What Do We Want Corporations to Do?

• Author: G. Tracy Mehan III
• Pages: 12-16

12 Best of the Books: Ref‌lections on Recent Literature

What Do We Want

Corporations to Do?

By G. Tracy Mehan III

Environmental Protection and the Social Responsibility of Firm s:

Perspecti ves From Law, Economics, and B usiness, edited by Bruce

L. Hay, Robert N. Stavins, and Ric hard H.K. Vietor. Resources for the

Future. 218 pages.

From the January/ February 2006 issue of The Environmenta l Forum.

The recent passing of Peter F. Drucker,

America’s greatest ma nagement theo-

rist, is a tting time to reect on the

nature and purpose of the most consequential

of economic institutions, the business cor-

poration. Created by law, and endowed with

corporate personality and limited liability,

it is quintessentially human institution, an

engine of fabulous wealth creation and the foe

of grinding poverty. It is also ”the destroyer

of worlds” on the cutting edge of what Joseph

Schumpeter termed capitalism’s “creative

destruction” of old ways, cultures, and eco-

nomic structures. It is at the center of today’s

controversies over globalization, trade, and

economic concentration.

Drucker claimed that, “Indeed, a business that does not show a prot at

least equal to its cost of capital is irresponsible; it wastes society’s resources.

Economic performance is the base without which business cannot discharge

any other responsibilities, cannot be a good employer, a good citizen, a good

neighbor.” But economic performance is not the only responsibility of busi-

ness. “Every organization must assume full responsibility for its impact

on employees, the environment, customers, and whomever or whatever it

touches,” said Drucker.