Overview
FYI
The required and optional readings for period 1 highlight the benefits and challenges of agency (i.e. separating ownership and control). Further, it is generally assumed owners seek to maximize profits or shareholder value. In the present moment, the shareholder primacy view is up for debate. Two opposing articles on the topic include the Business Roundtable redefinition of corporate purpose (see the link: BR_8_19_2019Links to an external site.) and a Financial Times interview with investor Warren Buffet (FT_12_29_2019. See a copy of the FT article posted on Canvas). In addition to these two sources find at least three other scholarly journal articles on the debate around shareholder primacy. To complete this project, write a popular press article that outlines what you believe is the purpose of a corporation. Included in your view should be the practical implications of your view, the ethical responsibility of a corporation in the broader social context.
The corporation you have in mind can be one you work for currently, one you have worked for in the past, a company you plan to start in the future, or you may write the article to define the ideal purpose for every corporation.
In order to develop a rigourous argument be sure to include at least ten scholarly articles in your list of references, incorporate some form of empirical evidence such as macroeconomic data, stock market data or academic case studies.
Follow all of the instructions given in the Doctoral business programs writing guidelines, with a particular focus on section 2, “Popular Press Article”, which states:
The popular press article assignment requires students to write for a broad audience, focusing on conveying complex concepts in a way that is easily understandable and applicable. Understanding the target audience and the readability level of the chosen media outlet is essential for this assignment. Students must select a popular press medium, such as a magazine or popular press trade book, and adhere to the specific author submission guidelines provided by the outlet. Following the guidelines is crucial for successful submission, and students should be prepared to provide proof of compliance. A letter of transmittal, which serves as a cover letter, should accompany the submission to the publisher, indicating the selected outlet, the URL of the submission guidelines, and confirmation that the article meets the specified criteria.
In order to complete this assignment according to the guidelines:
- Select a target popular press outlet,
- Write the article according to the submission guidelines,
- Prepare a letter of transmittal, and
- Check the final draft for compliance with all business doctoral writing guidelines.
During the two weeks of period 1, you may submit one draft of your presentation for feedback. Your minor project 1 submission should include a letter of transmittal, the article and the URL of the press outlet, specifically pointing to the outlet’s submission guidelines.
Business Roundtable Redefines the Purpose of a Corporation to Promote ‘An Economy That Serves All Americans’Updated Statement Moves Away from Shareholder Primacy, Includes Commitment to All Stakeholders
August 19, 2019
Washington – Business Roundtable today announced the release of a new Statement on the Purpose of a Corporation signed by 181 CEOs who commit to lead their companies for the benefit of all stakeholders — customers, employees, suppliers, communities and shareholders.
Since 1978, Business Roundtable has periodically issued Principles of Corporate Governance. Each version of the document issued since 1997 has endorsed principles of shareholder primacy – that corporations exist principally to serve shareholders. With today’s announcement, the new Statement supersedes previous statements and outlines a modern standard for corporate responsibility.
“The American dream is alive, but fraying,” said Jamie Dimon, Chairman and CEO of JPMorgan Chase & Co. and Chairman of Business Roundtable. “Major employers are investing in their workers and communities because they know it is the only way to be successful over the long term. These modernized principles reflect the business community’s unwavering commitment to continue to push for an economy that serves all Americans.”
“This new statement better reflects the way corporations can and should operate today,” added Alex Gorsky, Chairman of the Board and Chief Executive Officer of Johnson & Johnson and Chair of the Business Roundtable Corporate Governance Committee. “It affirms the essential role corporations can play in improving our society when CEOs are truly committed to meeting the needs of all stakeholders.”
Industry leaders also lent their support for the updated Business Roundtable Statement, citing the positive impact this commitment will have on long-term value creation:
“I welcome this thoughtful statement by Business Roundtable CEOs on the Purpose of a Corporation. By taking a broader, more complete view of corporate purpose, boards can focus on creating long-term value, better serving everyone – investors, employees, communities, suppliers and customers,” said Bill McNabb, former CEO of Vanguard.
“CEOs work to generate profits and return value to shareholders, but the best-run companies do more. They put the customer first and invest in their employees and communities. In the end, it’s the most promising way to build long-term value,” said Tricia Griffith, President and CEO of Progressive Corporation.
“This is tremendous news because it is more critical than ever that businesses in the 21st century are focused on generating long-term value for all stakeholders and addressing the challenges we face, which will result in shared prosperity and sustainability for both business and society,” said Darren Walker, President of the Ford Foundation.
The Business Roundtable Statement on the Purpose of a Corporation is below and the full list of signatories is available here.
Statement on the Purpose of a Corporation
Americans deserve an economy that allows each person to succeed through hard work and creativity and to lead a life of meaning and dignity. We believe the free-market system is the best means of generating good jobs, a strong and sustainable economy, innovation, a healthy environment and economic opportunity for all.
Businesses play a vital role in the economy by creating jobs, fostering innovation and providing essential goods and services. Businesses make and sell consumer products; manufacture equipment and vehicles; support the national defense; grow and produce food; provide health care; generate and deliver energy; and offer financial, communications and other services that underpin economic growth.
While each of our individual companies serves its own corporate purpose, we share a fundamental commitment to all of our stakeholders. We commit to:
- Delivering value to our customers. We will further the tradition of American companies leading the way in meeting or exceeding customer expectations.
- Investing in our employees. This starts with compensating them fairly and providing important benefits. It also includes supporting them through training and education that help develop new skills for a rapidly changing world. We foster diversity and inclusion, dignity and respect.
- Dealing fairly and ethically with our suppliers. We are dedicated to serving as good partners to the other companies, large and small, that help us meet our missions.
- Supporting the communities in which we work. We respect the people in our communities and protect the environment by embracing sustainable practices across our businesses.
- Generating long-term value for shareholders, who provide the capital that allows companies to invest, grow and innovate. We are committed to transparency and effective engagement with shareholders.
Each of our stakeholders is essential. We commit to deliver value to all of them, for the future success of our companies, our communities and our country.