The Firm as Common Pool Resource: Unpacking the Rise of Benefit Corporations
Citation: Janine Hiller, Scott J. Shackelford, Xiao Ma (2016) The Firm as Common Pool Resource: Unpacking the Rise of Benefit Corporations.
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Download: https://ssrn.com/abstract=2874654
Tagged: benefit corporation (RSS), delaware (RSS), connecticut (RSS), commons (RSS)
Summary
Authors claim benefit corporation legislation is moving corporate identity and its governance further on the spectrum towards being a Common Pool Resource because it requires sharing of corporate resources through socially responsible behaviour (difficulty of exclusion) while maintaining the profit paradigm of corporate existence (high subtractability).
Historical summary of debate over nature of corporation from 1930s and relationship to theory of firm -- both nexus of contracts and property views supporting shareholder primacy, but more expansive stakeholder view did not disappear, and was revived by team production theory (Stout, Blair). Many U.S. states have passed "constituency statutes", but not Delaware.
Roman law created firm as legal person "as a non-profit organization motivated toward promoting the public good", then ~1350-1900 corporations for profit were permitted, then corporations moved to widely-held management structures, then came multinationals. Benefit corporations harken "back to the original public good purpose of the first Roman corporations."
Benefit Corporation state statutes were the result of advocacy by BLab and others, starting with the founders of AND1, who were disappointed in changes to the company after they sold it. Presents as case studies the process of benefit corporation statute adoption in Connecticut (motivated by jobs, advocacy by a local social business accelerator) and Delware (advocated for by NYC VCs and Delaware judges, including Leo Strine).
Also briefly surveys social enterprise forms in Europe, largely focused on charity-oriented cooperatives, but also recently innovative Community Interest Companies (UK) and benefit corporation legislation in Italy.