Four Vectors

In boardrooms across the US and around the world, CEOs and boards face an historically complex task of figuring out what exactly they should be trying to optimize for in their businesses.

Are they meant to be agents acting principally — or exclusively — in service of their shareholders with the sole aim of profit maximization? Or are they stewards for a broader array of stakeholders including employees, communities, governments and the wider society? And, if the latter, how do they prioritize among those competing demands when trade-offs between them are required?

In the popular narrative, this debate over shareholder vs. stakeholder capitalism is about rethinking the legacy of the Reagan Revolution and the work of Milton Friedman and other economists of the Chicago School which ushered in an era of corporate focus on shareholders above all else.