The case for a thick shareholder concept

AuthorKatherina Pattit,Jason Pattit
Published date01 December 2019
Date01 December 2019
Bus Soc Rev. 2019;124:497–514.
In a 1990 Fortune article about America’s most admired companies, Coca-Cola’s rank on the list is
attributed to its CEO Roberto Goizueta shifting his focus from consumer marketing and boosting sales
to maximizing shareholder returns. Goizueta quoted as saying that he wrestles over how to improve
value and financial stability “from the time I get up in the morning to the time I go to bed. I even
think about it when I’m shaving. But I use an electric razor, so I think I’m safe.” The article’s authors
conclude that giving shareholders what they want, an outstanding year-over-year return, is the way for
a company to improve its position on the list.
DOI: 10.1111/basr.12188
The case for a thick shareholder concept
© 2019 W. Michael Hoffman Center for Business Ethics at Bentley University. Published by Wiley Periodicals, Inc., 350 Main Street, Malden,
MA 02148, USA, and 9600 Garsington Road, Oxford OX4 2DQ, UK.
1Department of Ethics and Business Law,
Opus College of Business, University of St.
Thomas, Minneapolis, MN, USA
2Department of Management, Opus
College of Business, University of St.
Thomas, Minneapolis, MN, USA
Jason Pattit, Department of Management,
Opus College of Business, University of St.
Thomas, TMH 443, 1000 LaSalle Avenue,
Minneapolis, MN 55403, USA.
Markets, corporations, shareholding, management, law, and
ethics are all human constructs. A human element seems
essential to their existence. Yet, the predominant conception
of shareholders as used in academia as well as the business
world is thin, generic, and inanimate. This article argues
that a thick conception of shareholders as human beings is
needed to legitimize and improve managerial decision mak-
ing under value pluralism, accurately reflect empirical real-
ity of capital markets, and meet moral demands to respect
the dignity of the human person. Drawing on the philosoph-
ical idea of thick evaluative concepts, the article explores
how this idea can be applied to shareholders and begins to
examine some of the implications of considering sharehold-
ers’ humanity for the responsibilities of and relationships
between managers and shareholders.
dignity, humanity, shareholders, thick concepts
It would have been interesting to ask rank-and-file Coca-Cola employees if they were as fixated on
maximizing shareholder value as Goizueta. Most employees were likely to be more concerned with
performing their job at a high-level. However, with many managers and lower-level employees hold-
ing shares in Coca-Cola, it is not impossible to believe they did have some interest in the performance
of Coca-Cola’s stock. But would they all state that their primary, let alone only, interest is maximizing
stock price? And would Coca-Cola’s employees choose to maximize value at the expense of work-
life balance, the environment, and other concerns? We would classify a view that only considers the
economic motivations of these shareholders as thin.
In juxtaposition to the previous example, consider the case of Snap Inc., the company that devel-
oped and maintains the popular image messaging and multimedia mobile app Snapchat, which held its
IPO on March 2, 2017. Snap’s prospectus states that its shares carryno voting rights now or in the fu-
ture. The prospectus also states that it is questionable whether investors will ever see a return. So why
invest if there are no voting rights and the prospectus questions the ability of the business to achieve
profitability? For some, there is the prestige of owning shares in one of the few “unicorns” to go pub-
lic. Others have a strong affinity for Snap’s service. At last, ownership of Snap shares could simply be
irrational exuberance based on the popularity of social media companies in the popular business press.
The Snap anecdote provides a thick view of shareholders and the multiplicity of their motives
for investing. Some motivations are pro-social in nature: to build a community, to help the business
become sustainable, to take part in a social movement. This example also shows that investors can
simultaneously possess multiple motivations for shareholding. Thus, our goal in this article is to re-
invigorate discussion about who shareholders are and what they want. We argue that shareholders
are not the thin, one dimensional entities with a singular goal that they have come to be viewed as.
Rather, shareholders are human beings who have many roles and motivations, and can hold multiple,
sometimes conflicting, values.
Acknowledging the complexity of the values held by shareholders complicates decision making,
especially if decisions take multiple objectives into account, but should managers assume that eco-
nomic objectives supersede all others? McDonald (2017, p. 577) argues that “we have allowed our-
selves to accept the idea that dealing in abstractions is a suitable alternative to dealing with the real
thing.” However, is it enough to accept this view simply because it is easier to make decisions based
on a single objective? Van der Linden and Freeman (2017) have argued in the case of profit that apply-
ing the notion of a thick evaluation can offer an alternative to using profit maximization as a singular
managerial decision objective. We suggest, by extension, that decision making could be improved if a
more realistic, thick conception of shareholders as humans with multiple interests is adopted.
In the next section, we discuss the notion of thick evaluative concepts. We then briefly provide
definitional clarity and historical context about the concepts of equity and shareholders. The roots of
the thin view of shareholders and attempts to develop a thicker conception in key academic disciplines
are then traced, followed by examples of a thick view of shareholders in practice. We then present our
arguments for why a thick conception is needed and conclude with an examination of the implications
for managers and shareholders.
A consistent challenge to establishing the humanity of shareholders lies in the multiplicity and incom-
mensurability of human values and motives and the potential for value and goal conflict. This value
pluralism leads to a preference for a single managerial goal, profit maximization, which requires a

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