Alternative Objective Functions for Firms

An important part of the meaningfulness of an organization - both for society and for individual employees - is tied to the purpose of the organization. The current mainstream view is that the objective of business is to maximize profit; some argue that it ought to be something different; and others argue that for many firms it already is something different. This debate has been hampered by the fact that the “something different” has not been rigorously formulated. To address this gap, we define five different relationship types between variables in an objective function and, from that basis, develop and present the resulting range of nine alternative objective functions for firms. Having outlined the alternative objective functions, we discuss how their development contributes to conceptual, empirical, and normative debates about organizational purpose. Removing the conventional assumption of profit maximization as the sole management principle opens up new horizons for the development of new, more nuan...