Reimagining a Corporation’s Purpose in the Great Recession Era and Meeting Threats to Free Enterprise

The current economic climate is obviously a difficult one for U.S. corporations: the economy is sluggish, the housing market has yet to fully rebound, consumer demand is down, and Wall Street’s relationship with Washington appears to have hit an all-time low. To add to these mounting difficulties, corporate America’s current focus appears to have shifted heavily toward maximizing shareholder profits and executive compensation at the expense of long-term corporate growth and business stakeholders, including employees, investors and communities. “Corporate short-termism” and profit by any means necessary are veritable threats to free enterprise and the health of the U.S. capital markets.

On January 30, as part of a series on corporate purpose, Brookings hosted a discussion on the substantial challenges modern-day corporations face as they struggle to rebound in an historically difficult economic environment, which is seemingly bound by different ethics than eras past. Moderated by Governance Studies Vice President Darrell West, a panel of experts explored how the short-term focus of shareholders and investors affects corporate behavior and government policy; how to encourage longer time horizons among shareholders and executives; how companies can best serve the interests of its stakeholders; and how corporate America can best meet the challenges presented by the Great Recession.