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How great companies deliver both purpose and profit

Journal

Journal of Chinese Economic and Business Studies

Subject

Finance

Authors / Editors

Edmans A

Biographies

Publication Year

2023

Abstract

Critics of capitalism argue that companies need to be heavily regulated, to reduce their profits and redistribute value to society. Defenders of capitalism reply that profits are essential to a well-functioning economy; they fund future investment by companies and provide returns to shareholders, such as households and pension funds. Both views are based on the pie-splitting mentality, that the value created by a company is a fixed pie that shareholders and society fight over. This article describes the pie-growing mentality, that shareholders and society are not in conflict. By having a purpose – being driven by the desire to create value for society – companies grow the pie, increasing shareholders as well as stakeholder value. It discusses how companies can put purpose into practice and how citizens can play their part.

Available on ECCH

No


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