ABSTRACT
This article examines the emerging debate advocating the pursuit of ‘business purpose’ as an alternative to the common view that defines business as focused on a profit-maximizing objective. A legal analysis of the structure of firms reveals that the idea of ‘business purpose’ should instead be conceived as embracing a plurality of different normative purposes. The article aims to provide a theoretical foundation for further development of a normative account of business firms that embraces different competing purposes in firms, including not only profit-making but also following the law, taking account of ethical duties, and orienting actions to address larger social, political, and environmental issues. This theoretical approach should inform future policy debates in law, government, and management through a reflective and iterative process of normative reconstruction. Negotiating and balancing the plural purposes of firms are inevitable in both everyday business decisions and large-scale policymaking. This normative theoretical foundation provides a more solid direction for future research and recommendations for law reform than narrower ideas derived mostly from contemporary economic assumptions that business firms should focus only on profit maximization.
Orts, Eric, Toward a Theory of Plural Business Purposes (January 6, 2024), The Wharton School Research Paper (forthcoming in Journal of Corporate Law Studies).
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