Investor Glossary-profit motiveInvestor Glossary-profit motiveInvestor Glossary-profit motiveInvestor Glossary-profit motiveInsightful stock market charts - Click here
investor
Categories    # A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

Profit Motive

The HTML to link to this page
 

In the free market economy, the profit motive is the ultimate purpose of a commercial enterprise, to earn a profit. The profit motive notion is closely related to the concept of self-interest. Adam Smith originally described the workings of the free market not in terms of profit motive, but as a by-product of individual self-interest. Under this philosophy, the profit motive is axiomatic, in that the only way a company can further the self-interests of its shareholders is to earn a profit. The profit motive is merely a proxy for providing income to shareholders. As an extremely focused definition of business purpose, the profit motive engenders considerable criticism of capitalism generally and multinational corporations in particular. These critics point out the profit motive apparently allows no room for the interests of the customer, the employee, or society and the environment, unless those interests happen to align with what the profit motive dictates. Perhaps the profit motive is a bit like democracy: the worst corporate objective, except for all the others that have been tried.



Rate this profit motive definition...

Learn about investing with the Investor Glossary Term of the Day


Click here for insightful stock market charts. Where is the market headed? The answer may surprise you. Find out
with the exclusive & Barron's recommended charts of Chart of the Day.


Popular Terms: dividends payable, limit order, phantom income, deferred tax, wholly-owned subsidiary, cancelled check, LIBOR, 1031 exchange, average price per share, per diem, APR, covered put, irrevocable trust, inflation, labor relations, current ratio, required rate of return, ex-dividend date, stock split, retained earnings, risk management, minority interest, open position, liquidity ratio, command economy, class C shares, ex-dividend, 144a, debt service coverage, diluted share, option premium, balance sheet, margin rate, real GDP, Key Rate Duration, reverse mortgage, FTSE, deferred revenue, FICO score, annual return, stock market close, 401a, EBITDA, implied volatility, 1035 exchange, Zero Cost Collar, quality assurance, VIX, in escrow


Accounting | Banking | Bonds | Brokers | Economy | Futures | Mutual Funds | Options | Real Estate | Retirement | Stocks | Taxes | Technical Analysis
Investor Glossary | Term of the Day | Suggest a Term | Chart of the Day | Dogs of the Dow
©2004-2016 Investor Glossary - All rights reserved - Terms of Use