Do All ‘For-Profit’ Companies Seek Profits?

There’s a common assumption that all companies seek profits. But is that assumption true? Never mind things like not-for-profit organizations. Let’s also set aside so-called “social enterprises,” companies that have an explicit social mission. I have in mind here genuine commercial entities. Do they always seek profits?

I can think of a few kinds exceptions, types of firms that don’t, as a rule, seek profits — or that at least don’t take profit-making to be their primary mission. I think you could also argue that Google is an example. It surely is profitable, but its behaviour suggests that that’s not its main goal. A fan would say that what Google wants to do is to organize the world’s information. A cynic would say Google’s goal is to dominate or control all that information. Profit is the tool that lets Google expand its sphere of control. Note that Google has apparently never paid a dividend — a share in profits — to its shareholders, though it certainly has had the profits to do so.

But the main example I’d like to put on the table today is this: most firms in the biotechnology industry.

Most biotechnology firms never make a profit. Indeed, for many of them it’s not even a reasonable goal, given that many of them never even put a product on the market. So most of them lose money on a yearly basis. Biotech companies are basically R&D companies. They often begin life as university spinoff companies, work for a few years turning a scientific idea into a plausible bit of technology, and end up being bought out by a large pharmaceutical company. And sometimes that’s the explicit goal. So in a very plain sense, they’re not “profit-seeking.” Their goal is to build their portfolio of intellectual property to the point where they become attractive to Big Pharma. So, question: does it make sense to call these firms “profit-seeking”? It’s not as if they’re charities. They’re aiming at commercial success, and would surely love to see a profit if that were possible. But for them commercial success doesn’t mean generating profits, in the usual sense. Whether that’s an important difference or not depends on whether profit-seeking per se has an ethically worse (or better!) influence on management behaviour than the zealous pursuit of other objectives.

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