For as long as I can remember the idea that creating great products that people want to buy seemed like an intuitively obvious way for a business to be wildly successful. Along the way, companies also needed to employ people and pay them a wage that would enable them to buy those awesome products.
The short term, bottom line thinking of modern American business just seemed fundamentally flawed but I didn't have the knowledge of business law to provide an explanation of why business played along with it. Apparently the idea of maximizing shareholder value took root with a 1976 paper by Michael Jensen and William Meckling in the Journal of Financial Economics entitled “Theory of the Firm: Managerial Behavior, Agency Costs and Ownership Structure.”
Now a new book by Roger Martin explains how we managed to become the pawns of Wall St hedge fund managers and investment bankers.
If our political leaders really want to make a difference that improves our economy and our country as a whole, they will make the changes necessary to enable business to get back to the roots of what they should be doing and ignoring Wall St.
#business
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The Dumbest Idea In The World: Maximizing Shareholder Value – Forbes
There is only one valid definition of a business purpose: to create a customer. Peter Drucker, The Practice of Management “Imagine an NFL coach,” writes Roger Martin, Dean of the Rotman School of Mana…
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