Professor McGahan is cross appointed to the Munk School of Global Affairs at the Physiology Department of the Medical School and is a senior associate at the Institute for Strategy and Competitiveness at Harvard University. McGahan’s current research emphasizes entrepreneurship in the public interest and innovative collaboration between public and private organizations.
|The Business Roundtable’s new Statement on the Purpose of a Corporation indicates a shift away from shareholder value maximization as the sole purpose of the corporation and toward a broader view of value creation.
This shift will have material impact on the well-being of U.S. workers.
|Strongly Agree||9||“The focus on stakeholders is a focus on value creation. Managing for shareholder supremacy amounted to running businesses for their residual claimants rather than for sustained superior performance. The Business Roundtable, led by Jamie Dimon, has put forth the same principles that have guided JPMC (and, before that, BankOne) under Dimon’s leadership. The results speak for themselves.”|
|In the next decade, we will see the first sustainably profitable private commercial activities in space.||Disagree||8||“There are already profitable ventures in space (primarily as services to researchers). So I have to disagree with the word ‘first’ in this statement! Scaled ventures in space that are private and commercially accessible to the public are likely not to be profitable for the next 10 years.”|
|Introducing 5G networks 3-5 years ahead of other countries will give Chinese firms an advantage.||Agree||7||“Faster internet connectivity gives firms an edge in market analysis of all types, including financial. It gives firms an edge in responding to opportunities. The question here is whether access to 5G networks in China will be restricted to Chinese firms. If so, and if Chinese companies are not restricted internationally from access to data, then 5G will confer an advantage on them.”|
|The increase in stock market volatility that began in 2018 will last for another three to five years.||Agree||8||“Structural changes in value have not been built into many valuation models, which makes them less reliable. These structural changes will not slow over the next five years. The only question is whether approaches to valuation will catch up.”|
|A hard Brexit will have a significant negative impact on many businesses, even if they do not have a U.K. or European presence.||Agree||4||“The direct effects of a hard Brexit will be greatest in the U.K. and Europe, but because of the significance of the U.K. as the world's fifth largest economy, the impact will be significant everywhere in the world. The most significant consequences will be in financial services, IT, oil and gas, and other industries in which U.K. firms have significant positions on a global scale.”|
|China is no longer the most attractive growth opportunity for Western multinationals.||Neither Agree nor Disagree||8||“Whether China is the right growth opportunity for an MNC depends on the strategy of the MNC, the industry structure, the cost of investment, the prospective returns on that investment, and the purpose, character, and context for the growth goal in the first place. China is massively important. Whether a specific firm should seek growth in China depends on whether and how the firm engages.”|
|In the next five years, the blockchain will have a transformative effect on finance in emerging markets.||Disagree||7||“I think blockchain will transform some payment systems, but the transformation of financing itself requires the development of basic institutions like lending systems before blockchain can take hold.”|
|In the absence of a carbon tax, industry self-regulation can help mitigate the worst fallout from climate change.||Strongly Disagree||8||“Despite the very best intentions and the substantial progress that has been made, we are falling behind on critical climate targets. Industry self-regulation will continue to be critical, but we know that it is not mitigating the worst of climate change.”|
|Amazon’s new $15 per hour minimum wage will force other companies to follow suit.||Disagree||2||“The labor markets in which Amazon offers $15 per hour are not constrained in supply.”|
|Restrictions on skilled immigration will cause US firms to to shift more operations overseas.||Strongly Agree||7||“Moving overseas as a hedging strategy is happening already.”|
|Uber has to develop self-driving cars in the next 10 years in order to remain viable.||Strongly Disagree||8||“The business model for self-driving cars is only now emerging. It will take some time for its full development. In the meantime, Uber will face a broad range of other challenges.”|
|A trade war will be more disruptive to business than to consumers.||Neither Agree nor Disagree||4||“Both businesses and consumers in targeted sectors will be affected more intensively than in other sectors. Tariffs that induce inefficiency to redistribute wealth will ultimately fail. ”|
|Concern over consumer privacy will fundamentally limit businesses’ ability to use big data.||Agree||8||“A best-case scenario is a relatively early framework on this. The longer we go without resolution, the greater the eventual constraints will be.”|