IDEAS home Printed from https://ideas.repec.org/p/hal/wpaper/hal-00823521.html
   My bibliography  Save this paper

Corporate Profit, Entrepreneurship Theory and Business Ethics

Author

Listed:
  • Radu Vranceanu

    (ESSEC Business School)

Abstract

Economic profit is produced by entrepreneurs, those special individuals able to detect and seize as yet unexploited market opportunities. In general capitalist firms manage to deliver positive profits even in the most competitive environments. They can do so thanks to internal entrepreneurs, a subset of their employees able to drive change and develop innovation in the workplace. This paper argues that the goal of profit maximization is fully consistent with the corporation doing good for society. However, there is little justification for corporations to transfer the whole economic profit to shareholders. Economic agents entitled to receive the economic profit are precisely those who create this profit, namely the internal entrepreneurs.

Suggested Citation

  • Radu Vranceanu, 2013. "Corporate Profit, Entrepreneurship Theory and Business Ethics," Working Papers hal-00823521, HAL.
    • Handle: RePEc:hal:wpaper:hal-00823521
    Note: View the original document on HAL open archive server: https://essec.hal.science/hal-00823521
    as

    Download full text from publisher

    File URL: https://essec.hal.science/hal-00823521/document
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Moore, Geoff, 2008. "Re-Imagining the Morality of Management: A Modern Virtue Ethics Approach," Business Ethics Quarterly, Cambridge University Press, vol. 18(4), pages 483-511, October.
    2. Roland Bénabou & Jean Tirole, 2010. "Individual and Corporate Social Responsibility," Economica, London School of Economics and Political Science, vol. 77(305), pages 1-19, January.
    3. Jensen, Michael C. & Meckling, William H., 1976. "Theory of the firm: Managerial behavior, agency costs and ownership structure," Journal of Financial Economics, Elsevier, vol. 3(4), pages 305-360, October.
    4. Marie-Laure Salles-Djelic & Radu Vranceanu, 2007. "Moral Foundations of Management Knowledge," SciencePo Working papers Main hal-01891991, HAL.
    5. Williamson, Oliver E, 1983. "Organization Form, Residual Claimants, and Corporate Control," Journal of Law and Economics, University of Chicago Press, vol. 26(2), pages 351-366, June.
    6. Williamson, Oliver E, 1993. "Calculativeness, Trust, and Economic Organization," Journal of Law and Economics, University of Chicago Press, vol. 36(1), pages 453-486, April.
    7. Koehn, Daryl, 1995. "A Role for Virtue Ethics in the Analysis of Business Practice," Business Ethics Quarterly, Cambridge University Press, vol. 5(3), pages 533-539, July.
    8. Friedman, Milton, 1966. "Essays in Positive Economics," University of Chicago Press Economics Books, University of Chicago Press, number 9780226264035, April.
    9. Fama, Eugene F & Jensen, Michael C, 1983. "Separation of Ownership and Control," Journal of Law and Economics, University of Chicago Press, vol. 26(2), pages 301-325, June.
    10. vranceanu, radu, 2007. "The moral layer of contemporary economics: A virtue-ethics perspective," ESSEC Working Papers DR 07006, ESSEC Research Center, ESSEC Business School.
    11. Todd R. Zenger & William S. Hesterly, 1997. "The Disaggregation of Corporations: Selective Intervention, High-Powered Incentives, and Molecular Units," Organization Science, INFORMS, vol. 8(3), pages 209-222, June.
    12. Shaker A. Zahra & Daniel F. Jennings & Donald F. Kuratko, 1999. "The Antecedents and Consequences of Firm-Level Entrepreneurship: The State of the Field," Entrepreneurship Theory and Practice, , vol. 24(2), pages 45-65, December.
    13. Vranceanu, Radu, 2005. "The Ethical Dimension of Economic Choices," ESSEC Working Papers DR 05001, ESSEC Research Center, ESSEC Business School.
    14. Herbert Kierulff & Grant Learned, 2009. "Limiting Laissez Faire Profits: The Financial Implications," Journal of Business Ethics, Springer, vol. 90(3), pages 425-436, December.
    15. Solomon, Robert C., 2003. "Victims of Circumstances? A Defense of Virtue Ethics in Business," Business Ethics Quarterly, Cambridge University Press, vol. 13(1), pages 43-62, January.
    16. Sigmund Wagner-Tsukamoto, 2007. "Moral Agency, Profits and the Firm: Economic Revisions to the Friedman Theorem," Journal of Business Ethics, Springer, vol. 70(2), pages 209-220, January.
    17. Audi, Robert, 2012. "Virtue Ethics as a Resource in Business," Business Ethics Quarterly, Cambridge University Press, vol. 22(2), pages 273-291, April.
    18. Robert A. Burgelman, 1983. "Corporate Entrepreneurship and Strategic Management: Insights from a Process Study," Management Science, INFORMS, vol. 29(12), pages 1349-1364, December.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. repec:hal:journl:hal-00823521 is not listed on IDEAS
    2. Patricia Grant & Surendra Arjoon & Peter McGhee, 2018. "In Pursuit of Eudaimonia: How Virtue Ethics Captures the Self-Understandings and Roles of Corporate Directors," Journal of Business Ethics, Springer, vol. 153(2), pages 389-406, December.
