Low‐profit Limited Liability Companies (L3Cs)

Artz, Nancy; Gramlich, Jeffery; Porter, Terry B.

doi:10.1002/pa.1437

Cited by 14 publications

(6 citation statements)

References 12 publications

(27 reference statements)

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“…In some cases, these organizations develop independently from a specific institutional framework, while in other cases, new regulations have been introduced to foster the development of these new organizations and to safeguard stakeholders from possible greenwashing practices (Stecker, 2016). Indeed, in many countries, there are efforts to develop legal frameworks that are capable of embracing the complexity of new organizational entities that are oriented toward blended ends such as BCs (André, 2015;Hiller, 2013;Robson, 2015) or low-profit limited-liability companies (L3Cs) (Artz, Gramlich, & Porter, 2012;Lang & Minnigh, 2010;Tyler, 2010), the latter with lower success (Callison & Vestal, 2010). As empirically observed by Cooney, Koushyar, Lee, and Murray (2014), several years after the promulgation of legislation for new organizational entities in many states of the US, an increasing number of companies is choosing to operate under these two new legal forms, with very rapid growth in the number of BCs.…”

Section: Literature Reviewmentioning

confidence: 99%

Understanding the purpose of benefit corporations: an empirical study on the Italian case

Mion

Adaui

2020

Int J Corporate Soc Responsibility

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Rethinking the traditional understanding of organizational purpose appears to be necessary. A teleological paradigm shift seems to be on its way, changing the focus of attention from considering business organizations as instruments used to generate profits toward a more comprehensive understanding of their purpose and of the benefit they can create for society. Recently, new organizational entities have emerged, accompanied by the renewal of institutional frameworks, among them are benefit corporations. Italy was the first European country to introduce a legal framework to define the benefit corporation as a particular legal entity. The Italian law on the benefit corporations proposes the promotion of firms that pursue the generation of benefit in a responsible, sustainable, and transparent way and considering diverse stakeholders. This paper explores and describes the multidimensional understanding of benefit and purpose of Italian benefit corporations, utilizing qualitative and quantitative content analysis of 94 Italian benefit corporations' purpose declarations, and providing a deep insight into the purpose declared by benefit corporations. The research highlights a certain vagueness in public declarations of the purpose of benefit corporations, even though it is clear that they attempt to differentiate themselves from traditional businesses by focusing on social objectives more than on economic ones. Furthermore, normative compliance emerged, but further normative requirements seem to be needed to make more effective the transformative potentiality of benefit corporations and to avoid risks of opportunistic behaviors.

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Section: Literature Reviewmentioning

confidence: 99%

Understanding the purpose of benefit corporations: an empirical study on the Italian case

Mion

Adaui

2020

Int J Corporate Soc Responsibility

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“…CICs are subject to a dividend and interest cap as well as an asset lock, meaning that assets may not be transferred or distributed to any organization apart from a CIC, a charity, or a similar body established outside the UK (Nicholls 2010). In the United States, L3Cs have three main requirements: (1) they must be organized to accomplish a charitable purpose, (2) they must be primarily created neither to accumulate property nor to earn a profit, and (3) they must not be created to further any political or legislative objective (Artz, Gramlich, and Porter 2012). With both new legal forms, equity investment allows enterprises to compete on the bundle of financial return and social impact available to private investors (Henderson and Malani 2009).…”

Section: Preferential Equitymentioning

confidence: 99%

Crowding-in or Crowding-out? How Subsidies Signal the Path to Financial Independence of Social Enterprises

Reichert

Hudon

Szafarz

et al. 2021

Perspectives on Public Management and Governance

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In today’s multisector configurations, there is little clarity about whether and how public and private subsidies influence social enterprises’ pursuit of financial stability. We address the strategic role of donors in the social-business life cycle whereby social enterprise start-ups rely on subsidies, while mature social enterprises strive for independence from donors. To address the “missing middle,” we develop a typology of subsidy instruments and an intermediary signaling model to clarify how subsidies shape the evolution of outcomes for social enterprises. We argue that source variation matters for certain instruments like corporate intangibles and governmentally subsidized credit guarantees, which trigger crowding-in effects and attract commercial partners, while preventing perverse crowding-out effects, such as soft budget constraints. To illustrate this commercialization story, we draw upon a microfinance case study, demonstrating how public and private donors can induce crowding-in and crowding-out effects. In short, our subsidy typology helps unpack the signals that public and private subsidies send to commercial funders of social enterprises and how they shape the path to future financial independence.

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“…How does the SE model connect marketing and financing in addressing the social problems? It has been suggested that they need to garner additional sources of revenue from sustainable sources in addition to grants and donations that NPOs rely on (Artz et al, 2012). With the SE paradigm, inspired individuals thus try to confront chronic global challenges and create value at the societal level with the support of patient capital[1], thereby overcoming the lacunae of previous economic models.…”

Section: Agenda Of Social Enterprisesmentioning

confidence: 99%

Integrating social enterprise and social marketing with shadow framework

Roy

Goswami²

2020

JSOCM

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Purpose The purpose of this paper is to argue for an integrative model of social enterprises (SE) and social marketing (SM) to usher in desirable change, instead of the currently adopted either/or approach. We offer the shadow framework to integrate these two paradigms in the context of peace-building organizations. Design/methodology/approach Using purposive sampling strategy, 19 cases of peacebuilding initiatives were identified and reviewed from secondary sources. Ashoka Fellows working in the domain of peacebuilding, along with a few other exemplary cases across the globe were considered. Findings We found an emerging typology of three forms in the organizational responses to peacebuilding initiatives: (a) pure charity-driven work, (b) dual structure of charity plus business enterprises, and (c) social enterprises with distinct revenue model. Research limitations/implications Building upon previous theoretical research, we find a lot of merit in SEs adopting the SM toolkit. We contribute to theory building by showing the interaction between paradox theory and stakeholder marketing in the context of SEs dealing with wicked problems such as peacebuilding. Consequently, we propose a shadow social marketing (SSM) model that would camouflage the real offering of peace through an apparent offering that would be non-controversial in nature and result in moderate-importance small wins for the multiple stakeholders involved with conflicting interests. Practical implications From a managerial perspective, chances of success of the desired social change increases by complementing the efforts of SEs through the SM toolkit. Organizationally, although all the three forms of peacebuilding initiatives can benefit from systematic usage of the SSM, they need to reframe their efforts toward those that are not pro-peace, rather than preach to the converted. Consequently, the answer may lie in efforts at building cultural sensitivity to promote entrepreneurship amongst such target groups amongst such target groups in conflicting communities, with an organizational form that successfully marries SEs and SM. Originality/value Though previous scholarship mentions the need for finding complementarities between social marketing objectives and social enterprise missions, no paper yet has suggested a roadmap for achieving it. This paper highlights an integrative plan that, in this specific case of peacebuilding initiatives, or social enterprises in general, can leverage to evolve better organizational practices, improve financial sustainability and measurable impact to effect the desired social change.

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Low‐profit Limited Liability Companies (L3Cs)

Cited by 14 publications

References 12 publications

Understanding the purpose of benefit corporations: an empirical study on the Italian case

Understanding the purpose of benefit corporations: an empirical study on the Italian case

Crowding-in or Crowding-out? How Subsidies Signal the Path to Financial Independence of Social Enterprises

Integrating social enterprise and social marketing with shadow framework

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