What sort of goals/obligations should businesses hold beyond maximizing financial return on investment for shareholders

Expert Solution

A business needs to focus on creating sustainable values for the largest society beyond maximizing financial return on investment for shareholders. When a business is solely focused on financial returns for shareholders, it often becomes myopic and make decisions which may be profitable in the short-run but unsustainable in the long-run. For example, often firms violate environmental norms, reduces benefits extended to employees, compromise of quality or materials used in production, indulge in accounting malpractices, etc. These types of practices might increase profits and financial returns in the short-run but makes it unsustainable in the future. Therefore, firms need to focus on increasing financial returns in a sustainable way by creating values to the society. A firm can create value by actually providing solutions to the society in a profitable way. Therefore, businesses need to go beyond financial returns and be a responsible stakeholder of the larger society to provide sustainable solutions to problems by providing products and services which create long-term value.

Rahul Sunny answered 2 years ago

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