Traditionally, businesses existed only to make money and please their stockholders. Professors R. Edward Freeman, Kirsten E. Martin and Bidhan L. Parmar argue that companies today seek to be more purpose-driven and ethical. They discuss five ideas business leaders are pursuing now: making purpose as important as profits, creating value for all stakeholders, working to improve society and reduce environmental impact, realizing the complexity of human nature, and merging business and ethics.
Wise businesses leaders seek purpose, create stakeholder value, participate in society, embrace human complexity and merge business with ethics.
Today’s businesses want to do more than make money. Leaders are responsible for deciding what they want their organizations to represent. Companies must profit to stay in business, but contemporary leaders also embrace corporate social responsibility, sustainability, stakeholder value and corporate stewardship.
Companies are incorporating purpose and values into their business models. For example, Tastings, a restaurant in Charlottesville, Virginia, wants customers to enjoy fine French cooking. Novo Nordisk wants to eliminate diabetes, and Whole Foods Markets offers healthy food choices. Companies also attend to their environmental impact. Salesforce, for example, an online software company, created a carbon-neutral cloud service and achieved net-zero greenhouse gas emissions.
Many entrepreneurs contribute new ideas for solving problems such as poverty, pollution and disease. The new story of business embraces the “and” of 1) profits and purpose, 2) shareholders and stakeholders, 3) ...