White Paper The Modern Dilemma Balancing Short- and Long-Term Business Pressures

The report explores the 'modern dilemma' of short-termism in business, arguing that while quarterly reporting is often blamed, the root causes lie in an asymmetry of legal duties between directors and shareholders. Through case studies of Hitachi, PepsiCo, Royal Bank of Canada, and Royal Philips, it demonstrates how leaders use strategic 'horizons', stakeholder capitalism, and improved investor engagement to protect long-term goals. It also provides a comparative legal analysis of reporting obligations and fiduciary duties across eight major jurisdictions.

• Quarterly reporting is not the primary driver of short-termism; rather, it is viewed by leaders as an 'inconvenience' or a 'necessary evil' often maintained due to investor expectations or competitive pressure.
• There is a significant legal asymmetry where directors generally owe fiduciary duties to the company, but shareholders in most surveyed jurisdictions have no corresponding legal duty to act in the best interests of the companies they invest in.
• Corporate governance is shifting from 'shareholder primacy'—the belief that a company's sole purpose is to deliver profit to shareholders—toward 'stakeholder capitalism', which integrates environmental, social, and governance (ESG) matters.
• Hitachi manages long-term value by aligning its 'Social Innovation Business' with the UN Sustainable Development Goals (SDGs) and breaking down its long-term vision into three-year mid-term management plans.
• PepsiCo's 'Performance with Purpose' strategy emphasizes that long-term value requires balancing the duration and level of returns, noting that focusing solely on short-term high returns does not ensure future success.
• Royal Bank of Canada (RBC) utilizes a tiered 'horizon' investment framework: Horizon one (1-2 years), Horizon two (3-5 years), and Horizon three (5 years to a decade) to mitigate the risk of technological disruption.
• Royal Philips employs a two-tier governance system under the Dutch Corporate Governance Code, investing approximately 10% of sales revenue in research and development to secure its long-term future.
• Legal barriers to extending financial reporting intervals vary; while quarterly reporting is a legal requirement in India, Japan, and the United States, EU Member States are not legally required to publish results quarterly following the 2013/50/EU Directive.

APA

World Economic Forum (2019). White Paper The Modern Dilemma Balancing Short- and Long-Term Business Pressures. http://www3.weforum.org/docs/WEF_Modern_Dilemma_Report_2019.pdf

Chicago

World Economic Forum. White Paper The Modern Dilemma Balancing Short- and Long-Term Business Pressures. 2019. http://www3.weforum.org/docs/WEF_Modern_Dilemma_Report_2019.pdf.

Wikipedia

{{cite report |author=World Economic Forum |title=White Paper The Modern Dilemma Balancing Short- and Long-Term Business Pressures |date=March 2019 |url=http://www3.weforum.org/docs/WEF_Modern_Dilemma_Report_2019.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{worldeconomicforum2019white, author = {{World Economic Forum}}, title = {{White Paper The Modern Dilemma Balancing Short- and Long-Term Business Pressures}}, institution = {World Economic Forum}, year = {2019}, month = mar, url = {http://www3.weforum.org/docs/WEF_Modern_Dilemma_Report_2019.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }