A market-based rationale for holding corporations accountable for the purpose of societal benefit

Corporations have a different role in market societies than individuals because they are a means to an end. Societies can enforce expectations that corporations create value by requiring that both revenues exceed expenses (profit) and societal benefits exceed societal costs (purpose). The profitability requirement is enforced by markets, while the purpose requirement can be enforced by laws, regulation, and ethical customs. As a result, corporations can, and often do, benefit society. However, not all corporations are equally subject to societal constraints because some corporations achieve a level of autonomy that enables them to subvert the societal constraints that require other firms to deliver net societal benefits. We argue that holding all corporations accountable for this purpose is consistent with the benefits that are understood to derive from markets and competition. By identifying what allows some corporations to resist accountability for purpose, we discuss potential ways to reinforce market mechanisms requiring corporations to achieve societal benefit.