In Britain and the United States, maximizing shareholder value is universally accepted as management’s paramount goal. While some continental Europeans share this point of view,¹ most continue to believe that shareholder value comes only at the expense of other stakeholders, leaving in its wake diminished job security, higher unemployment, poorer products and services, and weaker overall economic performance. Research conducted by the McKinsey Global Institute has shown that a focus on shareholder value is second only to open and competitive product markets in accounting for high productivity.² A study of the relationship between shareholder value creation, labor productivity, and employment growth in competing countries across the Triad (Germany, Japan, and the United States) found that winning companies are more productive, create more shareholder value, and grow employment faster than other players.³ To broaden and deepen this research, we recently studied the performance of more than 2,700 companies from 20 countries over a ten-year period. We found that, contrary to the prevailing European view, a focus on shareholder value boosts productivity and liberates resources that benefit stakeholders of all kinds in the long term.

Easier said than done

Creating shareholder value is what all managers should strive...