A growing number of companies choose to pursue financial and social goals simultaneously. These dual-purpose companies face inherent trade-offs as they are caught between the competing expectations of different stakeholders. We build a theory predicting the intensity of such trade-offs faced by dual-purpose organizations located in different institutional settings and adopting different governance mechanisms. We theorize that the intensity of the financial/social trade-offs experienced by dual-purpose companies increases with the level of economic liberalism of the institutional setting in which they operate. We further theorize that the influence of the institutional setting on the intensity of the financial/social trade-offs experienced by dual-purpose companies is filtered by their governance arrangements. We conclude by discussing changes in the surrounding ecosystem that could help to reduce the intensity of the trade-offs that companies experience, thereby paving the way for a new form of capitalism.
Battilana, Julie, Tomasz Obloj, Anne-Claire Pache, and Metin Sengul. "Beyond Shareholder Value Maximization: Accounting for Financial/Social Trade-Offs in Dual-Purpose Companies." Academy of Management Review 47.2 (April 2022): 237-258.