Normative Foundations of Business

What is the appropriate role for business to play in a capitalist society? In analyzing responses to this question, this note distinguishes two separate dimensions. The first involves the distinctive objective of business as a social institution, considers the pros and cons of profit maximization as well as alternatives to profit maximization such as putting the customer or the employee first, stakeholder theory, and the corporation as a public service entity. It then considers a second dimension, the appropriate moral constraints on business’s pursuit of its objectives. On this dimension, the note considers minimal strategic compliance, libertarian structures against force or fraud, the law, social norms, and independent standards of moral behavior.

Harvard Business Review, 1997

By Gregory J Dees and Jaan Elias

Normative Foundations for Business