What Is the Purpose of a Corporation Today?

This was the question we gathered Kellogg faculty to debate three years ago, shortly after CEOs at the Business Roundtable proclaimed their intent to redefine the purpose of a corporation. In their statement, the CEOs explicitly clarified their obligations toward other stakeholders, including employees, suppliers, customers, and communities, in addition to maximizing long-term shareholder value. At the time, the Kellogg faculty we spoke with were skeptical about the CEOs motives, or that anything would come of it—or even that this was the right way to drive social change. But several were also curious to see how the situation would play out. Since then, of course, we’ve seen a global pandemic, racial-justice protests, political upheaval culminating in the January 6 uprising, and a seemingly endless parade of climate disasters. Kellogg Insight recently brought together the same faculty to ask whether their views had changed in the intervening years, and how we should continue to understand the purpose of a corporation. The upshot: they are still as skeptical as ever. Carola Frydman, Ravi Jagannathan, Bob Korajczyk, and José Liberti are professors of finance, and Aaron Yoon is an assistant professor of accounting and information management.