Shareholder primacy, corporate social responsibility, and the role of business schools

Nigel Smith, David Rönnegard

Research output: Contribution to journalArticlepeer-review

29 Citations (Scopus)


This paper examines the shareholder primacy norm (SPN) as a widely acknowledged impediment to corporate social responsibility and explores the role of business schools in promoting the SPN but also potentially as an avenue for change by addressing misconceptions about shareholder primacy and the purpose of business. We start by explaining the SPN and then review its status under US and UK laws and show that it is not a likely legal requirement, at least under the guise of shareholder value maximization. This is in contrast to the common assertion that managers are legally constrained from addressing CSR issues if doing so is inconsistent with the economic interests of shareholders. Nonetheless, while the SPN might be muted as a legal norm, we show that it is certainly evident as a social norm among managers and in business schools—reflective, in part, of the sole voting rights of shareholders on corporate boards and of the dominance of shareholder theory—and justifiably so in the view of many managers and business academics. We argue that this view is misguided, not least when associated with claims of a purported legally enforceable requirement to maximize shareholder value. We propose two ways by which the influence of the SPN among managers might be attenuated: extending fiduciary duties of executives to non-shareholder stakeholders and changes in business school teaching such that it covers a plurality of conceptions of the purpose of the corporation.
Original languageEnglish
Pages (from-to)463-478
Number of pages16
JournalJournal of Business Ethics
Issue number3
Early online date16 Nov 2014
Publication statusPublished - Mar 2016


  • Corporate social responsibility
  • Shareholder primacy
  • Shareholder value maximization
  • Business schools
  • Corporate law
  • Fiduciary duties
  • Benefit corporations


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