Beyond Profit: The Moral Boundaries of Corporate Decision-Making |

Black-and-white image of a corporate meeting in a modern glass office building, with executives seated around a conference table, symbolizing corporate decision-making and governance.

Do we judge companies solely on their financial success? In classical economics, the dogma has long been that investors and the public primarily focus on one key figure: shareholder value. However, modern behavioral economics paints a more nuanced picture.

A large-scale study by Prof. Dr. Oliver Spalt, Chair of Financial Markets and Financial Institutions at Mannheim Business School, along with co-authors Prof. Dr. Zwetelina Iliewa and Prof. Dr. Elisabeth Kempf, based on a representative survey of 2,047 US citizens, shows that we perceive companies not only as profit-driven entities but also as moral agents.

Efficiency, but not at the expense of people

One of the most striking findings of the study concerns the treatment of personnel. While the “Friedman doctrine” posits that a company's sole social responsibility is to maximize profits, empirical evidence shows a substantial departure from this principle.

More than 85% of respondents oppose layoffs, even if they would clearly boost shareholder value. This is not just a passing feeling but a steady ethical stance. People are willing to endure significant financial losses to avoid what they perceive as moral harm.

Interestingly, the study shows that only 21% of respondents reject cost-cutting in general. This suggests that the public draws a precise distinction: increasing efficiency is morally neutral, whereas the direct suffering of individuals caused by layoffs is a moral trigger.

The current ESG (environmental, social, governance) debate is often dominated by issues such as climate change and diversity. However, the study shows that people's moral intuition follows a different order of importance. Traditional corporate issues that directly impact employees or internal fairness are viewed as much more significant.

What if profit itself is a moral expectation?

One of the study's “aha moments” lies in the reassessment of profit maximization. Support for the shareholder value principle is often misunderstood as amorality or selfishness. However, the data shows the opposite: for many people, the pursuit of profit is a moral virtue. People with a high degree of belief in authority perceive the company as occupying a traditional, clearly defined role within the social order. A company that maximizes profits, therefore, fulfills its “duty” to society and stabilizes institutions.

Avoiding harm counts for more than doing good

The study reveals an interesting asymmetry in our perception: Respondents' sensitivity to financial profit differs dramatically depending on whether a company wants to avoid harm or actively do good.

When it comes to “doing good” (e.g., unprofitable green projects), people are very sensitive to the amount of financial sacrifice involved. The more expensive the project, the less support it receives.
When it comes to “avoiding harm” (e.g., refraining from profitable layoffs), the curve (the “slope”) is much flatter. Here, the amount of lost profit hardly plays a role—the rejection of harm remains almost absolute, regardless of how much money is at stake.

For management, this means that moral missteps like excessive bonuses or mass layoffs carry more weight than any CSR campaign could compensate for in terms of boosting the positive image.

More than a trend: stable moral convictions

The research results are remarkably consistent. A follow-up study conducted in February 2025 (N=287), after a significant political power shift in the US, confirmed the results: the moral rankings remained stable. These are therefore durable preferences, not short-term reactions to political headlines.

The moral trilemma of stakeholders

The results make it clear that stakeholders are not faced with a simple choice between money and morality, but with a moraltrilemma:

Concern for the individual (individualizing values).
Preserving tradition and order (binding values/authority).
Creating financial value.

These values are often misaligned, but that’s exactly where the challenge of modern management lies.

Morality as a guiding principle for management

Corporate governance models that see morality merely as a “soft factor” or marketing tool fall short. This research indicates that moral expectations are deeply embedded and notably stable. For management, this means that legitimacy comes not only from profits or impressive CSR efforts but also from credible decisions made in morally difficult situations.

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