The purpose of the paper is to assess whether current corporate commitments to serve all stakeholders rather than just shareholders will protect corporate reputation during the coming economic downturn.
This paper reviews recent corporate commitments to corporate purpose and sustainability as well as critiques of these commitments to determine the likely public and governmental responses in the context of declining middle-class purchasing power and record profits.
The author believes that unless corporations make deeper commitments to productivity growth, higher wages and strengthening employment, there will be meaningful restrictions imposed upon their freedom to operate.
This review of corporate commitments and critiques is selective and not comprehensive. To the extent that the findings relate to events in the future, they are, by definition, non-verifiable.
If corporations begin to address the concerns discussed here before the next sharp economic downturn, they may be able to escape significant new obligations imposed by the governments. If not, they are likely to lose both freedom of action and reputation.
Depending on the flow of events, large segments of the population could turn against big corporations, representing a significant shift in the cultural and political environment.
Much has been written about the intersection of stagnation in productivity growth, decline in middle-class purchasing power and income inequality. However, the author believes that there has been little attention given to the possible implications from the perspective of corporate reputation.
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