Benefit Corporation Legislation and the Emergence of a Social Hybrid Category

Abstract

Previous research highlights tensions that social hybrids face by spanning categories. This article explores the emergence of legislation to support a new category for social hybrids, focusing on Benefit Corporation legislation in the United States. It presents quantitative analysis of state-level factors that make a state suitable for a social hybrid category (attractiveness for for-profit business and nonprofits, existing social hybrid organizations, legislative intensity, and political leanings) followed by qualitative analysis of the arguments marshaled for the creation of the Benefit Corporation legal form. These findings raise important insights for research on social hybrids and suggest a range of practical implications.

Consumer motivations to purchase from benefit corporations (B Corps)

“…B Corps are for‐profit organizations that are formally committed to creating social and environmental benefits, in addition to their traditional for‐profit motives (Chen & Kelly, ; Hiller, ; Stubbs, ). B Corps have also been referred to as hybrid organizations that combine for‐profit and non‐profit attributes (Rawhouser et al, ). These firms must be regularly certified through B Lab to ensure that social and environmental goals are sustained (Surowiecki, ).…”

Hybrid Organizations: Origins, Strategies, Impacts, and Implications

“…In finding that only small numbers of people and organizations typically submitted testimony when Benefit Corporation legislation was discussed and debated, Rawhouser, Cummings, and Crane's work shows that anyone wanting to influence such legislation in their region often can. 25 A second avenue of influence identified by the same study exists in the certifications that often precede the implementation of Benefit Corporation legislation, in that companies favoring significant social and environmental agendas can add their weight to the trend by having their commitments certified by organizations such as B Lab. 26…”

“…8 The importance of legal and taxation structures cannot be underestimated in fulfilling hybrid organizations' objectives, including both established models of incorporation, partnership, and tax-exempt status together with emerging models of benefit corporations and extended partnership law that integrate the achievement of both the social mission and shareholder value. In their article "Benefit Corporation Legislation and the Emergence of a Social Hybrid Category," Rawhouser, Cummings, and Crane investigate the support for and opposition to Benefit Corporation legislation in the U.S. 9 They found that states characterized by a Democrat majority that passes more bills, a market with firms thriving on sustainability-oriented products, and low nonprofit activity are more likely to enact Benefit Corporation legislation. More significantly, the authors indicate that anyone in favor of, or opposed to, Benefit Corporation legislation can influence the likelihood of a State's enactment of it, because less than ten people or organizations typically contributed to pre-vote testimony.…”

Strategic Alliances in Firm-Centric and Collective Contexts: Implications for Indigenous Entrepreneurship

“…Therefore, as enterprises continue to emerge around the world as a means for providing social benefits through participation and/or resisting the neoliberal market system (Rawhouser et al 2015;Economies 2020, 8, 31 6 of 31 Stiglitz 2002;Polanyi 1944), partnerships with Indigenous communities entail direct implications within the related spheres of CRS, Indigenous knowledge systems and worldviews, and SAs in theoretical and practical ways (Berkes and Ross 2013).…”