The Multipurpose Corporation as a Driver for Sustainable Value Creation

The nature of the debate on the role of business in society strongly suggests a cyclical nature, with constant attempts to balance different interests and perspectives. To overcome the illusion of solving this conundrum, this article proposes an alternative approach, multipurpose capitalism. It posits that companies should compete not only on their products and services, but also on their different purpose profiles. It is left to consumers, workers, and investors to decide where to shop, work, and invest. The article offers a framework and methodology to create a comprehensive ecosystem that enables this matching process and suggests ways to overcome the challenges along the way.

  • Prof. Dr. Michael Hilb

    Chair, Board Foundation

  • Prof. Dr. Michael Hilb

    Chair, Board Foundation

Disentangling an Eternal Debate

Debates about the role of business in society seem to repeat themselves. The debates that went under the label of ‘business ethics’ in the 1980s and ‘corporate social responsibility’ (CSR) in the 2000s are summarized by ‘environmental, social and governance’ (ESG) in the 2020s. Although the focus of attention has shifted, i.e., from corporate behavior to interactions with society and the planet, the fundamental philosophical issues remain the same and fit well within the paradigmatic cycles of ‘public action’ and ‘private interest’ as articulated by Hirschman (1982). The cyclical nature of the debate strongly suggests that it can never be resolved given its philosophical and etymological nature (Margolis and Walsh 2003). The wanderings are indicative of the balancing of multiple perspectives rather than the unwillingness to find a resolution of the underlying issues (Hilb 2005).Does this mean that trying to find a solution to the challenge is pointless? Not at all, because the regular resurgence of the issue is a clear indication that it matters to society and business. It is inherent in capitalism that citizens constantly question the role of corporations in society. Ultimately, it is about the challenges and conflicting goals of combining the tried and tested concepts of ownership, citizenship, and stewardship (Hilb 2021a).

We believe that a more promising way to address the challenge is to change the underlying assumption: Rather than attempting to persuade, educate, or even enforce a common normative standard, we advocate taking the diversity of interests and perspectives as a given and even as a strength, and designing a governance framework that enables and defines the coexistence of business activities based on a variety of philosophical perspectives. The Purpose of Purpose

The Purpose of Purpose

“The purpose of governance is the governance of purpose.” (Mayer 2018, 129)

It is worth revisiting the roots of corporate governance and its original rationale. In the early phase of the evolution of modern corporate governance, which can be traced back to 16th century England , purpose played a central role as it was a means of granting corporations a license to operate in a clearly defined area and, in this sense, limit their spheres of activity. In this world, the definition of the company’s purpose was legally binding and commercially essential: it represented a clearly defined license to operate. Its renewal depended on how well the purpose was fulfilled and beneficial to the Crown.

With the rapid global expansion of the British Empire, the Crown faced a double challenge. On the one hand, it was overwhelmed by the need to build a global trading system to realize and monetize territorial gains with its apparatus that had strong administrative and military capabilities but limited commercial acumen. Second, it simply lacked the knowledge and ability to oversee all areas in the new markets to issue and monitor narrow charters. Therefore, the Crown started granting mercantilist corporations general-purpose charters that gave it the right to manage all trade between England and its colonies.

The granting of general-purpose charters to companies operating worldwide eventually led to strong domestic pressure to reform and relax the narrow charter system. The Companies Act of 1862 culminated and consolidated legal developments in England by allowing companies to freely choose their form of incorporation and purpose. This general-purpose system is still prevalent in many jurisdictions today. Although we have seen the emergence of several forms for organizing collective activities, be it trusts, foundations, associations, or partnerships, the legal concept of the corporation remains dominant to this day.

Multipurpose Capitalism

Based on an understanding of the history of modern corporate governance, we propose to return to the roots and focus on purpose, but also recognize the limitations of its original understanding. Thus, we propose that purpose shall

  • not primarily serve state power but all stakeholders,
  • not be legally enforced but commercially enabled, and
  • not reflect what companies intend to do, but rather how they do it.

In addition to the refinement of purpose, three other adjustments are proposed:

  • the involvement of all stakeholders as judges of purpose
  • the centrality of the market in guiding these judgments
  • the acceptance or even promotion of different purposes based on the different perspectives and philosophies underlying these judgments.

