Global leaders are responding to high levels of mistrust in corporations and a tide of popular support to restrain and renationalise business
- President Macron seeks to define a new class of company with 'purpose' in France
- Jeremy Corbyn galvanises popular support for nationalisation, employee ownership and employee representation on boards in the UK
- Elizabeth Warren seeks to implement the Accountable Capitalism Act, which imposes public charters and German style co-determination on the boards of large US corporations
Rarely has there been such global recognition that there needs to be a fundamental change in the concept of the corporation. Business leaders are looking for answers.
In his new book Prosperity: Better Business Makes the Greater Good, Colin Mayer, Professor of Management Studies at Oxford Saïd provides them. He diagnoses the nature of the problem and offers proposals for reform of law, regulation, public policy and business practice to redefine the purpose and role of the corporation.
‘Business has lost its way over the past 60 years and forgotten the reason why it was established - to perform a public purpose and serve the societies in which it operates’ says Professor Mayer. ‘The emergence of individual then institutional shareholders during the 20th century, led to steadily intensifying attention on corporate profits and shareholder value at the expense of business and society.’
‘Public trust in business has eroded and is associated with a rise of populism and a call for change. The pace of technological progress and scientific advances is intensifying the urgency for reform as it increasingly leaves the traditional public policy tools of competition policy and regulation behind.’
Based on latest evidence, Prosperity describes a comprehensive root and branch reform of corporate law, regulation, taxation, ownership, governance, business leadership and management around the world, specifically:
- Corporate law that requires companies to define their purposes and enables them to be delivered
- Ownership in the hands of investors with a real interest in the long-term success of their companies
- Boards of directors that are held to account for the delivery of their corporate purposes
- Measures of performance that recognize profits where companies deliver real benefits for all, not just the few at the expense of the rest
‘The Friedman doctrine that the one and only purpose of business is to maximise profits for shareholders is no longer tenable.’ continued Professor Mayer. ‘Business thinking and education need to move on to define a purpose that is aligned with their activity and role in society. Without this, business and societies will face intensifying social, political and environmental problems.’
Professor Mayer is the academic lead for the British Academy’s Future of the Corporation research programme, which addresses the changing relationship between business and society.