Policy Monographs
The Art of Corporate Governance: a return to first principles
Calls for big business to be more ‘ethical’ and ‘socially responsible’ have never been louder, nor more misguided. Samuel Gregg argues these calls come at a time ‘when the public understanding of the nature of ethics has never been more confused’.
‘The idea that corporations exist primarily to maximise shareholder value is under siege, with many both within and outside the corporate world claiming that business must now meet a ‘‘triple bottom line’’.
Gregg argues that institutions need to be primarily understood in terms of their purpose; that is the telos that constitutes their fundamental aim. Once a corporation loses sight of its telos, it risks undermining shareholder value – its ultimate responsibility.
‘Business corporations are not athletic associations or even social welfare organisations, and a horseriding club does not exist primarily to make a profit’.
Gregg identifies the false and real problems confronting corporations while highlighting the incoherence of various ‘stakeholder’ theories, and reflects upon the trouble with concepts like ‘corporate social responsibility’ and ‘ethical investment’. Business leaders are often forced to adopt defensive positions when debate about questions such as the purpose of corporate governance emerge.
Gregg warns corporate leaders against the many organisations determined to undermine their activities. He urges them to heighten their engagement in public policy debates in order to protect what they serve to maximise – shareholder value.
