Purposes, Priorities and Accountability Under Social Business Structures: Resolving Ambiguities and Enhancing Adoption

Abstract

This article demonstrates that social business models do not meaningfully prioritize or impose accountability to “social good” over other purposes in ways that (a) best protect against owners changing their minds or entry of new owners with different priorities and (b) enable reliable accountability over time and across circumstances. This article further suggests a model that actually prioritizes “social good” and meaningful accountability to it. This article thus clarifies circumstances under which existing models might be most useful and facilitates broader and faster adoption as investors, entrepreneurs, employees, regulators, and others ensure shared, common understandings about purposes, priorities, and accountability.

Keywords: Hybrid business models, social good, benefit corporation, social purpose corporation, l3c, impact investing, social entrepreneurship, social enterprise, social business, mission related investing, corporate governance, business ethics

JEL Classification: K20, K23, K29, L20, L21, L22, L29, L30, L31, L33