BlueSky Thinking Summary

Although the maximizing shareholder value debate has been contentious, recent years have swung the pendulum toward broader corporate responsibility.

Initially grounded in Milton Friedman's 1970 assertion that profit maximization can align only managerial behavior with shareholder interests because ofdisparities between ownership and control, today's global predicaments—from worldwide economic crises to social uprisings—are increasingly galvanizing appeals to shift corporate roles beyond shareholders, most recently expressed in the Business Roundtable's 2019 statement.

That sentiment is echoed by Kellogg faculty, including Carola Frydman and José Liberti, based on legal realities and short-term investor pressures.

True value creation is relatively unrelated to stock price fluctuations, focusing instead on sustainable business practices and their impact on society.

As consumer activism continues to surge and regulatory gaps in ESG reporting remain at large, so does the question of business as a driver of change in society.

Ultimately, it is finding this balance between the desire for profit with responsibility toward a greater good in which the path for corporate social responsibility is paved—through market innovation and robust regulatory frameworks.