The Future of the Corporation and the Economics of Purpose

Abstract

This article examines the economic underpinnings of the concept of corporate purpose, which has gained increasing attention from business academics, practitioners and policymakers. It argues that there are fundamental reasons for reconceptualizing the purpose of business in the future which derive from the changing nature of business and the market failures to which it gives rise. It suggests that regulation is proving increasingly inadequate at correcting market failures, and the traditional separation between economic efficiency and distribution that underpins policy formulation is untenable. Instead, the article sets out how appropriately defined notions of corporate purpose can help to promote not only better social outcomes but also enhanced functioning of firms and markets. It describes a set of principles that provide a comprehensive framework for reforming business around credible commitments to corporate purpose. The reformulation of the corporation has profound implications for the macroeconomic performance of economies as well as the microeconomics of firms and markets.

Proxyeconomics, a theory and model of proxy-based competition and cultural evolution

“…The final general approach to improve outcomes suggested by our model is to increase the intrinsic incentive towards a shared purpose ( g ). Calls to this end have become more prominent in recent times, for instance in the context of business [ 107 ] or science [ 108 ]. The strength of this incentive can be seen as a product of (i) goal valuation and (ii) individual knowledge about the consequences of one’s own actions for this goal.…”

Purpose vs mission vs vision: persuasive appeals and components in corporate statements

“…As purpose is an aspirational statement depicting a big goal a company strives to achieve (Mayer, 2020), it serves as a unifying principle or North Star that informs business strategies, goals, practices and policies. In other words, when companies need to make big or small decisions, they can rely on their purpose for guidance.…”

Un lugar para la empresa en la política industrial

“…En definitiva, ampliar los indicadores de eficiencia para tener en cuenta los efectos externos de las decisiones individuales. En segundo lugar, porque la misión activa mantiene la tradicional visión de la empresa como caja negra, con el beneficio privado como único motor de la conducta empresarial; las políticas públicas de corte microeconómico deben de tomar en consideración las corrientes de cambio en el ámbito empresarial que equiparan el propósito social al beneficio como guías de las decisiones de asignación de recursos (Mayer, 2020). En tercer lugar, y relacionado con lo anterior, se ignora la complementariedad entre intangibles y se ignoran la calidad de gestión y las competencias de organizaciones como determinantes de la performance empresarial, es decir, se sigue menospreciando el cómo las empresas consiguen los resultados individuales y colectivos.…”