Remaking Capitalism Stakeholder, Not Shareholder Primacy
Remaking Capitalism: The interdependence of business has not traditionally been part of business vernacular. However now, especially in post pandemic society, it is an imperative word for the survival of the capitalist system. The destructive imbalance of outcomes has been the inimical consequence the shareholder primacy that has dominated business over the last few decades.
The self-interested behaviors that are ultimately most disastrous include: the destruction of the ecosystem through corporate externalizing of negative costs; breaking social cohesion through divisive employment behaviors; and a failure to understand, or even notice, that playing an active role in ensuring everyone’s well-being is altruistic.
B Corp Movement Declaration of Interdependence
The B Corp Movement has been a prime mover in changing managerial behavior, initially among startups and small enterprises, but progressively stretching into multinational corporations. This realization of the interdependence of business has occurred for good reason. It is not just for the survival of the fittest, but for the survival of the entire free enterprise world.
The B Corp Declaration of Interdependence states:
We envision a global economy that uses business as a force for good.
This economy comprises a new type of corporation—the B Corporation—which is purpose-driven and creates benefit for all stakeholders, not just shareholders.
As B Corporations and leaders of this emerging economy, we believe:
That we must be the change we seek in the world.
That all business ought to be conducted as if people and place mattered.
That, through their products, practices, and profits, businesses should aspire to do no harm and benefit all.
To do so requires that we act with the understanding that we are each dependent upon another and thus responsible for each other and future generations.
Entrepreneurs and company board members who have any sensitivity towards other people in the world we share, should read Better Business: How the B Corp Movement is Remaking Capitalism, by Christopher Marquis. The interdependence of business is obvious in daily life. We can no longer expect others to correct or pay for our selfish and shortsighted corporate behavior inside or outside the business.
Chris writes eloquently about the BCorp Movement and stakeholder democracy—the most important business issue of NOW. He shows why it is important for business to move away from shareholder primacy in business, both in our employment practices and commercial behavior. He makes clear why we need both legislative and structural change.
Marquis demonstrates how it is not about introducing social good into business. The palliative of corporate social responsibility (CSR) has largely been used by large companies to look good. He shows how remaking capitalism is about a fundamental shift in business priorities from so-called fiduciary responsibility to one that reflects internal and external behavior that demonstrates compassion.
The author is not only a business school professor, but is also an excellent writer who tells a vital story though many examples of the interdependence of business and learning how stakeholder capitalism is both critical to the bottom line and the survival of business itself. His interviews with business people are succinctly described and make the book easy to read and deeply convincing. If you want to better understand the process moving us from shareholder primacy to stakeholder capitalism, then download this report on Stakeholder Capitalism: The Fix That Our Economy Needs to Build Shared and Durable Prosperity for All—from B Lab.
He gives us real insight into how the B Lab founders have relentlessly built the B Corporation process through patient persuasion and careful negotiation with lawmakers to introduce the Benefit Corporation institutionally. My own company was a founder BCorp back in 2007. Back then, I had no idea that the BCorp Movement and the awareness of the interdependence of business would develop internationally on the scale and speed that it has. I should not have been surprised, given that the original concept was not only designed to be “best in the world, but best for the world”. In essence, he lays out how business must change for democracy itself to survive.
- The link to Chris’s book, Better Business, in the text above will take you to the title at Better World Books—a B Corporation. Better World Books prices are very competitive and they ship the book free.Their Purpose & Values match what Chris talks about in his book!
- There are a spate of new books on stakeholder capitalism and I will review them progressively. In the meantime I have a lot of very helpful books for purpose-driven entrepreneurs on my Startup Books page. Why not take a look?