Corporate ethics

[dougo]

In a discussion at lunch today, luckylefty quipped that Google's motto should be changed to "Don't be evil (except as required to maximize shareholder value)." I've heard this notion before, that a public company is legally required to do whatever is necessary to maximize its profits, and could be sued by its shareholders for not doing so. This reminded me of a quote I ran across recently by costikyan (from a couple years ago, in the context of computer game companies and the overabundance of licensed games):

Tom Peters, the business guru, echoes the sentiment: No successful business exists to produce a profit. Yes, you need to produce a profit; in a capitalist system (and thank god we have one), profit is the condition of survival. But profit isn't the goal; no one other than the stockholders get excited at that. A corporation is one way or organizating a group of people to strive toward an objective—but that objective, the vision they share, is always, for successful businesses, something other than mere profit.

It seems unlikely to me that a corporation does not have the freedom to reject certain highly profitable avenues if it chooses—pornography is one of the most lucrative industries these days, so can shareholders sue Google for not launching Google Smut? Or is the only defense that it might tarnish their public image enough to hurt the rest of their business model?

Comments

[mshonle.livejournal.com]

As for licensed games, that was probably the result of people wanting to enter into a market where they had no real talents, or, "execution abilities."

They were trying to diversify. Some came out ahead from the deal. Others lost from the deal. To execute well, you need a keen understanding of what you're doing, and to have some kind of passion for it. But just look at boy bands or Garfield or other things that make lots of money: there's no real integrity there, but, by golly, it's something that people want and are willing to pay for, so who are we to stand in their way? These companies only profit because there are people who are interested in consuming what they produce. (Exception: when companies profit because they can convince politicians to give them the money for nothing.)