What's the purpose of business?

In today's business world there is a dominant view that  the purpose of business is to optimise shareholder return. But shareholdings were simply an innovative way of funding business expansion when family wealth and patronage were no longer sufficient to do this effectively, back in the pre-South Sea bubble days.The actual purpose of business was and still is to make or service something for customers and the success of this creates shareholder value as an important outcome/bi-product of the overall purpose.

The original social and community purpose of the banking industry has clearly been lost in recent years and so it's good to read today's report by the Thinktank Respublica called "Virtuous Banking."  It suggests, among other things, that the purpose of banking is to "ensure systematic prudential security, work for the prosperity of customers, promote the responsible creation of value". This focus on "responsible creation of value" is possibly an aspect that all businesses could aspire to. The report also calls for more shareholder activism in holding the Executive to account in achieving this purpose. If the suggested actions are adopted there is a chance that the banking industry could become a beacon of responsible business practice with public trust rebuilt. It's a long way off but quite an inspirational purpose.