What is capitalism? Is it the greatest source of prosperity and freedom the world has ever seen, and an essential partner in solving the massive problems that we face? Or a menace on the verge of destroying the planet and our society? I think it may be both.

What is capitalism? Is it the greatest source of prosperity and freedom the world has ever seen or a menace on the verge of destroying the planet and our society? Rebecca Henderson argues that capitalism is the only solution to the massive problems that we face and explores the ways in which the private sector can help to reimagine capitalism so that it works for everyone.

Solving the great problems of our time will require reimagining capitalism by balancing the power of the free market with capable, democratically accountable government and strong civil society. Changing the purpose of the firm has the potential to make this process of rebalancing significantly easier. Purpose-driven firms could be catalysts in the drive for systemic change by supporting transformation within their own industries, supporting cooperation in the public interest and modelling public/private partnerships, and supporting the strengthening of global democracy. Transforming the purpose of the firm will require not only changing corporate law, but also changing the metrics used to control and measure firms and the social norms that constrain and guide corporate behavior.

The inaugural dean of Oxford University's Said Business School and academic director of the British Academy's Future of the Corporation program begins by identifying four alternatives to Milton Friedman's Shareholder Value doctrine: (1) enlightened shareholder value maximization; (2) stakeholder value; (3) shareholder welfare; and (4) corporate purpose. The pursuit of enlightened shareholder value is found wanting because of its difficulty of taking into account and responding to “externalities,” the social costs and benefits of corporate actions not reflected on their own cash flows and balance sheets. Stakeholder theory, while properly recognizing an intrinsic interest in non‐investor corporate constituencies, provides management with no guidance for decision‐making, particularly for evaluating tradeoffs among stakeholders. Shareholder welfare advocates, like this session's discussant and his coauthor Oliver Hart, expect pension funds, sovereign wealth funds, and other “universal investors” to succeed in influencing management to temper long‐run value maximization with investment addressing social problems like the environment and inequality.The main speaker of this session, after expressing doubt about investors’ ability to fulfill this responsibility, urges companies to adopt corporate purposes that go beyond value maximization in seeking “profitable solutions to individual and social problems and without creating problems for people and the planet.”A distinguished Columbia finance professor and former president of the American Finance Association discusses the findings of his research on the market pricing of climate change risk with a well‐known activist investor and corporate governance expert.After examining the stock returns of high‐ and low‐carbon emitting public companies in 77 countries during the relatively recent period 2005‐2017, Bolton reports that the realized returns of high‐carbon emitting companies were significantly higher than those of their low‐emitting counterparts. Such higher returns are construed as the risk premiums required by investors for bearing the “transition risk” now faced by corporations. These premiums also represent a higher cost of capital for high‐carbon emitters and, as such, reflect the market's attempt to “price,” and thereby, limit the negative externalities associated with climate change. And as both panelists go on to point out, this premium did not exist in the 1990s, and increased notably in the wake of the 2015 Paris Agreement.In this exchange between a Nobel Prize‐winning economist and the former CEO of Unilever and champion of ESG, the Nobel laureate begins by defending the Coase‐Friedman value maximization approach that, he argues has largely prevailed in large corporations throughout the world. According to this view, the best prescription for social welfare are policies that encourage companies to maximize their own long‐run efficiency and value. In so doing, they create the largest possible economic “pie,” which can then be redistributed by governments as they see fit.The former CEO of Unilever, while agreeing that radical reform of capitalism is unwarranted, calls for greater urgency and larger corporate efforts to combat climate change and inequality. Noting that Lord Lever founded his company some 150 years ago to solve serious hygiene problems that contributed to infant mortality, companies must increasingly be driven by a sense of purpose that goes beyond value maximization to satisfy today's universal investors.Two distinguished academics discuss the findings of recent studies that aim to measure the effects of corporate purpose on financial performance using measures of purpose that rely on surveys of how much meaning employees say they find in their jobs. Distinguishing between high‐purpose camaraderie, in which employees feel the organization is a little like a family, and purpose clarity, in which employees find a high sense of meaning in their work as well as a clear view of what they need to do, the studies that although camaraderie has no correlation with performance but purpose clarity is highly predictive of performance. And what appears to be a causal connection between purpose and performance is driven entirely by the middle ranks of the company.Employee beliefs about their firm's purpose also appear weaker in public companies than in private, and weaker in private‐equity‐owned, firms than among conventional private firms. Among public companies, purpose is lower for companies with significant hedge fund ownership, but higher in companies with high percentages of long‐term investors.Although environmental degradation and accelerating wealth inequality are “public good” problems, government is no longer capable of solving them alone. The private sector must play a major role, in part by pricing negative externalities into their goods and services. But if business enterprises have a strong interest in solving environmental and social problems because they are threats to economic growth, both speakers stress that economic growth is also essential to solving these problems.While agreeing that capitalism is the engine of wealth creation, and recognizing the threat its harmful side effects pose to corporate legitimacy and license to operate, both speakers see daunting challenges to solving the collective action problem and persuading companies to “internalize” externalities. The CEO of CaixaBank holds up his organization as an example of a successful bank that operates with a stakeholder approach. CaixaBank's ability to pursue this approach reflects in large part the 40% ownership of its shares by a non‐profit foundation that has been funding social work for more than 100 years.A U.K. entrepreneur and Member of Parliament discusses corporate governance challenges during the COVID pandemic with the deputy CEO of INGKA, the retail arm of IKEA, and the Chairman of Standard Chartered, the largest bank in Spain.The Chairman of Standard Chartered calls for integrating purpose into the operation of its business in five fundamental dimensions: ownership, governance, values, leadership, and financial resilience. To put ESG goals into practice, the bank uses “Sustainable Development Goals,” or SDGs, and publishes an annual summary demonstrating its progress toward those goals.IKEA, which is owned by the INGKA foundation, professes commitment to eight values, including cost consciousness and care for people and the planet. IKEA's management measures the company's performance in four ways: value created for (1) its investors; (2) its consumers; (3) its employees and local communities; and (4) the environment.

