The debate over corporate purpose – whether companies should serve shareholders exclusively or balance the interests of a broader set of stakeholders – has become one of the defining issues in corporate governance. With climate change and sustainability shaping regulatory and business agendas, questions about how directors think and what drives their strategic decisions are more pressing than ever.

In a new article, we present the first comprehensive, international analysis of directors’ shareholderism: their principled stance toward shareholders and stakeholders. Drawing on original survey data from 1,100 directors originating from 55 countries and serving in firms across 23 countries, we examine how values, culture, and legal environments shape directors’ orientations. The findings challenge prevailing assumptions in both policy and academic debates, offering fresh insights into how corporate purpose is negotiated in practice.

Beyond Assumptions in the Policy Debate

Much of today’s discourse assumes that directors are either narrowly shareholder-focused or that observable demographics – such as gender – determine stakeholder orientation. For example, the European Commission has considered codifying directors’ duties to balance shareholder and stakeholder interests and has encouraged gender diversity on boards on the premise that women directors are more stakeholder oriented. Firms have likewise responded by appointing “climate directors” or showcasing directors’ sustainability expertise.

Yet, the assumption that demographic traits or formal legal mandates alone predict directors’ stakeholder orientation is far from self-evident. Earlier research by Adams, Licht, and Sagiv (2011, “ALS”; see here) has shown that Swedish directors’ values significantly influence their approaches to shareholder–stakeholder issues. We extend this insight by examining how personal values interact with broader cultural and institutional contexts in shaping directors’ shareholderism.

To understand these dynamics, we refined the survey used by ALS and administered it internationally. The survey asked directors to respond to conflict scenarios based on actual, litigated cases where shareholder and stakeholder interests collided. Because courts themselves had been divided in resolving these cases, there was no obviously right answer, making it possible to capture directors’ genuine attitudes rather than expected responses.

We then linked directors’ answers to information about their personal characteristics and values, the cultural background of the countries where they grew up, and the institutional and legal environments of the firms where they currently serve. By integrating these levels of analysis – both individual and institutional (cultural and legal) – we were able to identify what most strongly shapes directors’ shareholderism.

Findings: Values and Culture Trump Legal Origin

Our evidence points to several findings. First, directors’ shareholderism varies with their values and cultural background. Directors who emphasize other-regarding values and de-emphasize self-direction values, and those who come from egalitarian or harmony-seeking cultures, tend to be more stakeholder-oriented and lean less toward shareholder primacy.

Second, institutional factors – particularly legal origin (common law versus civil law) – do not significantly predict directors’ attitudes. Despite the prominence of legal origin in comparative corporate governance, our results suggest that it plays a limited role in shaping directors’ shareholderism. Instead, personal and cultural characteristics explain more of the variation.

Third, expatriate status stands out: Directors who grew up outside their firm’s home country are consistently more stakeholder-oriented than local directors. Using gravity models from trade and migration research, we account for expatriate status and confirm that this effect is robust.

These findings complicate current regulatory and academic debates. If directors’ orientations are shaped more by deeply held values and cultural heritage than by formal duties or demographic traits, then legal reforms – such as mandating specific board characteristics or rewriting directors’ duties – may have limited effectiveness.

At the same time, our results show that board composition matters – but not in the ways most policymakers might expect. Rather than focusing narrowly on gender or formal sustainability designations, attention to cultural diversity and expatriate experience may offer a more effective means of including stakeholder perspectives in board deliberations.

Revisiting Corporate Purpose

The debate about corporate purpose often assumes directors are either single-minded profit-maximizers or predictable products of legal systems and demographics. Our study paints a more complex picture: Directors’ shareholderism reflects a mix of personal values, cultural background, and life experiences such as expatriation.

Our paper thus invites policymakers, business leaders, and academics to revisit their assumptions. Understanding directors’ shareholderism requires moving beyond demographic proxies and formal mandates to engage with the deeper drivers of decision-making in the boardroom.

This post comes to us from Renee B. Adams at the University of Oxford and ECGI Amir N. Licht at Reichman University and ECGI. It is based on their recent article, “Shareholderism around the World: Corporate Purpose, Culture, and Law,” available here. A version of this post appeared on the Oxford Business Law Blog.