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Viewed through an Anglo-American lens, corporate governance around the world is living a woke moment. Anglo-America’s recent “discovery” that corporations have stakeholders (other than shareholders) and purposes (other than maximizing shareholder value) is hailed as a corporate governance solution that can deliver global prosperity. However, this article demonstrates that long before Anglo-America’s “discovery” of corporate purpose, Asia was already awake to it. It describes how Asia’s most important and dynamic economies – which are the world’s engine for economic growth – have been built on systems of corporate governance where corporate purpose and stakeholderism reign supreme. 

This positive claim has important normative implications. The Anglo-American movement to push corporations around the world to be more purposeful is likely to have deleterious effects in Asia where corporations already tend to have too many purposes. Under the guise of embracing the Anglo-American corporate purpose movement, entrenched stakeholders may resist reforms to reduce rent seeking, wealth tunnelling, and protect (minority) shareholder interests. 

A proper understanding of the history of corporate purpose in Asia demonstrates that different jurisdictions have different understandings of the purpose that corporations should serve and that there is no one model that fits all. At any given time, each jurisdiction will be at a different point along the shareholder-primacy/stakeholderism continuum. How this is achieved will vary from jurisdiction to jurisdiction and within each jurisdiction over time. Ultimately, prosperity requires diversity.  

This paper originated from an ECGI Blog Post: No need for Asia to be woke: Responsible capitalism through an Asian lens (8 March 2022)

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