The impact is extinction. They create openings for cronyism at the expense of effective responses to global problems.

In this article, we offer a critical view of the Great Reset thesis, defined as the insistence on more government intervention in the innovation process through subsidy schemes or direct involvement, more emphasis on stakeholder capitalism brought about by a combination of legislation and pressure on business, and new metrics used to monitor private as well as public actors’ performance with respect to sustainability, innovation, and stakeholder performance. The Great Reset thesis is a set of normative propositions, calls for a better world that supposedly should be championed by management scholars as well as political and business leaders and the public. While Great Reset proponents do not a call for eliminating markets or capitalism, they call for new, normative management theory that in many ways is inconsistent with the market economy in its current form. The Great Reset is not only about changing managers’ objectives, beliefs, and actions, but also changing how organizations interact. In essence, calls for stakeholder management, new metrics for assessing social and environmental impact, and greater government intervention in markets to achieve social and environmental goals are closely related; they represent complementary arguments for restructuring the conventional capitalist model in which the means of production are privately owned and these owners—for large companies, shareholders—are responsible for managing their assets.

We argue that the Great Reset thesis is based on a fundamental lack of appreciation of the power of markets to bring about desirable social outcomes. In calling for a break with the traditional capitalist model, it leads to a world in which pressing social, environmental, and political challenges are exacerbated rather than alleviated. Moreover, the Great Reset thesis rests on a naïve conception of how governments work that neglects well-known problems concerning what governments (can) know, their incentives to take the right actions, and their vulnerability to rent-seeking on the part of organized special interests. It also mistakenly believes that the current system is a mostly unfettered market-based economy (e.g., Schwab, 2020) when, in reality, there is already massive government intervention—and, as a result, crony capitalism (Klein, Holmes, Foss, Terjesen, & Pepe, 2021)—in every major sector of the economy (Stiglitz, 1989, Majone, 1994).

At the firm level, the Great Reset thesis is similarly based more on a naïve belief in the benefits of stakeholder governance rather than a careful, sober analysis of the relative benefits and costs of alternative systems of governance, including shareholder and stakeholder models. As a large literature suggests, stakeholder approaches are plagued by unresolved (and perhaps unresolvable) problems of aligning the interests of multiple stakeholders with goals that cannot be aligned in the absence of a common scale of measurement (Jensen, 2004; Foss & Klein, 2018). The new proposed metrics will not solve these problems.

Moreover, implementing stakeholder management amounts to a dilution of ownership. Ownership is an economic function that can be performed better or worse, and the goal of an economic system should be to align ownership with ownership competence (Foss, Klein, Lien, Zellweger, & Zenger, 2021). Stakeholder management proposals risk putting ownership in the hands of less competent owners (Foss & Klein, 2018), which is particularly harmful under the conditions of high novelty, uncertainty, and complexity that characterize more innovative parts of the economy (e.g., Adams & Licht, 2011). In particular, as emphasized by Hansmann (1996), larger and more heterogeneous groups have difficulty exercising ownership rights, as diverging interests make agreement difficult, particularly where exit from the group is costly. Thus, even if we conceive of a community, society, or even the entire world population as the rightful “owners” of various public goods (e.g., environmental preservation), it doesn’t follow that assigning ownership rights to everyone in the group will be effective in achieving the group’s goals.

At the same time, concentrating more decision power in the hands of governments, implementing complex and diffuse metrics, and diluting ownership by groups high in ownership competence (typically, private investors) hampers the functioning of markets, allows for more crony capitalism, and reduces the resources that are available for fostering innovation and economic growth, the primary means of alleviating poverty, improving global health, and improving the quality of life. Leveraging management theory in the service of the Great Reset therefore risks being a harmful enterprise. We end by sketching an alternative market-based way forward.