How to Reconcile Corporate Interests with Broader Social Interests

The widely accepted primary purpose of corporations is to maximize profit or value to shareholders, otherwise known as “shareholder primacy.”  Shareholder primacy represents not only the prevalent objective of corporations but also a norm: A seminal case in corporate law, Dodge v. Ford Motor Co., set the cardinal principle that a corporation must serve the interests of shareholders rather than the interests of its employees, customers, or the community.

The court decision has set shareholder primacy as a legal obligation, not just a business objective, and created a distinction between corporate interests and the interests of other stakeholders such … Read more