Corporate Purpose: The Role of Law and Culture

Corporate Purpose: The Role of Law and Culture

Many companies are now seeking a way to signal their purpose – their reason for being beyond profit. Yet a key barrier that companies face is the dominant rhetoric of shareholder value maximization, which urges managers to focus on short term profits, often at the expense of society and the environment. We ask if new 'purpose-driven' solutions are a response to corporate law being seen as too restrictive, or a response to certain cultural factors that drive behaviour. Our statistical analysis suggests that law and culture both play an important role. 

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