01 March 2014

Corporate Purpose Redux

Several years ago I posted several entries (here and here) about the purpose of corporations. Applying Aristotle's four-cause analysis (material, efficient, formal, and final), I concluded that profits were a corporation's efficient cause, not its final cause (or purpose). As the chief end of man is to glorify God, not maximize personal welfare, so a corporation's end is to meet the legitimate needs of its customers. This cannot be done without profitability but profits alone do not warrant the legal and relational distortions created by the law's recognition of the personhood of an artificial entity.

I bring this up again because my friend Haskell Murray tweeted an excellent piece by the NYT's Tony Schwartz describing what seems to a serious commitment by a number of corporations to serving ends beyond shareholder wealth maximization.

Are these declarations of a purpose-driven corporate life for real? Even Schwarz wonders: "It’s easy to be cynical about the motives of leaders who profess a purpose beyond profit and a desire to take better care of their varied constituencies ..." Yet, he goes on to remark that "I find myself feeling hopeful. At the most practical level, doing so is a form of enlightened self-interest."

I don't believe that such corporate commitments, even if carried out, will lead to heaven on earth. Yet, I believe that such commitments and their implementation are a fitting acknowledgment of the reality that life is more than serving oneself or even one's shareholders.

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