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Cited by 1,974

The DOI matches its Crossref record; 1 of the 1 references it cites were found in a registry or an index.

Value Maximization, Stakeholder Theory, and the Corporate Objective Function

Jensen, Michael C.·2002·Business Ethics Quarterly
DOI 10.2307/3857812
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Abstract

In this article, I offer a proposal to clarify what I believe is the proper relation between value maximization and stakeholder theory, which I call enlightened value maximization. Enlightened value maximization utilizes much of the structure of stakeholder theory but accepts maximization of the long-run value of the firm as the criterion for making the requisite tradeoffs among its stakeholders, and specifies long-term value maximization or value seeking as the firm’s objective. This proposal therefore solves the problems that arise from the multiple objectives that accompany traditional stakeholder theory. I also discuss the Balanced Scorecard, which is the managerial equivalent of stakeholder theory, explaining how this theory is flawed because it presents managers with a scorecard that gives no score—that is, no single-valued measure of how they have performed. Thus managers evaluated with such a system (which can easily have two dozen measures and provides no information on the tradeoffs between them) have no way to make principled or purposeful decisions. The solution is to define a true (single dimensional) score for measuring performance for the organization or division (and it must be consistent with the organization’s strategy), and as long as their score is defined properly, (and for lower levels in the organization it will generally not be value) this will enhance their contribution to the firm.

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Metadata

Authors
Jensen, M. C.
Venue
Business Ethics Quarterly
Publisher
Cambridge University Press (CUP)
Published
2002-04
Volume
12
Issue
2
Pages
235-256
ISSN
  • 1052-150X (ISSN-L)
  • 2153-3326
DOI
10.2307/3857812
OpenAlex
W2333049154
Cited by
1,974
References
1
FWCI
51.46
Type
journal article
Language
en
Open access
closed

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