ABSTRACT
At its root, the concept is really political: it is based on noticing who counts and who doesn’t for the person making decisions. The people who count are ‘insiders’. Everyone else is an outsider. You can think of insiders as living in a gated community. If they dump garbage over the wall, the garbage is gone as far as they are concerned. For firms, shareholders are inside the box and nonshareholders are outsiders. Profit maximizing firms don’t care much about what happens “outside of the box”.
