Benefit Corporations: Fostering Socially Conscious Corporate Leadership

In the modern business world corporate social responsibility competes with sexuality for top billing in corporate marketing.1 Unfortunately, this high priority for corporate social responsibility seems more a matter of form than substance. While the consideration of social, environmental, and ethical issues lies center stage in business discourse, genuine progress continues to advance at a glacial rate. Despite estimates that over 2 million organizations work to promote social justice and environmental sustainability,2 multinational corporations continue to wreak havoc with debatable levels of accountability. In light of such a limited track record of success, as well as the social, economic, political, and cultural differences throughout the globe, the central question driving this article is as follows: Is it possible to foster a worldwide business environment where social enterprise reflects a common business practice rather than a notable exception to the rule of profits before people and planet?We believe that the answer to this question is yes, and that one of the vehicles may drive such change is an emerging and innovative type of business entity, the social enterprise. Numerous countries, including the United States, Canada, United Kingdom, France, Germany, Italy, Japan, and Russia, have already enacted legislation in support of social enterprise business entities.3 Despite the voluntary nature of social enterprise legislation, the emergence of such legislation has the potential to catalyze new expectations and efforts for behavioral change, paving the way for a new paradigm in business behavior.4We begin with a discussion centered on the traditional viewpoint that multinational corporations primarily creates social problems by briefly examining corporate social rights abuses, the shortcomings of existing regulation, corporate lobbying efforts, and the social impact of increased regulation. Next, we explore the growing strength behind a central challenge to the traditional viewpoint: multinational corporations can solve social problems. We then examine how socially conscious leadership and social enterprise provide a means for reexamining the dichotomy between the traditional viewpoint and contemporary business practices. Finally, we discuss the attributes of a specific social enterprise, the benefit corporation, followed by an assessment of the entity's development potential on an international scale. We conclude with suggestions for future research.The Traditional Viewpoint: Businesses Create Social ProblemsCorporate Social Rights AbusesThere is extensive evidence with the academic literature to support the traditional viewpoint that multinational corporations only generate social evils.5 Academic scholarship and the business press are besieged by examples of gross corporate malfeasance, including the mining of conflict minerals in the Congo by cell phone manufacturers, the practice of sweatshop labor in Bangladeshi garment factories, and the censorship of internet usage in diverse countries throughout the world.6 In a similar fashion, there is an abundant array of evidentiary support to the contention that humans are destroying the environment.7 Humanity takes the abundance of Earth's natural resources for granted, as modern humans have the same environmental impact in five minutes that early humans had in one year.8The world economy possesses numerous characteristics of a Ponzi scheme, for economic development now overtakes the Earth's sustainable yield capacity by 30%.9 Industrial polluters discharge thousands of pounds of toxic waste into the atmosphere and water system.10 The destructive social and ecological concerns that derive from global corporate activities are the recipients of an upward momentum of disapproval and condemnation from social rights advocates.11 Multinational corporations (MNCs) are involved routinely in assorted social cruelties, including environmental pollution, the disregard of domestic laws, and bribery. …

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