The COVID-19 pandemic and the consequences for economies around the globe have made many analysts, business leaders, scholars, politicians and interest groups call for a re-assessment of the purpose of business. The shareholder-driven way of doing business has led to extreme exploitation of natural and human resources. Mammon is in charge. While many hope to get back as soon as possible to business as usual in order to earn back what was lost and to forget about this horrible time, one thing is certain. The burden of the pandemic will be divided unequally – hitting those without financial or political leverage harder than those with. Exploitation will continue, and the younger generation will be left with an even heavier task of dealing with the negative consequences.
Business was never meant to exploit, and a business leader was never meant to be a profit-driven person focused on the short term and grabbing the low-hanging fruits. Business and entrepreneurship were meant to serve society and the flourishing of human beings and their communities. Business and entrepreneurship were not meant to set themselves apart from society, reap the benefits and dump the costs on the shoulders of society, communities and individuals. Business and entrepreneurship were meant to contribute and receive a fair return for their contribution, with a drive to keep on improving that contribution.
The post-COVID-19 world will have to force business leaders to look in the mirror and turn the direction of their businesses towards serving the common good. In order to do so, corporate governance structures and practices will have to be changed. The so-called Anglo-Saxon model of corporate governance with its focus on shareholders is a dead-end street. But even the Continental European model of corporate governance with its recognition of a say for a wider set of stakeholders needs an overhaul. This model adopted the spirit of the Anglo-Saxon model too implicitly. Scandals in big European firms are proof of that.
Corporate governance structures and practices in the post-COVID-19 decade will need to take the common good as their point of departure, not the shareholder. Shareholders will become well-respected partners, as will the society at large and employees. The dominant philosophy of the corporation as a nexus-of-contracts needs to be replaced by a view of business as a community of persons working together in cooperative business relationships toward the shared purpose of contributing to human flourishing. There is just no alternative, and it is better to accept this conclusion sooner rather than later.