Reflections on corporate purpose and performance

Abstract

AbtstractWe are encountering growing crises that derive from a misconception of the nature of business. A revised understanding of profit should lie at the heart of the purpose of the corporation, namely, that it derives from producing solutions not problems for others. Firms should not profit from producing problems for others. There is a limit to the extent to which either competitive markets or regulation can ensure that. Instead, it must be intrinsic to the purpose of the business and, in the absence of this, both markets and regulation fail. Furthermore, public policy in the form of corporate taxation and public expenditure can be used to promote problem‐solving common purposes around shared prosperity. This has significant implications for business practice as well as policy.