Shareholder primacy has been the primary philosophy dictating business practices and priorities for decades. A virtuous organization rejects the doctrine of shareholder primacy, recognizing the pressure it places on organizations to make unnecessary social sacrifices at the expense of financial gain for a single stakeholder. Instead, a virtuous organization follows a stakeholder theory model, where a responsibility to consider the needs and value creation for all influences decision making. Virtuous organizations are willing to sacrifice the costs of a more short term financially profitable decision in favor of a decision that long-term maximizes overall value creation.
In considering its stakeholders, a virtuous organization thoroughly assesses the individuals and groups that its work touches. It works wisely within the tension between meeting the needs of the individual and benefitting the whole, including recognizing the significant role of business in shaping society and individual experiences and being shaped by both. A virtuous organization also proactively gives the environment a seat at the stakeholder table.
A virtuous organization is able to make space for all stakeholders to participate in its mission. When stakeholders feel heard and respected by an organization, they will be committed to its success and empowered to express their values through their participation in the organization.