February 28, 2022
MIT’s SMR Strategy Forum recently featured Timothy Simcoe, Professor of Strategy and Innovation, as a strategy expert to address the thesis that the field of strategy management has overlooked the importance of corporate purpose.
A 1970 essay by Milton Friedman titled, “The Social Responsibility of Business Is to Increase Its Profits,” popularized the position that companies’ only social responsibility is to maximize shareholder returns. Friedman’s ideas are still relevant in today’s corporate world, but cracks have begun to appear. A majority of the panelists agreed that the role of corporate purpose has been overlooked, pointing to the difficulty of measuring non-financial outcomes for businesses as a determining factor. Others, including Timothy, highlight the broad impact of Friedmann’s doctrine.
“Perhaps because that view became so entrenched, management scholars have not produced much credible knowledge about how firms define purpose-beyond-profit, or whether it matters for performance.”Timothy Simcoe
Professor of Strategy & Innovation
The article outlines the panelists’ opinions with many concluding that there are still more questions to be answered.