Disruptive Innovation and the Global Emergence of Hybrid Corporate Legal Structures
European Company Law, Volume 11, Issue 2
13 Pages Posted: 9 Jul 2014 Last revised: 12 Jul 2014
Date Written: July 8, 2014
There is considerable legal scholarship focused on reforming the shareholder primacy model of governance embodied within the modern day corporation. While these efforts are worthwhile and must continue, there are certain ideological and practical limitations that make true reformation of this model difficult. It is important, therefore, that in the midst of ongoing efforts, one does not lose sight of available alternatives.
This article promotes a novel perspective that does not spring from traditional-style efforts of corporate reform, but rather, on how a growing trend in corporate law may create 'disruptive innovations' in the marketplace and foster an environment where sustainable companies eventually become the norm. This trend is the global emergence of corporate hybrid legal structures that are blending both for-profit and non-profit legal characteristics in their governance design. Corporate social responsibility (CSR) is getting a facelift in the private sector. Large multinational corporations are still catching onto CSR, but the leaders at the forefront of the movement are transforming the concept of CSR into one of 'social innovation' and the integration of business concepts with social activism. The growth of the 'social enterprises', a definition with no legal meaning that commonly refers to either a for-profit corporation trying to do social good, or an enterprising non-profit organization, is beginning to generate statutory responses in several countries. Legislators are beginning to create corporations with legal features that support social enterprises. With correct strategic implementation, corporate hybrids have the potential to challenge the status quo and force mainstream corporations to change how they operate.
Keywords: Disruptive innovation; corporate governance; corporate law; social enterprises; social value; corporate social responsibility; for-profit corporation; non-profit organization
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