companies aren't human beings with morals.
companies exist for the sole reason to make money - not to make the world better - that's a side effect.
but unfortunately a lot of people wanna see the world as they wish it to be, not the way it is.
companies aren't human beings with morals.
companies exist for the sole reason to make money - not to make the world better - that's a side effect.
but unfortunately a lot of people wanna see the world as they wish it to be, not the way it is.
Not every business owner is a profit obsessed psycho. Most multinational CEOs are but you can find good people at every level. The "only exist to make money" thing starts when you let in shareholders, but a company can stay ethical as long as they put up strong barriers before taking outside investment.
A lot of people get the wrong impression from reading Dodge Brothers and think companies are legally required to put profit first. What really happened is Friedman and Reagan planted the idea of shareholder supremacy, convinced schools to teach it and now generations of business majors think it's a sacred truth they have to enforce anywhere they go. Never let a MBA take over.
It’s not about the moral or ethical qualities of the CEO. It’s about the structural incentives of the organization as a whole. This is even more true in a larger organization, where any one individual has relatively little effect on the behavior of the organization as a whole.
Companies that don’t do a good job of making profits tend to go away, thus there exists natural selective pressure to put profits ahead of other concerns. Note that none of the above has anything at all to do with morals or ethics.
Yes. Emergent behaviors.
This is why a healthy, society-aligned regulatory regime is impoetant, to set incentives. If you make more money being decent than you would being abusive, companies will adapt. They are more like corals than they are like people.
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Being "a profit obsessed psycho" might help some people rise to positions of power, but I think the stronger point is that a corporation is an emergent superorganism with its own identity above the individual human level, without a psychology, that operates on its own principles of self preservation based on the incentives of the environment it operates in and that individual choices result in a gestalt of behaviors that no one person really has full control over even though they are part of it and what they do does affect the overall outcome, like a cell and organs making up an animal.
And if I asked people to name companies which retain a good public perception of being not entirely profit driven, the ones that would most likely come to mind are ones like Costco, where there's someone who is setting the tone and not leaving it to the committee of free market/investors to decide the fate of the company. I wonder if there are parallels here to other similar economic models, hmm...
companies like Costco, Patagonia etc are rare why ? because deliberate actions & care have been taken to go against the grain of what a company should do.
just like the USA at it's founding - deliberate actions were taken etc that were counter to the normal. & going against the wind takes a lot of energy.
at a certain point in time - you run out of energy or you've to keep keep reinvesting to not run out otherwise barbarians are knocking down at the gate.
I shop at Costco and don't hate it, but why would I believe it is not entirely profit-driven?
The problem with “profit driven” is that it reduces motives to a lowest common denominator. Short term profit? Long term profit? Brand value that can be leveraged later?
Costco, specifically, I have a good story about. Jim Sinegal spoke at my MBA program, and he talked about when they were starting and the challenge was a value prop of “buy bulk, lower cost” contrasted with bulk actually being more expensive than small quantities, therefore needing to target higher incomes.
Part of the solution: wider parking spaces. Make people feel like their expensive cars are safer, it’s easier to get in and out of the car (especially for older people, who have more wealth), and differentiate from typical stores.
Now, you tell me: would you be just as happy with cramped parking spaces because the larger ones are profit-driven? Does motive even matter here?
Costco has a policy to cap margins at 14% or something to that order. And it's disciplined enough that it's broken off with major brands that tried to dispute this.
It's profit driven in its own way, but against the grain of modern corporate strategy.
> companies aren't human beings with morals.
Companies are not sentient beings in themselves: they are made up of human beings with wills. If the human being(s) make moral choices the result will be companies that do moral actions.
> companies exist for the sole reason to make money - not to make the world better - that's a side effect.
That is one interpretation on the purpose of companies (and a relatively recent one):
* https://en.wikipedia.org/wiki/Friedman_doctrine
There are others:
* “Profits are to business as breathing is to life. Breathing is essential to life, but is not the purpose for living. Similarly, profits are essential for the existence of the corporation, but they are not the reason for its existence.” ― Charles A. O'Reilly, Lead and Disrupt: How to Solve the Innovator's Dilemma, https://en.wikipedia.org/wiki/Charles_A._O%27Reilly_III
* “On the face of it, shareholder value is the dumbest idea in the world. Shareholder value is a result, not a strategy...your main constituencies are your employees, your customers and your products.”[72] — https://en.wikipedia.org/wiki/Jack_Welch#Politics
Or going back a few decades:
> In 1949 General Foods’ president Clarence Francis told Congress that he had a “three-way responsibility to the American consumer, to our associates in this business, and to the 68,000 [stockholders in General Foods]. We . . . would serve (the company’s) interests badly by shifting the fruits of the enterprise too heavily toward any one of those groups.” Two years later, the president of Standard Oil of New Jersey claimed that managers needed “to conduct the affairs of the enterprise in such a way as to maintain an equitable and working balance among the claims of the various directly interested groups—stockholders, employees, customers, and the public at large.” So widespread were such views that, in 1959, one writer in the Harvard Business Review complained that it was no longer “fashionable for the corporation to take gleeful pride in making money.” Instead, he complained, it was typical “for the corporation to show that it is a great innovator; more specifically, a great public benefactor; and, very particularly, that it exists ‘to serve the public’.”
* https://law.temple.edu/10q/purpose-corporation-brief-history...
> American corporate law has long drawn a bright line between for-profit and non-profit corporations. In recent years, hybrid or social enterprises have increasingly put this bright-line distinction to the test. This Article asks what we can learn about the purpose of the American business corporation by examining its history and development in the United States in its formative period from roughly 1780-1860. This brief history of corporate purpose suggests that the duty to maximize profits in the for-profit corporation is a relatively recent development. Historically, the American business corporation grew out of an earlier form of corporation that was neither for-profit nor nonprofit in today’s parlance but rather, served a multitude of municipal, religious, charitable, educational, and eventually business purposes in early nineteenth-century New England. The purposes of early American business corporations—rather than maximization of profit to private shareholders— were often overtly public, involving development of local transportation, finance, and other much-needed economic infrastructure. With the rise of factory-based manufacturing, railroads, and other capital-intensive industries in the middle decades of the nineteenth century and the advent of general incorporation statutes, the purpose of the American business corporation shifted fundamentally from public to private. By 1860, the stage was set for the modern firm.
* https://repository.law.umich.edu/mbelr/vol9/iss1/2/
> That is one interpretation on the purpose of companies (and a relatively recent one):
Self-reply: see also Boeing company ethos pre-McD acquisition versus post-McD acquisition ethos:
* https://www.goodreads.com/en/book/show/55994102-flying-blind
thanks for the resources.
Eric Ries gives more examples and some excellent commentary on this here: https://www.youtube.com/watch?v=PoJ1vTdHpks
Are these the same companies that claim that companies are people?
They exist to make money but not by all means.
Companies are allowed to make money because it’s a net benefit for society.
If that changes companies lose their reason of existence.