Abstract

Jay Barney explores two theories of profit—positioning theory and resource-based theory—and their implications for the relationship between profit and societal welfare. Positioning theory suggests that profits stem from a firm’s ability to exploit barriers to competition, often at the expense of social welfare. Resource-based theory, on the other hand, ties profits to a firm’s unique capabilities to deliver valued goods, which can align with enhancing societal welfare when consumers prioritize socially beneficial qualities. However, Barney’s analysis appears to assume that profit-driven organizations cannot or should not aim at social welfare independently of profit motives. This chapter challenges this assumption by presenting four counterexamples: the CSR officer leveraging societal contributions for regulatory support, the price-gouging heroin dealer whose monopoly inadvertently reduces societal harm, the humanitarian monopolist who uses profits for altruistic purposes, and the fair-trade branding guru whose competitive advantage is rooted in ethical practices. These examples highlight consumer irrationality and externalities, both conditions that complicate the alignment of profit and societal welfare. Ultimately, the critique argues that profit-seeking organizations can sometimes pursue societal welfare non-instrumentally, particularly in cases of monopolistic power or resource-based advantages. The analysis concludes that business strategy must reconsider its assumptions about the incompatibility of profit and social good, as real-world conditions often permit—and sometimes necessitate—pro-social behavior independent of profit motives.