The Social Enterprise: A New Form of Enterprise?
The American Journal of Comparative Law, Oxford University Press, Forthcoming
63 Pages Posted: 20 Apr 2022
Date Written: March 22, 2022
In the last decade, social enterprise emerged as a part of the debate around the purpose of corporations. The social enterprise grew out of the idea that businesses can do well by doing good. Supporters of this vision of “stakeholder governance” believe that enterprises can mind the bottom line without disregarding social issues and the environment. However, as businesses’ commercial undertakings whose sustainability depends on their profitability, their detachment, solidarity, and welfare-driven agenda are heavily undermined by market pressure to mind shareholders’ wealth maximization. Still, due to their ability to anticipate a change of status quo ahead of the State during times of crisis or systemic risk, businesses can adapt and even join individuals to fight for social, political, and economic change. How honest are businesses’ efforts to change? Are their efforts solely motivated by self-interest? Can it be any other way? Actions attributed to corporations with a social focus have been debated as corporate social responsibility strategies are often deemed to enhance profit maximization. Given the skepticism corporations face when they refrain from maximizing shareholder value to engage in socially-charged activities, one must ask—is social enterprise a new form of business enterprise or is it merely a measure to address unavoidable problems like climate change, economic inequality, social injustice, and employee max exodus in the “Great Resignation” following the COVID-19 pandemic? This Article addresses these questions and suggests a legal framework and approach that considers social enterprise as self-sufficient rather than a mere byproduct of traditional legal forms for business.
Keywords: social enterprise, nonprofits, investors, stakeholders, wealth maximization, capitalism, Delaware, fiduciary duties, corporate governance, metaverse, social impact, private capital, securities and state regulation, human capabilities, interdisciplinarity
JEL Classification: L21, L26, L31
Suggested Citation: Suggested Citation