it grows out of business lore and business norms and business education.”

That is, belonging to a corporation does not mean one must value share price above all else, any more than belonging to a religion requires one to ignore traditional corporate goals.  The two sets of values can co-exist along a "continuum of companies on the profit side." But this concept is not merely aspirational.  I suspect, as Lyman posits, that real-world companies currently pursue all sorts of different goals—even despite corporate scholars telling them for the past two decades that all they should do is maximize shareholder value. 

My current work involves some of the how and why these diverse goals exist, and their effect on the form of entity.  That is, to what extent do Google shareholders purchase shares based upon their desire to “belong to” or “express” the values adopted by Google? How does this relate to the feeling one gets by donating to NPR or buying coupon books you don’t really want from local schoolchildren? 

If one starts from the premise (which I’ll expand on in a future post) that, practically speaking, the line dividing for-profits and non-profits is wafer thin, then the situations might be more closely related than one might think.  At some point on the continuum towards non-wealth-maximization goals, most entities opt for non-profit status.  But I’m working towards an argument that that choice, the organizational form choice, fulfills a largely expressive and not substantive function. 

Thoughts are welcome, on-line or off. 

 

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