Recently, I have had the time to clear my reading list and was surprised by the possible implications of a passage from "The Corporation". This particular section was talking about the business ethics of companies, and how they run into trouble seeking financing.
Essentially, Joel Bakan, the author, puts forward the theory that the essential duty of any business is to make money for its investors. Private companies face less limitations, but as soon as investors come on board, the company is often forced to downplay ethics and corporate beliefs in order to maximize profits for the investor. An example used to support this is The Body Shop, a corporation which had a strong social conscience. After the company went public, this strong social conscience was downplayed.
Now, looking into our current business climate, many companies might seek financing to either expand operations and take advantage of opportunities in a mixed economic climate, or they might seek financing simply to survive. Business owners should take note from The Corporation. Taking on investors who don't share your beliefs beyond that of maximizing profit can lead to conflict. Understanding the beliefs and attitudes of an investor can be a key step in creating a mutually pleasant (and profitable) relationship.
TAGS: Funding, Investments
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