Norm breaking has created an ethical dilemma for corporate America
Distancing oneself from rational behaviour, good choices, and sound judgment is easy if you accept the logic: “that’s just the way things are done now.”
I worry that’s what’s happening in the business and corporate world, with organisations being whipsawed as they struggle to define who they are and what they stand for amid a dramatic shift in norms and a relaxed regulatory environment ushered in by President Donald Trump’s second term.
Whether a startup or a mature corporation, leaders have witnessed a commander-in-chief determined to rewrite accepted norms and even upend what had been considered ethical behaviour by accepting a luxury Boeing 747-8 plane as a donation from the Qatari royal family (in violation of the Constitution’s Emoluments Clause) to overseeing a stock portfolio that made 3,600 trades — 60 a day — in the first quarter of 2026.
That’s not to say business leaders think anything goes, but there’s little question they’re trying to figure out how to manage their own organisations in this new era.
A moment of ethical tension
Do leaders believe that it is all right with these new standards and expectations to just look out for themselves and their business interests — a version of the shareholder theory espoused by late economist Milton Friedman in 1970? Or do they believe that despite all this permission to focus on the bottom line, there remains a business case for going beyond profits to serve the interests of a broader range of stakeholders — the argument by the academic and philosopher R. Edward Freeman in the mid-1980s?
The tug-of-war between shareholder and stakeholder philosophies has become an ethical dilemma for companies today. But this tension should not result in a zero-sum game, as it seems to be some 40 years after the debate began. Companies can absolutely increase profits while looking out for the greater good of their employees, customers, and others in the community. It’s a balancing act with risks right now, but it could be critical to a company’s fortunes down the road.
How companies navigate this dilemma will determine how customers, clients, employees, and others view these enterprises, as shown by the talent and client drain at the Paul Weiss law firm after it capitulated to Trump earlier this year.
A time for hard truths
The first truth is that companies can’t afford to be only shareholder driven. Leaders have clearly recognised that they need to consider all stakeholders, as the number of publicly listed companies has declined by 50 percent since the mid-1990s and many have been taken private in part to escape the regulatory grind and the tyranny of short-term results. While this move makes it easier for private companies to adopt stakeholder frameworks, it doesn’t mean they do.
The second truth is that companies should strive to be both shareholder-driven and committed to stakeholders. What company executives have to do is to say, “We have these two models. Either one in extreme cases causes failure. The conversation begins with personal reflection. Leaders must ask themselves “Now, how do I, as an individual, make sure that I’m not driven mostly by greed and envy? How am I making sure that I am moderating my own desires to take care of the community?”
This kind of reflection, which is a hallmark of ethical maturity and leadership, takes moral courage and requires CEOs to be transparent about how they harmonize these two ways of looking at business.
It sounds simple but achieving that balance can ensure financial stability and security, as well as the well-being of executives, the board, shareholders, employees, customers, and the community in which they do business. Right now, I hear far too often that companies are just looking out for themselves, which is necessary for business. But that perspective is not a good long-term strategy for any company.
Business leaders must resist being whipsawed by changing norms and standards of behaviour. The ethical questions come down to: “Who are we and what do we care about?”
The answer will determine who thrives going forward.
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