Rethinking the firm's mission and purpose

Abstract

The dominant notion of the firm in Management theory is mostly borrowed from Economics and assumes that firms maximize profits or market value. This notion may be at the roots of today's basic problems in corporations. The current financial crisis has laid them bare. That notion is coherent neither with a broader view of human nature, nor with a wider perspective on the purpose of the firm. Moreover, this hypothesis may have negative effects on firms leadership and governance, making the role of senior executives in society unattractive, and may erode corporate reputation. In this paper, we review those arguments and present a more comprehensive view of the firm. © 2010 EURAM Macmillan Publishers Ltd. All rights reserved.