What Is Business For? The Question Strategic Management Has Never Answered

I received my Ph.D. in strategic management in 1983 — the same year the field was essentially born. I watched it emerge from business policy with tremendous excitement. For the first time, we had rigorous frameworks for understanding how firms compete, create advantage, and survive. It felt like science. It felt like progress.

Forty-plus years later, I’m watching the field freeze.

The companies we study are facing climate disruption, resource constraints, and cascading social instability. The researchers studying them are producing increasingly sophisticated analyses of an increasingly inadequate set of questions. Strategy has gotten better at answering: How do firms win? It has almost entirely avoided asking: Win at what cost, and for how long? And underneath both of those questions lies the one we have been most reluctant to ask at all:

What is business actually for?

THE INHERITANCE NO ONE QUESTIONED

When strategic management broke from business policy in the late 1970s and early 1980s, it was a genuine intellectual leap. The old field was atheoretical, case-driven, internally focused, and largely descriptive. The new one reached for rigor — and found it in neoclassical economics. Industrial organization theory gave us competitive structure. The rational actor model gave us firm behavior. The profit motive gave us a clear objective function.

What it did not give us was a moment of reflection.

The neoclassical paradigm was not chosen after deliberation. It was inherited — absorbed wholesale as the price of admission to serious scholarship. The assumptions arrived bundled together: firms maximize profit, markets allocate resources efficiently, growth is inherently good, and the natural world is an externality to be priced or ignored. No one stopped to ask whether these were the right assumptions for the right questions. They were simply the assumptions the field grew up inside.

That inheritance made strategic management powerful. It also made it a prisoner.

THE INVISIBLE CAGE

Every scientific field operates within a paradigm — a set of shared assumptions so foundational they become invisible. And for decades, the neoclassical assumptions were useful enough. But a paradigm that treats the biosphere as a backdrop for commerce cannot survive contact with a world in which the biosphere is collapsing.

Six of nine planetary boundaries have now been breached. Ecosystems that took millions of years to develop are being degraded in decades. The ecological economist Herman Daly spent his career trying to show economists — and by extension, business scholars — that an economy cannot grow forever inside a finite planet. He drew a simple picture: the economy is a subsystem of society, which is a subsystem of the biosphere. The biosphere does not exist inside the economy. It is the other way around.

Strategic management has yet to fully reckon with that picture — because the paradigm it inherited never required it to.

WHAT PARALYSIS LOOKS LIKE IN PRACTICE

The paralysis is not dramatic. It is quiet, and it looks like rigor.

It looks like another study of competitive dynamics that treats industry boundaries as fixed when planetary disruption is redrawing them. It looks like another resource-based view paper that counts patents and brand equity as assets while treating topsoil and clean water as free. It looks like strategy journals full of nuanced, carefully reviewed research that collectively assumes away the most consequential forces reshaping business in our lifetimes.

Companies aren’t making this mistake anymore. BlackRock, Unilever, Patagonia, Interface — firms across sectors are discovering that ignoring natural and social capital is not just an ethical lapse. It is a strategic miscalculation. Climate risk is supply chain risk. Biodiversity loss is agricultural risk. Social inequality is market instability. The firms that will survive the next fifty years are not the ones that optimized hardest within the old model. They are the ones that saw the model breaking.

The field that claims to study strategy is still largely teaching the old model.

THE QUESTION WE KEEP AVOIDING

Beneath the technical failures lies a deeper one. The neoclassical paradigm settled the question of business purpose before strategic management even existed as a field — and the field accepted that settlement without examination.

What is business for? That is not a soft question or a philosophical indulgence. It is the foundational ethical question that determines everything else: what counts as performance, what counts as value, who counts as a stakeholder, and what obligations firms carry toward the societies and natural systems that make their existence possible. A field that inherits its answer to that question rather than earning it through honest inquiry is not doing strategy. It is doing theology.

The purpose question has urgent practical stakes. If business exists to maximize returns to shareholders, then Daly’s nested hierarchy is irrelevant — the biosphere is just a cost center. If business exists to create enduring value for human communities within the limits of a living planet, then nearly every framework we teach requires revision. The gap between those two answers is not a matter of emphasis. It is a matter of civilization.

WHAT A PARADIGM SHIFT LOOKS LIKE

This has happened before. Strategic management itself was born from a paradigm shift — when business policy gave way to a field grounded in industrial organization economics and rigorous theory. That transition produced frameworks we still use: competitive analysis, dynamic capabilities, the resource-based view. It took courage to say the old way was insufficient.

We need that courage again — this time directed not just at our methods but at our inherited assumptions. A paradigm shift toward Sustainable Strategic Management would not discard what we’ve built. It would embed it in a larger frame — one that recognizes firms as social institutions operating within ecological limits, and one that takes the purpose question seriously rather than treating it as already settled. Strategy would still be about creating advantage. But advantage would be defined in relation to long-run stakeholder value and ecological integrity, not quarterly returns alone.

The tools exist. Ecological economics, systems thinking, stakeholder theory, circular economy design — the intellectual architecture for a richer strategic paradigm is already built. What’s missing is the willingness of the field’s leading journals, doctoral programs, and senior scholars to declare the old paradigm insufficient and mean it.

THE STAKES ARE NOT ABSTRACT

Every year, doctoral students in strategic management are trained to ask questions the old paradigm permits. Every year, junior faculty publish papers the old paradigm rewards. Every year, executives arrive at strategic decisions armed with frameworks the old paradigm produced — frameworks that systematically undercount the risks most likely to destroy their firms.

This is not a problem at the margins. It is a problem at the foundation.

I spent my career inside this field because I believed it mattered. I still do. That is why I am saying, clearly and without apology: the paradigm that built strategic management is now limiting it. The field that taught the world to think rigorously about competitive advantage must now think rigorously — and honestly — about what business is for.

The cage is invisible. The inheritance was unexamined. Neither of those facts makes them any less consequential.

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Jean Garner Stead is Professor Emerita of Management at East Tennessee State University. She is the author of Management for a Small Planet and Sustainable Strategic Management.

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