Understanding the process of innovation has been a central concern of management researchers, but despite this progress, there remains much that we do not understand. Deepening our knowledge is critically important given the enormous environmental and social challenges we face as a society. Pursing incremental innovation will continue to be hugely important, but this paper argues that building a richer understanding of architectural or systemic innovation will also be crucial. This paper suggests that the study of organizational purpose may provide a particularly fruitful avenue for future research.This paper was accepted by David Simchi-Levi, Special Section of Management Science: 65th Anniversary.

What is capitalism? One of humanity’s greatest inventions, and the greatest source of prosperity the world has ever seen? A menace on the verge of destroying the planet and destabilizing society? Or some combination of the two? Should capitalism be reformed or revolutionized? We need a systemic way to think through these questions. Are the systems that we currently use to govern the activities of private corporations still adequate in the face of the enormous problems we face? What kinds of reform might enable capitalism to overcome these problems? If revolution is needed, what should replace it? And whether the path is reform or revolution, how do we get from here to there, given the enormous pressures that corporations are under every day? In this symposium, we propose to discuss these issues from a number of contrasting perspectives.

The notion of social impact has been the subject of considerable interest in multiple literatures. Researchers studying strategy, organization theory, organizational behavior, human resource management, and social issues have long discussed the importance of corporate social responsibility (CSR) as a means by which organizations can have a positive impact on their diverse stakeholders, communities, and societies (Adler, 2019; Jones et al., 2016; Mackey, Mackey & Barney, 2007; Marglis & Walsh, 2003; Waddock & Graves, 1997). IB researchers have also acknowledged the role of multinational companies in promoting CSR and achieving social impact (Surroca & Tribo & Zahra, 2013). Similarly, entrepreneurship, technology and operations management and innovation scholars have discussed ways to enhance organizational social impact and improve social welfare (Short, Moss & Lumpkin, 2009; Zahra & Wright, 2016). Thus, to many, organizations (large and small) can be an important force for good that promotes social wealth by addressing grand societal challenges, thereby having a positive social impact. To this end, scholars have highlighted the importance of collaboration between private and public organizations along with non-governmental organizations (NGOs) in promoting social welfare (Klein, Mahoney, McGahan & Pitelis, 2013; Luo & Kaul, 2019; Mahoney, McGahan & Pitelis, 2009). From social responsibility to social impact Presenter: Aseem Kaul; U. of Minnesota Presenter: Jiao Luo; U. of Minnesota Public-Private Partnerships in the Public Interest: A Governance Perspective Presenter: Anita McGahan; U. of Toronto Reimagining Capitalism in a World on Fire Presenter: Rebecca M. Henderson; Harvard U. Broadening Our Views of Corporate Social Impact to Include Conflict & System Capacity Presenter: Witold Jerzy Henisz; U. of Pennsylvania From social entrepreneurship to social impact Presenter: Shaker A. Zahra; U. of Minnesota

