Monday, August 19th, 2019

Is Money Best Purpose For Corporations?

Monday, February 3rd, 2014

American Hero News
Is Money Best Primary Goal for Corporations and Investors?
by Carter LeCraw, CFP

Carter LeCraw

It is often taken for granted that the primary goal of a business is to maximize profits. But, Zhao Xiao, a prominent Chinese economist who came to America to find out the secrets to our economy (and who was referenced in our last article, Market Economies with and without Churches) delivers a warning to that kind of thinking. In his interview with PBS, Xiao indicated that the goal of maximizing profits can be problematic. He said, "this can cause companies to look for quick results and nearsighted benefits. It can cause companies to disregard the means and earn money at the expense of destroying the environment, society and the livelihood of others, or endangering the entire competitive environment of the trade."

On the positive side Xiao believes that companies run by faith-driven values can serve as a real help to society. In addition, having what he calls, "a motivation that transcends profits" can benefit the business owner's innovation as he seeks to better serve his customers. Xiao gave the example of the Puritans who came to establish a "city upon a hill" and whose purpose for business was "for the glory of God". To be clear, Xiao is NOT opposed to profits. He even suggests, in his provocative article "Market Economies with Churches and Market Economies without Churches", that the spread of Christianity along with its more altruistic values would BENEFIT the Chinese economy. Based on Mr. Xiao's findings it appears that having a purpose that transcends profits can actually create a better environment for generating long-term financial success for a company.

Interestingly, there are companies today whose management specifically state that their purpose transcends profits. One in particular comes to mind. The first part of their mission statement reads, "We firmly believe that our Company is a powerful vehicle through which we channel our time, talent, and energy in pursuit of the fundamental goal of serving God by serving others." This is actually a public company whose stock is available for almost any investor to purchase.

If, as Mr. Xiao suggests, companies with more altruistic goals have a better chance at long term financial success, could it be the same for investors? Certainly that is a debate worth having. More importantly, what would happen to our culture and America as a whole if investors developed a purpose (for their investment capital) similar to the Puritans or the public company mentioned above? It's not to hard to see how it could have an enormously positive effect.

Having a "values first" perspective in business or with investments does come with risks. But, aren't those risks; the ones based on principle, the kind worth taking? Why don't we give it a try. America is worth it.

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