Business and Professional Ethics Journal

published on December 23, 2016

Organizational Horcruxes
Benefit Corporations as a Container for Entity Identity

This article examines the potential effect of organizing as a benefit corporation both on reducing transaction costs and as a container and creator of firm “identity.” It argues that to the extent that the Model Benefit Corporation Law (MBCL) creates a permissive environment—a big tent that can accommodate a diverse set of investors—it diminishes the power of the benefit organizational form to shape a unique benefit identity. Conversely, to the extent the MBCL creates a schema of mandatory defaults that unduly impedes contracting, it will discourages adoption by entrepreneurs, and risks becoming a minor aberration—perhaps one of many—on the organizational landscape. The article suggests that further empirical research is needed to determine which firms are choosing the benefit corporation form; how the benefit corporation identity may have influenced that decision; and how those firms themselves affect perceptions of benefit identity by the larger community.