The Troubling Question of Corporate Purpose

What is the purpose of the corporation? This fundamental question has troubled generations of corporate scholars. It troubles them still, as witness the thoughtful and thought-provoking pieces by Thomas Clarke, Faith Stevelman and Olivier Weinstein gathered together in this issue of the CONVIVIUM. In this brief essay, I do not comment, in any detail, on Clarke's, Stevelman's, or Weinstein's articles. Rather, I seek to defend their work, and my book as well, from the predictable charge that we have not offered a common theory of corporate purpose to "beat" shareholder primacy theory. In doing this, I exercise the lawyer's prerogative and defend against the "it takes a theory" accusation by arguing in the alternative. First, I argue that sometimes a theory can be so misleading that it should be abandoned, even if no good alternative is available. Second, I argue more tentatively that there may be in fact a superior alternative theory of corporate purpose implicit in the literature critiquing shareholder primacy, including the articles by Clarke, Stevelman, and Weinstein. This theory, which might be dubbed the multifunction theory, recognizes that the corporation is only an organizational form, a means that can be (and is) employed by different individuals to serve different ends. Clark, Stevelman, Weinstein, and I have all at different times adopted slightly different perspectives on what the ends of the corporation ought to be. We may all, from our own perspectives, be correct.