Proceedings of the International Association for Business and Society

Volume 25, 2014

Proceedings of the Twenty-Fifth Annual Meeting

Geoff Edwards, David Marlow
Pages 117-128

Allocation or Regulation: Reasserting Society’s Control over Corporations through Tenure

Corporations are a social and legal construct. They cannot exist without limited liability and other protections deemed necessary for modern commercial activity. The original justification for corporations was to supply goods and services at a scale beyond local enterprise. This notion of serving the community has been lost and corporations’ duty is now seen as increasing shareholder value, which can reduce to funnelling wealth from society to the investor class. Given this modern business orthodoxy, in the absence of statutory directions otherwise, a company is obliged to prioritise commercial forces over ethical ones. Corporate social responsibility becomes an appeal to morality and is doomed to fail. It is open to the legislature to adjust the statutory regime. Serving the public interest can be made a purpose or an objective. By analogy with land law, the simplicity of embedding responsibilities as a condition of registration is contrasted with third-party regulation.