goal of the private corporation and that the public-interest theory, which was especially popular in the late 1960s, has not been generally accepted.

Do recent developments in environmental policy, or even our growing understanding of the interactions between economic activity and fundamental natural systems, indicate that the current concept of the firm is inadequate in an environmentally constrained world? Corporations coevolved with the Industrial Revolution; they are its creators as well as its creators. If the Industrial Revolution must be reengineered to be sustainable (Graedel and Allenby, 1995), is the same true of private corporations?

REDEFINING THE FIRM

There has been little explicit recognition that inherent in the integration of technology and environment—a likely prerequisite to any meaningful increase in the sustainability of global economic activity—are implicit drivers for redefining the corporation. Major drivers include the following:

  • The arguably fundamental conflict between uncontrolled growth as a goal of profit-driven private firms and an environmentally constrained world (Constanza, 1991; Daly and Cobb, 1989).

If a sustainable state requires bounded resource use and material flows, it presents a conflict between the traditional goals of the firm—maximization of value and growth of value over time for shareholders—and the firm's achievements. There are, however, conditions under which individual firms might grow even if unlimited economic growth (as opposed to economic development) is incompatible with sustainability. Some firms, for example, may continue to grow within a sector at the expense of less efficient firms even if the sector itself remains the same size or shrinks. Moreover, as sustainability is approached, some economic sectors will undoubtedly grow at the expense of others as the economy restructures itself. For example, sustainability may require the substitution of information and intellectual resources for material and energy inputs during manufacture or use, leading to an expansion of the electronics and telecommunications sector in the economy as a whole.4 Some forms of service, such as creating appropriate software applications, may contribute to dematerialization of the economy; firms providing such products could, and should, increase their value as sustainability is approached.

Only when the growth orientation of corporations results in the inappropriate growth of the economy and environmental stress may sustainability be challenged. Corporations could retain a strict growth incentive, but society could create boundary conditions that preclude unsustainable economics. For example, the



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