Redefining Capitalism

The loss of public trust in business—and the corresponding rise in government policies and practices that hamper competitiveness and sap economic growth—are rooted in a narrow definition of capitalism whose time has come and gone.

Capitalism is an unparalleled vehicle for meeting human needs, improving efficiency, creating jobs, and building wealth. But we cannot harness the full potential of businesses until these meet society’s broader challenges as part of their core purpose.

The purpose of the corporation, therefore, must be redefined as creating shared value, not just profit per se. This will drive the next wave of innovation and productivity growth in the global economy. It will also reshape capitalism and its relationship to society, and legitimize business again as a powerful force for positive change.

The Purpose of Business

• The purpose in business is to create economic value while creating shared value for society
• Businesses acting as businesses, not as charitable givers, are arguably the most powerful force for addressing many of the pressing issues facing our society
• Shared value will give rise to far broader opportunities for strategy and economic value creation
• Shared value thinking will drive the next wave of innovation, productivity, and economic growth
• A transformation of business practice around shared value will give purpose to the corporation and represents our best chance to legitimize business again