Single-objective versus multi-objective theories of the firm: using a constitutional perspective to resolve an old debate

Our article contributes to the recurring debate on whether and how firms in competitive markets should pursue objectives other than purely financial ones. Two competing approaches dominate this debate: one favors profit maximization as a single objective; the other favors multiple, partly social objectives. This debate has been going on for decades without approaching consensus. Our article offers an explanation for this intellectual stalemate and proposes a constitutional perspective that reconciles and improves the two seemingly antagonistic approaches. At the core of our proposed solution lies the distinction between the sub-constitutional level of action (choices within constraints) and the constitutional level of rules (choices among constraints). Using this distinction, we argue that both single-objective and multi-objective theories of the firm play equally important, but categorically different roles.