There is a constant conflict in business on whether to purely maximize shareholder returns or to also cater to the other stakeholders such as society and the environment. Some approaches have been identified which can help balance the two ends- social welfare and profit maximization. These approaches can broadly be classified under three heads. The first is primarily targeted towards profit maximization, while the second looks at social welfare, and a third tries to balance out the two. Profit maximization in itself may get tweaked as enlightened or constrained. Social welfare too could be simple, constrained or enlightened. The approach depends on the company’s corporate strategy to decide which path it will veer towards. The middle path is most common which involves a weighted combination of goals. Sometimes a hierarchy is also created to rank the objectives. Another approach is the complementary one, with exact equal eight assigned to each of the two maxims.

Source:https://knowledge.insead.edu/responsibility/balancing-profit-and-social-welfare-ten-ways-to-do-it-9421

Uploaded Date:04 July 2018