There's more to the story of Business Roundtable's push to serve a higher purpose than mere shareholder returns.
Call me jaded, but that was my first question when news broke that a group of CEOs at some of the country’s largest companies had decided to redefine the purpose of a corporation. The Business Roundtable on Monday decreed that corporations no longer exist only to produce profits for shareholders, but also to serve customers, employees, suppliers, communities and the environment.
“Each of our stakeholders is essential,” the statement reads. “We commit to deliver value to all of them, for the future success of our companies, our communities and our country.”
“I saw this, and I thought ‘These guys are worried,’” says Erik Gordon, a professor at the University of Michigan’s Ross School of Business.HT: Crains's Chicago Business' Editor Ann Dwyer
Business leaders know corporations are vulnerable to populist anger—Larry Fink, CEO of investment giant Blackrock, last year warned his compatriots that their “license to operate” hinges on public support. So it makes sense that they would try to convince people that companies care about more than the bottom line. Former Baxter International CEO Harry Kraemer, now a professor at Northwestern’s Kellogg School of Management, thinks the Roundtable is merely calling attention to longstanding corporate practices essential to generating a profit, such as delivering value to customers, investing in a skilled workforce or maintaining good relations with their communities....MUCH MORE
noun, plural bal·ly·hoos.
- a clamorous and vigorous attempt to win customers or advance any cause; blatant advertising or publicity.
- clamor or outcry.
- a halfbeak, Hemiramphus brasiliensis, inhabiting both sides of the Atlantic Ocean.
- to advertise or push by ballyhoo.