AP Macro: What is a circumstance where a company might not choose to act solely in the interests of the firm – explain the situation.

There can be many circumstances in which a company will choose to act in ways that are not “solely” in its own interests.  This is because there are many instances in which the firm’s interests coincide with those of other stakeholders.  In such cases, the firm will be acting in a way that is not solely in its own interests.  This is true regardless of whether the firm acts because the action is in its own interests.

For example, we know that Walmart raised the wages of many of its employees this past year (2015).  By doing so, the firm was acting in its own interests, but also in a way that was in the interests of others.  As we can see in the article in the link below, Walmart has seen benefits from adopting this policy. It is getting more applications and experiencing lower turnover, both of which are beneficial.  However, at the same time, Walmart is acting in the interests of its workers and even of society as a whole.  When Walmart raises its wages, its employees’ standards of living will presumably rise.  When Walmart raises its wages, competitors may also raise their wages, helping many other workers.  When these things happen, our society as a whole is better-off because, among other things, people are wealthier and there is less of a need for government assistance to low-wage workers.

Thus, we can see that Walmart acted not solely in its own interests when it raised wages.  We do not know whether Walmart cared about helping its workers or society, but we know that its action is likely to have that effect.