Harvard Business Review LogoAs capital costs rise, companies need a disciplined way to allocate resources without abandoning commitments to employees, customers, and the environment. Here’s how to find that balance. by Michael Mankins and Matthew CrupiChad HaganAfter years of cheap capital, many companies drifted away from managing for shareholder value in favor of loosely defined stakeholder models. Now capital costs are moving back toward historicalOver the past two decades managing for shareholder value has fallen out of favor. It has been portrayed as out of step with societal priorities—particularly the growing emphasis on environmental, social, and governance (ESG) concerns—or incompatible with the interests of other stakeholders. In its place, many firms have embraced stakeholder-oriented or purpose-driven models, seeking to balance the interests of employees, customers, communities, the environment, and shareholders simultaneously.A version of this article appeared in the July–August 2026 issue of Harvard Business Review.
Bring Back Managing for Value
After years of cheap capital, many companies drifted away from managing for shareholder value in favor of loosely defined stakeholder models. Now capital costs are moving back toward historical norms, and value maximization should once again guide decision-making. However, it must be applied differently than it has in the past. This article proposes a simple but disciplined model: Retain value maximization as the governing objective but explicitly recognize stakeholder commitments as constraints that limit the set of feasible choices. The authors distinguish between hard constraints (nonnegotiable commitments) and soft constraints (which guide choices among value-creating alternatives) and describe four foundational capabilities that companies must rebuild. Leaders can use this model to evaluate alternatives consistently, allocate capital to its highest-value use, and address legitimate stakeholder claims without sacrificing accountability.
