Taking Happiness Seriously: A Neo-Utilitarian Moral Foundation for Managerial Decision Making



Most managers and academics endorse the idea that the objective of firm is to make money for its owners – a normative perspective sometimes called the "shareholder model." In this paper, we argue that this is a bankrupt perspective, at least in our current state of social and economic affairs. To make that case, we examine the logic of utilitarianism, thus far an intellectual bastion against the encroaching arguments of stakeholder theorists and other critics of the shareholder model, and find that it provides very little support the shareholder model. We first briefly review the extant debate, detailing the eroding case for the shareholder model. We then trace the classic utilitarian argument for privileging shareholders above others, and note how each link in its logical chain is unsupported or contradicted by available evidence. Finally, we present an alternative objective of the firm – one which would be supported by utilitarian theory – namely, to increase the happiness of members of important stakeholder groups in ways that are compatible with increasing, or at minimum maintaining, the wealth of the firm.
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Pursey Heugens