Generating Knowledge for Sustainable Development: The Case against the Corporate Objective Function

Sustainable development-organizing an organization in a way that it can function in the long term-began gaining global attention in 1983 when the United Nations created the Brundtland Commission to offer various ways to save the human environment and natural resources and promote economic and social development. Corporate sustainability not only depends on the business's ability to function over a long period but also on sustainable relationships with stakeholders. This text offers a comprehensive perspective covering salient aspects of sustainable development with chapters contributed by experts from various countries. It provides guiding principles and tools for transformation and generates knowledge about sustainable organizational designs, sustainable business models, co-creating value with multiple stakeholders, and organizational transformation for sustainability. Written for students, faculty, researchers, professionals, and practitioners in the corporate world, this book will be a valuable resource in promoting sustainable development. Chapter 3 argues that privileging profit maximization is incompatible with sustainable development. Profit maximization tends to lead to inefficient tradeoffs and self-reinforcing systemic imbalances, which could then threaten economic and social institutions. Three premises are offered to see why this is the case: The purpose of modern organizations is to create economic value; economic value flows to capital, consumers, and/or labor; and transferring value between societal groups is not the same as creating economic value. A brief counterargument is provided. Shareholder maximization is incompatible with sustainable development because there isn't a distinction between creating or transferring value, companies can focus on transferring value rather than creating it, and value transfer can lead firms to make inefficient tradeoffs, which then contribute to social problems.

• Business management
• Social enterprise
• Sustainable business practices
• Organizational development
• Environmental sustainability
• Organizational goals
• Corporate social responsibility
• Business and society