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Corporate Profit, Entrepreneurship Theory and Business Ethics

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  • Radu Vranceanu

    ()
    (Economics Department - ESSEC Business School)

Abstract

Economic profit is produced by entrepreneurs, those special individuals able to detect and seize as yet unexploited market opportunities. In general capitalist firms manage to deliver positive profits even in the most competitive environments. They can do so thanks to internal entrepreneurs, a subset of their employees able to drive change and develop innovation in the workplace. This paper argues that the goal of profit maximization is fully consistent with the corporation doing good for society. However, there is little justification for corporations to transfer the whole economic profit to shareholders. Economic agents entitled to receive the economic profit are precisely those who create this profit, namely the internal entrepreneurs.

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Paper provided by HAL in its series Post-Print with number hal-00823521.

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Date of creation: May 2013
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Handle: RePEc:hal:journl:hal-00823521

Note: View the original document on HAL open archive server: http://hal-essec.archives-ouvertes.fr/hal-00823521
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Keywords: Corporate Goal; Entrepreneurship Theory of the Firm; Internal Entrepreneurs; Profit; Social Role of Business; Virtue Ethics;

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  1. Jensen, Michael C. & Meckling, William H., 1976. "Theory of the firm: Managerial behavior, agency costs and ownership structure," Journal of Financial Economics, Elsevier, Elsevier, vol. 3(4), pages 305-360, October.
  2. Jean Tirole & Roland Bénabou, 2010. "Individual and Corporate Social Responsibility," Working Papers, Fondazione Eni Enrico Mattei 2010.23, Fondazione Eni Enrico Mattei.
  3. Sigmund Wagner-Tsukamoto, 2007. "Moral Agency, Profits and the Firm: Economic Revisions to the Friedman Theorem," Journal of Business Ethics, Springer, Springer, vol. 70(2), pages 209-220, January.
  4. Williamson, Oliver E, 1993. "Calculativeness, Trust, and Economic Organization," Journal of Law and Economics, University of Chicago Press, University of Chicago Press, vol. 36(1), pages 453-86, April.
  5. Vranceanu, Radu, 2005. "The Ethical Dimension of Economic Choices," ESSEC Working Papers, ESSEC Research Center, ESSEC Business School DR 05001, ESSEC Research Center, ESSEC Business School.
  6. Robert A. Burgelman, 1983. "Corporate Entrepreneurship and Strategic Management: Insights from a Process Study," Management Science, INFORMS, INFORMS, vol. 29(12), pages 1349-1364, December.
  7. vranceanu, radu, 2007. "The moral layer of contemporary economics: A virtue-ethics perspective," ESSEC Working Papers, ESSEC Research Center, ESSEC Business School DR 07006, ESSEC Research Center, ESSEC Business School.
  8. Herbert Kierulff & Grant Learned, 2009. "Limiting Laissez Faire Profits: The Financial Implications," Journal of Business Ethics, Springer, Springer, vol. 90(3), pages 425-436, December.
  9. Fama, Eugene F & Jensen, Michael C, 1983. "Separation of Ownership and Control," Journal of Law and Economics, University of Chicago Press, University of Chicago Press, vol. 26(2), pages 301-25, June.
  10. Williamson, Oliver E, 1983. "Organization Form, Residual Claimants, and Corporate Control," Journal of Law and Economics, University of Chicago Press, University of Chicago Press, vol. 26(2), pages 351-66, June.
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