Giving Priority to Social Good and Public Benefit with Meaningful Accountability Thereto: 'Differentiated Social Good' and the Social Primacy Company

Abstract

There is a heightened lack of clarity and understanding about the new U.S. business forms both in terms of theory and practice, especially with regard to relative priorities of social good (or the absence thereof), decision-making, and meaningful accountability thereto (or the lack thereof). As a likely result, investors, entrepreneurs, and their respective advisors are not using the forms, or they too often are using the forms for the wrong purposes. Moreover, policymakers risk incentivizing something other than what they intend while punishing those they do not intend to punish. In addition, capital is not flowing to businesses that pursue and prioritize social good as had been hoped.

Contributing to the complexity and consequences are efforts to re-characterize businesses as “social” and investing as “impact” any or all businesses or investments that have even a smidge of social good. As a result, too often, too many people feel good about what they believe they are doing without realizing that they are not doing what they believe.

An intentional framework for decision-making and evaluation can help inhibit these results. This article presents a framework grounded in understanding commitment to social good, desired connections between efforts/resources and social results, and approaches to social good that are distinct from those of traditional approaches – i.e., “differentiated social good.” It also juxtaposes the proposed “social primacy company” as an example of what a form that actually does what too many mistakenly believe traditional and the still new hybrid forms purportedly do.

Investors, entrepreneurs, their legal and other advisors, policymakers, journalists, academics, researchers, and others would benefit from such clear understandings, framework, and considerations of differentiated social good.

Keywords: benefit corporation, b corp, social entrepreneurship, impact investing, social enterprise

JEL Classification: G30, K20, K23, K29, L20, L21, L22, L29, L30, L31, L33, I38