Shareholder value theory is under attack. In fact, about a decade ago in an interview with the Financial Times on the future of capitalism, Jack Welch, former CEO of General Electric, famously called shareholder value “the dumbest idea in the world.” The irony of course, is that Welch is also regarded as the father of the shareholder value maximisation movement in the 1980s.
The rejection of shareholder value, and more accurately of shareholder primacy, is therefore not new. Welch’s comments came at a time of a time of widespread distrust and outrage towards the capital markets and corporate elite following the 2008 global financial crisis. Fast forward ten years and the sentiment still resonates – society is reeling from the impacts of the crisis and business is still stumbling in the dark to find better ways to do business.
The recent statement by the Business Roundtable (BRT) can be seen in this light. Impatience from both the political left and right and heightened awareness of global problems such as climate change and inequality have forced the hand of business. The statement can be read as tacit acknowledgement of businesses contribution to global crises and an attempt to reposition the corporation as a benevolent force in society, ready to deliver value “for the benefit of all stakeholders”.
