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Corporate Profit, Entrepreneurship Theory and Business Ethics

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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.

Suggested Citation

  • Vranceanu , Radu, 2013. "Corporate Profit, Entrepreneurship Theory and Business Ethics," ESSEC Working Papers WP1308, ESSEC Research Center, ESSEC Business School.
  • Handle: RePEc:ebg:essewp:dr-13008
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    References listed on IDEAS

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    1. Fama, Eugene F & Jensen, Michael C, 1983. "Separation of Ownership and Control," Journal of Law and Economics, University of Chicago Press, vol. 26(2), pages 301-325, June.
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    More about this item

    Keywords

    Corporate Goal; Entrepreneurship Theory of the Firm; Internal Entrepreneurs; Profit; Social Role of Business; Virtue Ethics;

    JEL classification:

    • A11 - General Economics and Teaching - - General Economics - - - Role of Economics; Role of Economists
    • A13 - General Economics and Teaching - - General Economics - - - Relation of Economics to Social Values
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • M14 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Corporate Culture; Diversity; Social Responsibility
    • P20 - Economic Systems - - Socialist Systems and Transition Economies - - - General

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