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54 Sw. L. Rev. 143 (2025)
Changing Corporate Purpose: Law, Managers, and the B Corp

handle is hein.journals/swulr54 and id is 151 raw text is: CHANGING CORPORATE PURPOSE: LAW, MANAGERS, AND THE B CORP Harwell Wells* I. INTRODUCTION The benefit corporation marks a genuine innovation in American law, importing into the core of corporation law a new mandate that business corporations that choose to organize as benefit corporations be run to produce benefits for constituencies beyond shareholders At the same time, it's a puzzling innovation because it raises questions about the commands of the law, the actions of managers, and the exact relationship between the two. As Michael Dorff shows us in his excellent new book, at the core of the benefit corporation is the notion that a corporation should be oriented towards a corporate purpose beyond just producing economic value for shareholders.2 The benefit corporation promises to accomplish this by changing the law. As the story goes, whereas once the law's dictates compelled managers to prioritize shareholder value above all, now it will not merely allow but require managers ofbenefit corporations to pursue some other benefit as well, beyond shareholders' narrow economic interests. (This summary skips over some details.) This new legal form is an attempt to escape both legal and business imperatives that push for-profit corporations toward serving only shareholders.3 Before we celebrate this new departure, however, we should understand how we arrived here in the first place. II. THE LAW AND CORPORATE PURPOSE Let's begin with the law. For almost two centuries, the mandate of corporation law has been clear: business corporations should be run to benefit * Richard H. Walker '75 Chair in Business Law, Temple University James E. Beasley School of Law. 1. See generally MICHAEL B. DORFF, BECOMING A PUBLIC BENEFIT CORPORATION: ExPREss YOUR VALUES, ENERGIZE STAKEHOLDERS, MAKE THE WORLD A BETTER PLACE (2024). 2. See id. at 53. 3. One may question whether the benefit corporation is an entirely new form, but ifwe accept that until now the law has put shareholder benefit above all other goals then it seems the benefit corporation really is a sharp departure from what has gone before. See id. at 56-57. 143