Steward leadership: A win-win-win model for the post-pandemic business landscape

In this article first published in the Asian Management Insights (AMI) by the SMU Centre for Management Practice, Dr Yancy Toh (Head of Research, SAC) and Rajeev Peshawaria (CEO, SAC) offer their views on:

Rajeev Peshawaria, Dr Yancy Toh
CEO, Head of Research, Stewardship Asia Centre

14 May 2021

In this article first published in the Asian Management Insights (AMI) by the SMU Centre for Management Practice, Dr Yancy Toh (Head of Research, SAC) and Rajeev Peshawaria (CEO, SAC) offer their views on:
1. What are the factors driving a global change in stance towards purpose-driven organisations?
2. Which is the relevant model: shareholder or stakeholder capitalism?
3. What would it take for organisations to enjoy enduring success in today’s transparent world?

"There is one and only one social responsibility of business — to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud."
– Milton Friedman


Five decades after its publication, Friedman’s shareholder-centric doctrine about the purpose of business remains a subject of vigorous debate. Those defending him point to the fact that owing to capitalism, the proportion of people living in extreme poverty has dropped from 42 percent of the global population to under 10 per cent today. On the other hand, those opposing his ideas cite the deepening income inequality, rising unemployment, and the inability of lowly-paid frontline workers to work remotely amidst the COVID-19 pandemic as some of the evidence suggesting the failure of shareholder capitalism.

While opinion about shareholder capitalism remains deeply divided, there is no denying the increasing calls to reject it in favour of a more balanced stakeholder approach. In fact, in 2019, the US Business Roundtable abandoned its long-held position about the primary purpose of the corporation, which stated that “the paramount duty of management and of boards of directors is to the corporation’s stockholders.” Instead, 181 CEOs adopted a new one that commits to delivering value to a wider array of stakeholders, including customers, employees, suppliers, and communities, in addition to shareholders. Elsewhere in the world, including Asia, more CEOs and boards of directors are hard at work transforming their companies into "purpose-driven" organisations.

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