This is where multipurpose capitalism comes in. Multipurpose capitalism can be defined as an economic system in which firms compete not only with different products and services, but also with different and distinct purposes that are judged by their stakeholders.
Therefore, firms must determine their purpose profile with full knowledge of how it may be perceived by their key stakeholders, i.e., employees, customers, investors, business partners, and the public, and in their respective markets, i.e., capital, product, labor, utility, and opinion markets. At the same time, the respective stakeholders can decide with whom they want to do business. They can choose a partner whose philosophies match theirs. This will not only lead to a better alignment of needs, but also to action rather than talk: Stakeholders do not have to complain about corporate behavior but can act instead. Meanwhile, companies are not forced to lobby and influence others, but can put their convictions into action and turn them into a competitive advantage.

How would multipurpose capitalism work in real life? As the approach depends on transparent and reliable information about commitment and compliance, a widely accepted and understood framework and evaluation methodology are essential.

The Multipurpose Corporation

At the heart of multipurpose capitalism is the multipurpose corporation, which must focus on defining its purpose and aligning its activities with it. In this world, the role of governance is not so much to prescribe responsibility as to provide transparency so that each actor can be held accountable for what it commits to. Therefore, the different business concepts compete with instead of discrediting each other. It is incumbent on workers, consumers, and investors to decide which company they want to work for, buy its products and invest in, rather than being forced to behave in a certain way that may run counter to their philosophies.

As a framework, we propose the Value Growth Star, a structure that allows companies to show their value growth in five directions: toward the company, which drives its future prosperity; toward the proprietors, e.g., in the form of dividends or value growth; toward people working for the company, e.g., in the form of salaries and skill building; toward the public, e.g., in the form of taxes and capacity building; and toward the planet, e.g., by reducing emissions or regenerating nature. Value creation is understood as a net concept, i.e., the difference between the value created and the value diminished by a company.

While most people think of value in financial terms, value growth can also be represented in other forms of capital, such as human, social, intellectual, or natural capital (Mayer 2018). To make the framework comparable, a reserve currency needs to be defined, as well as a mechanism for determining its exchange rate. Given the strong market orientation of the concept, we propose that financial capital be declared the reserve currency and that a global marketplace be established where the various value currencies can be traded. We believe that the value that companies can generate by using the Value Growth Star will encourage them to participate in the value market.

Since the companies differ in size, the value added should not be presented in absolute terms but rather in relative terms, i.e., what percentage of the value-added flows in the five directions. This gives each stakeholder a clear profile of what the company considers a priority. Underlying the relative approach is also the objective that the methodology proposed does not intend to provide an alternative approach to business valuation; its sole purpose is to provide transparent and structured profile information to stakeholders.

Transitioning to a Multipurpose World

A prerequisite for such an approach to work is that the concept is not only embraced by a critical number of stakeholders, but also serves as a basis for decision making. As with any new idea, it is therefore critical to get past the ‘tipping point’ (Gladwell 2000) and achieve strong network effects (Varian, Farrell, and Shapiro 2004) for the concept to gain acceptance (Utterback and Abernathy 1975). This requires a well-understood framework, a sound methodology, and clear benefits for users, both companies and their stakeholders. In this sense, the operational challenges of building such a system can be compared to those of building a platform business, where the needs of both platform operators and users must be met (Hilb 2021b). Therefore, all stakeholders and companies involved need to recognize that greater diversity will provide them with more appropriate choices and reduce the costs they currently incur in terms of risk management, public affairs, or public relations.

Despite these considerations, there are three important challenges to overcome:

  • The demand challenge: Do stakeholders even appreciate the diversity of choice, and as a result, is it attractive for companies to differentiate themselves? Or will we see a natural evolution toward a mainstream purpose?
  • The trust challenge: Do stakeholders trust the concept, methods and data generated, or can such an approach be easily discredited?
  • The complexity challenge: Can the concept and the methods behind it be kept as simple as required, given the variety of contexts – be they industries, regions, or ownership structures?

To address these challenges, it is essential to consider multipurpose capitalism not in isolation, but in conjunction with two other concepts to ensure that the accountability offered by multipurpose capitalism is complemented by the principles of responsibility and integrity (Hilb 2021a).

In that context, responsibility is defined as the obligation to perform a given task in compliance with the established rules, i.e., to “respond” to the agreed-upon rules. This contrasts with accountability, which refers to the need for actors to “stand in” for the outcome of their or their organizations’ actions, which goes beyond compliance with legally enforceable rules. Finally, integrity is described as behavior in which words and actions are internally and externally coherent, that is, when they are “one.” Integrity as such is not tied to any values.
Hence, a multipurpose world can only function if individuals and institutions live up to their commitments. It depends on open and transparent communication and consistent action. Therefore, integrity of words and actions is a sine qua non for the system to survive and thrive.


