Social Enterprise as Commitment: A Roadmap

Abstract

For-profit social enterprises lack the external accountability mechanisms of the charitable and corporate sectors. Absent legal reform, a for-profit social enterprise must develop internal mechanisms to prioritize its social mission, mitigate tensions between pursuing dual missions, and avoid engaging in deceptive greenwashing. This article contributes to the field of law and entrepreneurship by presenting a commitment approach to social enterprise governance within the bounds of existing social enterprise laws. Commitment to the amelioration of a social or environmental problem is a central attribute of social enterprise. A commitment approach is one in which for-profit social enterprise founders and the board of directors, in the early stages of the firm, adopt governance policies and processes that create an organizational identity committed to mission-accountability, transparency, and stakeholder governance. Adoption of a commitment approach at the highest levels of the organization aids in creating an organizational identity that reigns in conflict between social mission and financial profitability when managers face difficult decisions over costs and resource allocation. This article presents the commitment approach through the lens of a fictional for-profit social enterprise, and recommends specific governance policies and processes for public benefit corporations, benefit corporations, and social purpose corporations.

Keywords: social enterprise, Delaware public benefit corporation, benefit corporation, social purpose corporation