One interesting fact of life is that corporations are not only endowed with a form of legal personhood, but they actually act in many ways more like actual human beings than like limited-purpose entities aiming to secure financial rewards for their owners. Take, for example, Barnes & Noble’s ongoing dilemma about what to do with the Nook. Ask yourself this: Why would an operator of bookstores would start manufacturing electronics?
There’s no real mystery about this. The physical book retailing industry is in structural decline driven by technological changes. Insofar as physical bookstore survive, they’ll survive because (some) people have warm/fuzzy/nostalgic feelings about bookstores. But that implies a future, if there is one, for the sort of neighborhood independent bookshops that people have warm/fuzzy/nostalgic feelings about, not soulless chains. Barnes & Noble the organism doesn’t want to die, so it makes a desperate effort to launch a new book-related businesses—the design and manufucter of e-readers—that it has no particular expertise in. All very understandable, but weirdly out of step with the ostensible idea of the for-profit business corporation. At the end of the day, there’s absolutely nothing wrong with investors capitalizing a new business venture, the venture making money for a while, then its profits declining and eventually the business shuts down. Nothing lasts forever, and a corporation doesn’t need to achieve immortality to have been a good business. But large firms essentially never behave like this. They never, that is, serenly accept the inevitable and just attempt to manage their existing operations as well as possible. Instead they want to live! They want to thrive! And this survival instinct is tied up in a weird way with the doctrine of shareholder value. In theory, the urge to live is value-destroying. But in practice for any executive team to straightforwardly admit that their business is in a dying market segment and they have no plan for changing that fact would lead to an immediate share price crash with deleterious consequences for the executives.
CORRECTION: The original version of this item repeatedly misspelled “Barnes & Noble”.