    3. Katsuhiko (Katsu) Shimizu, 2012. "Risks of Corporate Entrepreneurship: Autonomy and Agency Issues," Organization Science, INFORMS, vol. 23(1), pages 194-206, February.
    4. Andrew West, 2018. "After Virtue and Accounting Ethics," Journal of Business Ethics, Springer, vol. 148(1), pages 21-36, March.
    5. Ferrell, Allen & Liang, Hao & Renneboog, Luc, 2016. "Socially responsible firms," Journal of Financial Economics, Elsevier, vol. 122(3), pages 585-606.
    6. Chiaju Kuo & Yung-Yu Lai & Shaio Yan Huang & Chung-Jen Fu, 2011. "Internal Corporate Governance Mechanisms: Evidence From Taiwan Electronic Companies," The International Journal of Business and Finance Research, The Institute for Business and Finance Research, vol. 5(4), pages 57-74.
    7. Boubaker, Sabri & Chebbi, Kaouther & Grira, Jocelyn, 2020. "Top management inside debt and corporate social responsibility? Evidence from the US," The Quarterly Review of Economics and Finance, Elsevier, vol. 78(C), pages 98-115.
    8. Dak-Adzaklo, Cephas Simon Peter & Wong, Raymond M.K., 2024. "Corporate governance reforms, societal trust, and corporate financial policies," Journal of Corporate Finance, Elsevier, vol. 84(C).
    9. Stephen J. Smulowitz & Didier Cossin & Hongze Lu, 2023. "Managerial Short-Termism and Corporate Social Performance: The Moderating Role of External Monitoring," Journal of Business Ethics, Springer, vol. 188(4), pages 759-778, December.
    10. Crosno, Jody L. & Tong, Pui Ying, 2018. "Just going through the motions? An empirical investigation of control, compliance, and performance in franchisor-franchisee relationships," Journal of Business Research, Elsevier, vol. 92(C), pages 360-373.
    11. Ormazabal, Gaizka, 2018. "The Role of Stakeholders in Corporate Governance: A View from Accounting Research," CEPR Discussion Papers 12775, C.E.P.R. Discussion Papers.
    12. Yoshikatsu Shinozawa, 2007. "The Effect of Organisational Form on Investment Products: an empirical analysis of the UK unit trust industry," Corporate Governance: An International Review, Wiley Blackwell, vol. 15(6), pages 1244-1259, November.
    13. Jacqueline Christensen & Pamela Kent & Jenny Stewart, 2010. "Corporate Governance and Company Performance in Australia," Australian Accounting Review, CPA Australia, vol. 20(4), pages 372-386, December.
    14. Humphry Hung & Reuben Mondejar, 2005. "Corporate Directors and Entrepreneurial Innovation," Journal of Entrepreneurship and Innovation in Emerging Economies, Entrepreneurship Development Institute of India, vol. 14(2), pages 117-129, September.
    15. Ben Ali Chiraz & Cédric Lesage, 2010. "Ownership concentration and audit fees: do auditors matter most when investors are protected least?," Post-Print hal-00476923, HAL.
    16. Ajit Dayanandan & Han Donker & John Nofsinger, 2018. "Corporate goodness and profit warnings," Review of Quantitative Finance and Accounting, Springer, vol. 51(2), pages 553-573, August.
    17. Ni, Xiaoran & Song, Wei & Yao, Jiaquan, 2020. "Stakeholder orientation and corporate payout policy: Insights from state legal shocks," Journal of Banking & Finance, Elsevier, vol. 121(C).
    18. Dulce Redín & Reyes Calderón & Ignacio Ferrero, 2014. "Exploring the Ethical Dimension of Hawala," Journal of Business Ethics, Springer, vol. 124(2), pages 327-337, October.
    19. Armstrong, Christopher S. & Guay, Wayne R. & Weber, Joseph P., 2010. "The role of information and financial reporting in corporate governance and debt contracting," Journal of Accounting and Economics, Elsevier, vol. 50(2-3), pages 179-234, December.
    20. Renneboog, Luc, 2000. "Ownership, managerial control and the governance of companies listed on the Brussels stock exchange," Journal of Banking & Finance, Elsevier, vol. 24(12), pages 1959-1995, December.
    21. Bu, Luofan & Chan, Kam C. & Choi, Ahrum & Zhou, Gaoguang, 2021. "Talented inside directors and corporate social responsibility: A tale of two roles," Journal of Corporate Finance, Elsevier, vol. 70(C).

    More about this item

    Keywords

    Corporate Goal; Entrepreneurship Theory of the Firm; Internal Entrepreneurs; Profit; Social Role of Business; Virtue Ethics;
    All these keywords.

    JEL classification:

    • A11 - General Economics and Teaching - - General Economics - - - Role of Economics; Role of Economists
    • A13 - General Economics and Teaching - - General Economics - - - Relation of Economics to Social Values
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • M14 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Corporate Culture; Diversity; Social Responsibility
    • P20 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies - - - General

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:hal:wpaper:hal-00823521. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: CCSD (email available below). General contact details of provider: https://hal.archives-ouvertes.fr/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.