How does one witness to businesspeople about climate change? Climate change is a problem for the collective and the long term, whereas business often requires a ruthless focus on the individual and the quarter. Climate change is an ethical catastrophe whose solution almost certainly requires a profoundly moral response, but talk of morality in the boardroom is often regarded with profound suspicion. Reconciling these tensions has forced me to navigate between worlds in an ongoing attempt to persuade businesspeople that solving climate change is both an economic and a moral necessity, and that the purpose of business is not only to make money but also to support the institutions that will enable us to build a sustainable world. This has not always been easy.

The public debate about how to tackle climate change has been overwhelmingly dominated by the assumption that it can be solved through the adoption of an appropriate pricing regime. This paper argues that while the development of such a regime will be critical to slowing climate change, it is a necessary, but not a sufficient, condition. We argue that it will also be important to accelerate rates of innovation and cooperation across the economy and that one important tool for doing this is the active encouragement of the development of authentically “purpose-driven” organizations.

Firms benefit by leveraging capabilities and complementarities of others, especially as they increasingly collaborate as conveners and members of business ecosystems. Scholars have used biological ecosystems as an analogy to explore interorganizational relationships for decades, yet the prevalence and increasing importance of business ecosystems across industries has sparked a burgeoning research focus in this area. In this panel symposium, we gather five scholars engaged in ecosystem-related research exploring new structures and organizational considerations from multiple disciplines and methodological domains. The five diverse yet related perspectives consider difficulties and opportunities presented by strategies where organizations interact in ecosystem structures. Though much is understood about ecosystem structures, a wealth of new research is uncovering new variants and introducing new debates that the panel will explore through a moderated, formal, interactive discussion. Discussion topics will include: 1) the nature of new ecosystem forms such as networks of ecosystems, 2) coordination structures in ecosystems, 3) international ecosystems, 4) learning to cooperate in ecosystem structures, and 4) the role of government in innovation ecosystems. By discussing these topics together (actively including symposium participants), we can examine these phenomena through an integrated approach and identify new directions for research.

Organizations have long been focused on the utilitarian purpose of providing goods and services for financial benefit of shareholders. Yet a growing chorus calls for understanding both the societal and financial value of organizational adoption of higher purpose. Increasingly defined as holding a concrete vision of realizing moral and social outcomes along with financial objectives, this can motivate employees and lead to extraordinary returns to shareholders and society. However, cultivating and leading through higher purpose poses substantial and largely unexplored challenges. A panel of distinguished speakers from academia and industry will provide cutting- edge insights into the emerging area of research and practice regarding higher purpose. This will clarify conceptualization of higher purpose, along with tensions, challenges, strategic responses, and case studies of this emerging and important phenomenon.

Artificial intelligence may greatly increase the efficiency of the existing economy. But it may have an even larger impact by serving as a new general-purpose “method of invention” that can reshape the nature of the innovation process and the organization of R&D. We distinguish between automation-oriented applications such as robotics and the potential for recent developments in “deep learning” to serve as a general-purpose method of invention, finding strong evidence of a “shift” in the importance of application-oriented learning research since 2009. We suggest that this is likely to lead to a significant substitution away from more routinized labor-intensive research towards research that takes advantage of the interplay between passively generated large datasets and enhanced prediction algorithms. At the same time, the potential commercial rewards from mastering this mode of research are likely to usher in a period of racing, driven by powerful incentives for individual companies to acquire and control critical large datasets and application-specific algorithms. We suggest that policies which encourage transparency and sharing of core datasets across both public and private actors may be critical tools for stimulating research productivity and innovation-oriented competition going forward.