Corporate Purpose

Abstract

This chapter examines the duality of corporate purpose. First, corporate purpose can be understood at the level of the individual corporation. Enabling corporate law allows for customization and corporate organizers can specify their choice of purpose. Second, by contrast, corporate purpose is viewed as a generalizable and monolithic concept across companies. It is an abstract debate at the heart of corporate law, which ramifies deeper issues such as the role of corporations in society and in whose interest they should be run. We explore these two sides of corporate purpose and argue that while each aspect of corporate purpose is a commonly understood way of thinking about the topic, they operate in tension with each other. The flexibility provided under law is effectively modified or constrained by the cultural, legal, and institutional environment that fiduciaries operate in, which has been and continues to be shaped by the great debate about corporate purpose.

Keywords: corporate purpose, corporate law, corporate governance, corporate social responsibility, CSR, fiduciary duties, corporate charter, shareholder primacy, shareholder value maximization, ESG, benefit corporations, stakeholders

JEL Classification: G30, G38, K10, K20, K22