On August 19, 2019, the Business Roundtable released a new Statement on the Purpose of a Corporation. The document is signed by 181 CEOs who commit to lead their companies for the benefit of all stakeholders—customers, employees, suppliers, communities, and shareholders. This is profoundly important because it may signal a shift away from Milton Friedman’s long-standing and widely accepted doctrine that the sole purpose of a corporation is to generate value for shareholders.
Since its publication in 1970, The Friedman doctrine, as it is known, has influenced all aspects of business, from how corporations operate and compensate executives, to how business schools teach. The singular focus on shareholder value has also led to a wide range of outcomes for businesses and society, including vast wealth creation and some infamous ethical failings.
I shared this statement with my current MBA students at Emory University’s Goizueta Business School and contrasted it the zeitgeist of my own MBA experience in the 1990s. The students, of course, reacted and shed important light on what this could mean for the future of business education and how the MBA degree sometimes is perceived.
Contrary to a common misconception about MBA students and programs, the idea that corporations should focus broadly on social responsibility is widely embraced across our student body.
And this is true in more than just their words.
A closer look at academic choices and experiences reveals today’s MBA students are increasingly finding electives and projects that teach them to value the customer experience and optimize the human capital of a firm. When learning about supply chains and channel strategy, they often ask just as many questions on fair trade and ethics as they do of costs and efficiencies.
Community service is no longer a peripheral activity, but a fully integrated aspect of Goizueta’s MBA experience because today’s students are more civic-minded than previous generations. We are well-positioned in Atlanta—a major metropolitan area with a wide range of community partners.
Some are skeptical about the sincerity and enforceability of a stakeholder rather than a shareholder-only approach to corporate behavior. But regardless of the motivation behind this new direction, 181 of America’s most prominent CEOs have signed their names on this Statement. They are paying close attention to what happens next within the corporations that they lead.
Some of the skeptics suggest the Statement is more reactionary than innovative. That may be true when considered in the context of how MBA programs have evolved to meet student needs.
For years, one of the most popular courses at Goizueta Business School has been “Business and Society” taught by a faculty leader from Goizueta’s center for social enterprise, SE@Goizueta. For years, Goizueta marketing faculty and the Marketing Analytics Center (EmoryMAC) have made headlines by valuing fan bases of professional sports franchises, which has helped students examine the customer experience in innovative ways. For years, Goizueta has had a global experiential module in Central America focused on helping coffee farmers earn fair prices for their product and demand ethical treatment from their buyers.
So maybe the Business Roundtable produced this new Statement as a sign of the times more than an aspiration for the future. Either way, it is an important affirmation that today’s corporate leaders and the modern MBA program are on the same page.
Brian Mitchell is the Full-Time MBA Associate Dean at Emory University’s Goizueta Business School. Prior to joining Goizueta, Brian spent 20 years in marketing and strategy roles in the pharmaceutical industry where he earned distinguished awards such as Brand of the Year and the Pharmaceutical Global Marketing Award. Brian has an Ed.M. in Higher Education Leadership and Governance from Harvard University and was awarded Harvard’s 2016 Intellectual Contribution and Faculty Tribute award for his research on global partnerships in graduate business education.