Publicly traded companies are, by law, driven to make as much money as possible for shareholders. Privately held companies are not held to this same limitation. So while a company like Valve could be highly profit-driven (let’s be honest, all for-profit companies in a capitalist system are driven by this motivation), it doesn’t seem to be driven to maximize profits in the short term. This means that they can focus on things other than profit if they so choose.
There is a common belief that corporate directors have a legal duty to maximize corporate profits and “shareholder value” even if this means skirting ethical rules, damaging the environment or harming employees. But this belief is utterly false. To quote the U.S. Supreme Court opinion in the recent Hobby Lobby case: “Modern corporate law does not require for-profit corporations to pursue profit at the expense of everything else, and many do not.”
Publicly traded companies are, by law, driven to make as much money as possible for shareholders. Privately held companies are not held to this same limitation. So while a company like Valve could be highly profit-driven (let’s be honest, all for-profit companies in a capitalist system are driven by this motivation), it doesn’t seem to be driven to maximize profits in the short term. This means that they can focus on things other than profit if they so choose.
– Lynn Stout, professor of corporate and business law, Cornell University