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Who Should Business Create Value for and What does ‘Value’ Mean?

Everyone agrees that the purpose of any business or organisation is to create value. But that is about as far as any agreement goes. Since at least the 1930’s, and probably for much longer, there has been a big debate about who value should be created for. And opinions on this vary by country, and even by legal jurisdictions between regions within some countries. Then there is the big question, what do we mean by ‘value’ anyway?

One view is that the purpose of a business is maximising value for shareholders who are often regarded as the owners, even though this is not the case. A business is a “legal person” and a “sovereign entity.” It exists independently of shareholders and has rights of its own. Shareholders only own shares. “Today’s companies are, to all intents and purposes, effectively “ownerless”” says the former South African Judge and Corporate Governance expert Mervyn King.

In King’s explanation of the evolution of the organisation he says, “the law developed to protect shareholders” leading to the evolution of the concept of the “primacy of shareholders” and a requirement to make decisions in the best interests of the general body of shareholders. Nevertheless, the company is “sovereign and separate from its shareholders.” And “the concept that shareholders own the company turns out to be a myth” despite Milton Friedman’s statement that shareholders are “the owners of the business”.

What shareholders have is a “claim to the future stream of income if the company can pay its debts on due dates or has readily realizable assets to pay its debts,” says King.

King then quotes Andy Haldane, Chief Economist of the Bank of England who said, “”ownership” is really a misnomer when applied to shareholders….they “own” least as residual claimants. Associating “shareholding” with “ownership” thus makes little substantive sense, despite its widespread use in popular discourse”.

The idea shareholders are owners is further weakened by the fact “most companies today have their financial capital represented by loans rather than equity,” loans backed by covenants to banks that may well require major shareholders to cede voting rights to the bank in many cases. And shareholder funds account for an increasingly small percentage of the assets of many businesses.

In his conclusion King states emphatically, “in terms of governance and corporate ownership, a company as a person in its own right cannot be owned – and it is not owned by any one of its stakeholders including its shareholders.”

In this context, the move to a so-called “enlightened shareholder approach” and away from the “shareholder primacy” focus makes sense. And King cites the UK companies Act 2006 as an example of the enlightened shareholder approach.

Nevertheless, opinion remains divided and it is this “shareholder v stakeholder” debate, and the damage it causes, that was my concern when I decided to organise a conference. But it is a particular concern because, in my view, it is based on an entirely false dichotomy - hence the title of the conference that will take place online on March 15th Beyond the False Dichotomy: Ending the Shareholder v Stakeholder Nonsense

To move beyond the false dichotomy let us view the company as a person, just as the law views it. We can then see that the real purpose of Business ought to be its own health, wellbeing, and long-term success.

We can also say, like a person, the rights it enjoys come with responsibilities – to those who depend on it, and to the society that supports it. It should also be of good character, respect the values of the society it is part of, respect the letter and the spirit of the laws and norms of that society, maintain healthy relationships with others, and protect the environment in which it exists.

Some call this “company as a responsible person” alternative to the Shareholder v Stakeholder approaches the “company-centric” approach. I think of it as just Enlightened Enterprise. It is the approach advocated by the Enlightened Enterprise Academy which I founded in early 2020.

The philosophy behind it will be explained in detail in the Enlightened Enterprise Manifesto to be published soon. And I hope it will spark the creation of an Enlightened Enterprise Movement.

Let me turn now to the issue of “value.” If business is to be viewed as a person, and is not owned by shareholders, it is logical to suggest it needs to be creating value for itself. But we should realise people are rarely simply self-interested and selfish, no matter what some economists may maintain.

We create value for others and for society. And this is especially true if we think of value in more than narrow financial or economic terms. Equally, we also impose costs. But good citizens will aim to add more value than the costs they impose. Most of us also care about our reputations and wish to be seen positively, and this also guides our behaviours.

Some people are guided by the idea of doing no harm, others by a desire to do some good, or even to make a significant positive impact. In reality, I think it can be argued the same can be said of most businesses, regardless of the debate over what they should, or should not, be focused on doing.

This said, our expectations of on business are increasing, We increasingly want them to make a significant positive impact, by helping resolve the growing list of major challenges we face, given their potential to do so. And we scrutinise their behaviour as never before, to ensure they are doing us no harm.

A growing number of businesses recognise the expectations also offer them great opportunities, to prove their value and secure their own long-term success in the process. The Quaker Industrialists recognised this long ago and became leading members of the eighteenth-century enlightenment movement, and of the first industrial revolution, in their pursuit of the creation of heaven on earth. At some point their wisdom seems to have been lost, but we can remind ourselves of it now, and we should.

It is not hard to see what value might mean in this context, but I will spell it out as I see it. Enlightened Enterprise is about creating value for the enterprise itself as a product of creating value in the form of contributions to the sustainable widely shared prosperity of others, measured in terms of human flourishing and wellbeing. This is not an original idea. Aristotle called this eudaimonia.

Dignity is a value, a concept central to all major world religions, and the foundational right of the United Nations declaration of Human Rights, which almost every country on earth ratified.

It refers to a sense of inherent self-worth and respect for the inherent self-worth of others. And others could be human beings, animals, other beings, or even the planet and our environment.

As such I believe Dignity as a value could serve as our guide in decision making, our “moral compass”, and the one 'leaders' should use.

This “Dignity Theory of Value,” as I call it, has far more to offer than the theories of economic value, in my opinion. The “Labour Theory of Value” was offered by Adam Smith. Later economists replaced it with the “Market Price Theory of Value.” Neither is satisfactory considering what human society really values. As Oscar Wilde famously said of the market price theory of value, it tells us, “the price of everything and the value of nothing.

Real value, which enlightened enterprise should create for themselves and and others, should be measured in terms of contributions to the conditions that enable people and other beings live a sustainable life of dignity and to flourish. The same conditions that are necessary for the long-term success of enterprises.

This thinking addresses the questions, who business should create value for and what does value mean. And I suggest, it offers a means by which we can move beyond the false dichotomy to put an end to the shareholder v stakeholder debate which is nonsense.


In a series of four online conferences starting on March 15th leading international thinkers from a range of disciplines will start to explore these issue.

Beyond the False Dichotomy is the name of the whole program. The first conference on March 15th, Beyond the False Dichotomy: Ending the Shareholder v Stakeholder Nonsense. It will explore why it is a false dichotomy, that was born of a narrative that came to dominate, and how this happened. It will also explore the damage it causes and make the case for a need to move beyond it.

​To move beyond the false dichotomy, we will need a new narrative. We will need to ensure it is widely understood and accepted. Exploring what the new narrative should be and how to achieve these objectives will be the focus of the second conference on May 17th , Beyond the False Dichotomy: Shifting the Narrative.

​To fix the damage caused by the false dichotomy and the old narrative, a new narrative will need to be accompanied by a clear understanding of what needs to change and how to cultivate the changes the new narrative will stimulate. Ending the False Dichotomy: Cultivating Changes July 12th, will be the focus of the third conference.

​To ensure the shift is long-lasting and will lead to sustainable widely shared prosperity measured in terms of human flourishing and wellbeing, the focus of the final conference, September 20th Beyond the False Dichotomy: Lessons in Longevity and Stewardship from companies that are managed for, and have been able to achieve, long-term success.


For the first conference on March 15th the confirmed speaker line-up is:


A series of short video interviews with some of the speakers is available on our YouTube Channel



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