Choose Your Own Master: Social Enterprise, Certifications and Benefit Corporation Statutes

2 American University Business Law Review 1 (2012)

53 Pages Posted: 16 Jun 2012 Last revised: 26 Apr 2013

See all articles by J. Haskell Murray

J. Haskell Murray

Belmont University - College of Business Administration; Belmont University - Massey School of Business

Multiple version iconThere are 2 versions of this paper

Date Written: June 15, 2012


In the wake of the most recent financial crisis, interest in social enterprise has increased exponentially. Disillusioned with the perceived shareholder wealth focus of corporate law, entrepreneurs, investors, customers and governments have become more receptive to new paradigms. In the past four years, 17 states have passed one or more of five different types of social enterprise statutes and many additional states are considering similar legislation.

Focusing primarily on the benefit corporation form, this article examines three main issues: (1) whether social enterprise statutes are potentially useful, (2) how social enterprise law can be improved, and (3) whether social enterprises will be sustainable. First, regarding usefulness, this article recognizes the traditional legal framework already provides social entrepreneurs most of the flexibility they seek, but posits that the social enterprise statutes may better combat perceptions of a shareholder wealth maximization norm arising from existing for-profit corporation law (especially in Delaware). As a potential alternative to social enterprise statutes, the article suggests that states like Delaware could simply amend their existing corporate codes to expressly allow for a societal or environmental-focused objective in a corporation’s charter. Second, regarding improvements to social enterprise law, the article suggests: (i) statutorily requiring social entrepreneurs to choose their own primary master; (ii) recognizing modified versions of traditional corporate law concepts; (iii) lowering transaction and uncertainty costs; and (iv) eliminating certain mandatory rules. Third, regarding sustainability, the article concludes that intensive social enterprise branding efforts should be left to the private sector organizations like B Lab; and social investors, perhaps using new vehicles such as crowdfunding and social impact bonds, must fill the funding gap left by hesitant traditional investors.

Keywords: social enterprise, benefit corporation, B corp, B Lab, corporate governance, fiduciary duties, care, loyalty, takeover defenses, eBay, Ben & Jerry's, greenwashing, Delaware, constituency statutes, SROI, GIIRS, SASB

JEL Classification: K10, K22, M13, M14, G34

Suggested Citation

Murray, J. Haskell, Choose Your Own Master: Social Enterprise, Certifications and Benefit Corporation Statutes (June 15, 2012). 2 American University Business Law Review 1 (2012), Available at SSRN:

J. Haskell Murray (Contact Author)

Belmont University - College of Business Administration ( email )

United States

Belmont University - Massey School of Business ( email )

1900 Belmont Blvd.
Nashville, TN 37212-3757
United States

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Abstract Views
PlumX Metrics