Modeling Corporate Purpose: A Comparative Simulation of Stakeholder and Shareholder Governance Models | ||
| مجلة الدراسات التجارية المعاصرة | ||
| Volume 11, Issue 22, October 2025, Pages 1293-1328 PDF (885.09 K) | ||
| Document Type: المقالة الأصلية | ||
| DOI: 10.21608/csj.2025.434789.1678 | ||
| Author | ||
| فيصل عبد الله العتيبي* | ||
| جامعة شقراء . المملكة العربية السعودية | ||
| Abstract | ||
| This study investigates the debate over corporate purpose by developing a comparative mathematical framework to evaluate the financial implications of shareholder-centric and stakeholder-oriented governance models. Drawing on foundational theories from eco-nomics and business ethics, the research develops two distinct models: a prof-it-maximization model aligned with shareholder primacy and a multi-objective stake-holder model that incorporates financial, social, and environmental metrics. Using a ten-year simulation, the study finds that firms adopting a stakeholder approach demon-strate stronger long-term performance in revenue, profit margins, and return on invest-ment, while also generating broader stakeholder value. The simulation further reveals that although the shareholder model yields higher initial profits, it proves unsustainable over time, ultimately leading to weaker financial performance and highlighting how a narrow focus on shareholder value can undermine long-term profitability and competitiveness. These results challenge the assumption that prioritizing shareholder returns leads to op-timal outcomes and highlight the strategic advantages of stakeholder governance. The findings further suggest that the stakeholder model fosters governance practices that are both ethically grounded and inclusively structured, while offering greater resilience and stability in the face of economic uncertainty. The research contributes to business ethics by translating normative theories of corporate purpose into operational models and offering a structured, predictive comparison of governance approaches through simulation. | ||
| Keywords | ||
| Corporate Purpose; Stakeholder Theory; Shareholder primacy; Financial Performance | ||
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