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The Future of the Corporation and the Economics of Purpose

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  • Colin Mayer

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.

Suggested Citation

  • Colin Mayer, 2021. "The Future of the Corporation and the Economics of Purpose," Journal of Management Studies, Wiley Blackwell, vol. 58(3), pages 887-901, May.
    • Handle: RePEc:bla:jomstd:v:58:y:2021:i:3:p:887-901
    DOI: 10.1111/joms.12660
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    References listed on IDEAS

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    1. John C. Coffee Jr, 2017. "Preserving the corporate superego in a time of stress: an essay on ethics and economics," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 33(2), pages 221-256.
    2. Rebecca Henderson & Eric Van den Steen, 2015. "Why Do Firms Have "Purpose"? The Firm's Role as a Carrier of Identity and Reputation," American Economic Review, American Economic Association, vol. 105(5), pages 326-330, May.
    3. Donal PALCIC & Eoin REEVES & Matti SIEMIATYCKI, 2019. "Performance: The Missing ‘P’ In Ppp Research?," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 90(2), pages 221-226, June.
    4. Bishop, Matthew & Kay, John & Mayer, Colin (ed.), 1994. "Privatization and Economic Performance," OUP Catalogue, Oxford University Press, number 9780198773443.
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    Cited by:

    1. Md. Mahiuddin Sabbir & Khan Md Raziuddin Taufique, 2022. "Sustainable employee green behavior in the workplace: Integrating cognitive and non‐cognitive factors in corporate environmental policy," Business Strategy and the Environment, Wiley Blackwell, vol. 31(1), pages 110-128, January.
    2. Joan Enric Ricart & Carlos Rey, 2022. "Purpose in Corporate Governance: The Path towards a More Sustainable World," Sustainability, MDPI, vol. 14(8), pages 1-11, April.
    3. Ricardo Zózimo & Miguel Pina e Cunha & Arménio Rego, 2023. "Becoming a Fraternal Organization: Insights from the Encyclical Fratelli Tutti," Journal of Business Ethics, Springer, vol. 183(2), pages 383-399, March.
    4. Robert Hurley, 2023. "An Organizational Capacity for Trustworthiness: A Dynamic Routines Perspective," Journal of Business Ethics, Springer, vol. 188(3), pages 589-601, December.
    5. Allen, Franklin & Qian, Meijun & Xie, Jing, 2022. "Implicit benefits and financing," Journal of Financial Intermediation, Elsevier, vol. 52(C).
    6. Braganza, Oliver, 2022. "Market paternalism: Do people really want to be nudged towards consumption?," ifso working paper series 23, University of Duisburg-Essen, Institute for Socioeconomics (ifso).
    7. Francesca Collevecchio & Gianluca Gionfriddo, 2023. "Adopting a social purpose in for-profit firms: the role of the board of directors," International Entrepreneurship and Management Journal, Springer, vol. 19(3), pages 1467-1499, September.
    8. Muel Kaptein, 2023. "A Paradox of Ethics: Why People in Good Organizations do Bad Things," Journal of Business Ethics, Springer, vol. 184(1), pages 297-316, April.
    9. Trotter, Philipp A. & Brophy, Aoife, 2022. "Policy mixes for business model innovation: The case of off-grid energy for sustainable development in sub-Saharan Africa," Research Policy, Elsevier, vol. 51(6).
    10. Hasbullah & Hasanuddin & Muh. Riswandi, 2022. "Performance of Food Distribution Institutions in Realizing Price Stability and Access to Rice Food at The Household Level of Farming Group in Bantaeng Regency," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 6(7), pages 582-587, July.
    11. Nikolai Brosch, 2023. "Corporate purpose: from a ‘Tower of Babel’ phenomenon towards construct clarity," Journal of Business Economics, Springer, vol. 93(4), pages 567-595, May.
    12. Martin Ritter & Heiner Schanz, 2021. "Carsharing Business Models’ Strategizing Mindsets Regarding Environmental Sustainability," Sustainability, MDPI, vol. 13(22), pages 1-18, November.
    13. Gregor Bouville & Jocelyne Barreau, 2021. "Les Utopies Du Travail Et Le Management : Du 19e Au 21e Siecles," Post-Print halshs-03403834, HAL.
    14. Diane Coyle, 2021. "The idea of productivity," Working Papers 003, The Productivity Institute.

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