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Pies, Ingo; Schreck, Philipp; Homann, Karl (2019): Single-objective versus multi-objective theories of the firm: using a constitutional perspective to resolve an old debate. In: Review of Managerial Science
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Our article contributes to the recurring debate on whether and how firms in competitive markets should pursue objectives other than purely financial ones. Two competing approaches dominate this debate: one favors profit maximization as a single objective;the other favors multiple, partly social objectives. This debate has been going on for decades without approaching consensus. Our article offers an explanation for this intellectual stalemate and proposes a constitutional perspective that reconciles and improves the two seemingly antagonistic approaches. At the core of our proposed solution lies the distinction between the sub-constitutional level of action (choices within constraints) and the constitutional level of rules (choices among constraints). Using this distinction, we argue that both single-objective and multi-objective theories of the firm play equally important, but categorically different roles.