Seoul National University forum explores corporate governance and stakeholder capitalism

A company should do more than increase returns for its shareholders, Oxford professor Colin Mayer told a Seoul forum. It should create profitable solutions to problems facing society, while accounting for the effects of its activities on society and the environment.

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Companies should move beyond the existing view of corporations as organizations that simply increase shareholder profits and evaluate value by considering the impact of business activities on society and the environment.

Mayer, an emeritus professor at Oxford’s Saïd Business School, delivered the keynote address online at the first monthly forum hosted by Seoul National University’s Future Economic Research Center. The event, held in Seoul, focused on corporate governance and stakeholder capitalism. Seoul National University professor emeritus Kim Byung-yeon chaired the discussion, which brought together around 10 scholars and experts from South Korea and abroad, both online and in person.

Speaking on “The Purpose of the Corporation in the 21st Century and Implications for Korea,” Mayer argued that social responsibility should not sit outside a company’s main business. “Companies should move beyond the existing view of corporations as organizations that simply increase shareholder profits and evaluate value by considering the impact of business activities on society and the environment,” he said. He added that providing “profitable solutions” to social problems should be a core management strategy, rather than an extra form of social contribution or ESG activity.

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The purpose of a company is not to make profits by causing social problems, but to provide profitable solutions to the problems society faces.

Mayer proposed five elements for putting that purpose into practice: clarifying the company’s purpose, linking it to the business and organization, establishing an ownership structure that supports it, connecting it to executive compensation, and ensuring that management acts on it. He placed particular emphasis on ownership structures that can support a company’s long-term purpose over time.

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This is not an ancillary form of social contribution or ESG activity, but a core business strategy.

The forum also examined South Korea’s governance reform debate. Participants discussed measures to protect minority shareholders, but Mayer warned that excessively weakening controlling shareholders could leave companies more focused on short-term shareholder value, depending on the interests of private equity and hedge-fund investors. Later discussions covered the strengths and limits of family-centered ownership at major Korean companies, ways to reconcile controlling and minority shareholder interests, and related legal and regulatory challenges.

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It will provide important implications for our society regarding for whom and for what purpose companies should be operated.