There is never a simple solution to a complex problem, but there can be a range of smart solutions that contribute to the solution of a complex problem. The concept of a multi-purpose society aims to belong to the latter category by considering the diversity of interests, philosophies, and approaches. By disentangling the endless debates about the role of business in society and the virtues and vices of capitalism, multipurpose capitalism accepts that there is a variety of different notions of what constitutes a desirable outcome, but also believes in the power of capitalism to match economic actors who seek partners who share similar aspirations. Goal setting becomes a concept of alignment rather than anger, of collaboration rather than confrontation, of dialogue rather than disenchantment.

The obstacles on the road to realizing the multi-purpose world are considerable, rocks rather than stones. Rocks, however, only fall after severe earthquakes or volcanic eruptions. Let us not be intimidated by natural disasters but consider them as valuable indicators of an imbalance that requires comprehensive solutions. We should not waste energy on removing the rocks but build various pathways around them to make the overall system more resilient and better prepared for future inevitable eruptions.


Gladwell, M. (2000). The tipping point: How little things can make a big difference. Little, Brown.

Korine, H., & Gomez, P. Y. (2014). Strong managers, strong owners: Corporate Governance and Strategy. Cambridge University Press.

Hilb, M. (2005): Corporate social impact innovation – An empirical study of corporate citizenship initiatives in Swiss-based multinational firms. Doctoral thesis. University of St. Gallen.

Hilb, M. (2021a): Circular capitalism: Unlocking the power of ownership and citizenship through stewardship. SN Business & Economics 1, 14, 1-7.

Hilb, M. (2021b): From corporate to ecosystem governance. In Governance of Ecosystems, Hilb, M. 11-22. Haupt.

Hirschman, A. O. (1982). Shifting involvements: Private interest and public action. Princeton University Press.

Margolis, J. D., & Walsh, J. P. (2003). Misery loves companies: Rethinking social initiatives by business. Administrative science quarterly, 48(2), 268-305.

Mayer, C. (2018). Prosperity: Better business makes the greater good. Oxford University Press.

Utterback, J. M., & Abernathy, W. J. (1975). A dynamic model of process and product innovation. Omega, 3(6), 639-656.

Varian, H. R., Farrell, J., & Shapiro, C. (2004). The economics of information technology: An introduction. Cambridge University Press.


This article was published as a chapter in the book Governance of Sustainability in September 2023.


Other Insights from this theme

  • Board News

    The Swiss Institute of Directors Partners with the Chartered Governance Institute

  • Board Views

    From Corporate Governance of Sustainability to Sustainable Corporate Governance

    What is the best way to integrate sustainability into the corporate governance framework? Boards of directors have chosen two distinct paths: the functional way, which focuses on corporate governance of sustainability, and the foundational approach, which leads to sustainable corporate governance. This article assesses the merits and limitations of both approaches and calls for a transition to sustainable governance. This requires board members to engage regularly with stakeholders and to continuously debate the underlying assumptions to further develop the governance framework as required.

  • Board News

    Board Foundation Chair to Join the ICGN Global Governance Committee

  • Board News

    The GNDI Global Director Report 2023 Published

  • Board Guides

    Primer on Climate-related Directors’ Duties

  • Board Views

    The Board as Driver of Sustainable Change

    Responsibility is key to good governance. The article links corporate citizenship with innovation, urging boards to support social impact.

  • Board Views

    Striving for Excellence in Venture Governance

    The contribution of the venture board to entrepreneurial value creation, and its pivotal role in venture ecosystems, is often overlooked despite a long history of venture governance. History teaches us six principles of excellence in venture governance.

  • Board Views

    The Promise and Perils of Agile Governance

    Agility as a leadership principle has gained enormous importance in recent years. Many companies proclaim agility as a new leadership culture that is better aligned to future opportunities and challenges. At the same time, companies must adhere to corporate governance principles, some of which conflict with agility principles. This article presents considerations for improving the compatibility of agile leadership principles with the principles of effective corporate governance.

  • Board Views

    From Corporate to Ecosystem Governance

    Mastering ecosystems is increasingly seen as key to strategic value creation in highly dynamic environments. The role of governance has become a key differentiator between organizations that win or lose from the ecosystem game. This article discusses the importance of governance to the successful creation, development, and growth of ecosystems and presents eight challenges to be addressed along the ecosystem lifecycle. It continues with a taxonomy of ecosystem governance that provides a menu of effective governance mechanisms to address these challenges. The article concludes with advice on how best to manage the transition from a corporate governance to an ecosystem governance focus.

  • Board Guides

    Guidelines on the Corporate Governance of Climate Change and Biodiversity

  • Board Guides

    Guidelines on the Corporate Governance of Startups

  • Board Guides

    Guidelines on the Corporate Governance of SMEs