Teaching Interest

The Role of the Corporation in Society

by George Serafeim


Classical financial economic theory defines the role of the corporation to be shareholder value maximization.  According to this view, meeting the needs of other stakeholders along social and environmental dimensions should only be done if it contributes to creating shareholder value.  Making these decisions assumes that the information is available for doing the necessary analysis and that management and shareholders have the same risk profiles and time frames for value creation.  However, this classic view of the corporation is coming under pressure as the government and civil society are increasingly interested in the role companies should play in contributing to environmental and social sustainability.  They are essentially arguing for a multi-stakeholder view which does not take the primacy of one particular type of stakeholder, shareholders, as a given.  Others argue that, with a sufficiently long-term view, no tradeoffs need to be made since value can only be created for shareholders if the company is not destroying value for other stakeholders.  Globalization, recurring crises in the world's capital markets, and the failure of companies to adequately manage risk are also contributing to a growing debate about the role corporations should have in society today.  We are at the early stages of even framing the discussion. The purpose of this doctoral seminar is to first put some structure to the debate and second to pose alternative models to the dominant one in place today.  The seminar is a broad and interdisciplinary one with readings from a variety of fields and disciplines.

Keywords: sustainability; corporate culture; corporate accountability; corporate social responsibility; accounting; reporting; leadership;