[brookst]

Publicly traded companies also don’t have to increase profit margins. They generally do, but so do privately traded companies.

[Hemospectrum]

Increasing profit margins is a reliable way to increase stock prices, which is (at this stage of capitalism) the most powerful force directing the allocation of capital. It's a self-reinforcing feedback loop with far-reaching power throughout the economy.

[brookst]

Allocation of capital matters for startups. Most large companies aren’t issuing new stock, so profit margins only affect secondary markets for their stock.