March 13, 2014
The Social Enterprise Effect
Posted by Joseph Yockey

When Pope Francis began his papacy one year ago today, how many people thought he would soon become Time’s Person of the Year or grace the cover of Rolling Stone magazine? I'm guessing that the so-called “Francis Effect” has at least something to do with the Pope’s message of inclusion. For example, when speaking about tolerance and how to approach people from different backgrounds, Francis famously recommended, "do good: we will meet one another there."

Apart from any theological considerations, those words remind me of the concept of bracketing. My understanding of bracketing is that it refers to a mode of negotiation or analysis where the most contentious issues are set to one side so that the focus can remain on matters of common agreement. William Simon probably puts it best in an article in the Wisconsin Law Review:

“The hope [with bracketing] is that progress can be made without fully addressing the hard issues, or that discussion of the other issues will lead to a reframing of the hard ones in ways that will make them more tractable. Think, for example, the progress that occurred in discussions of the death penalty when discussion was diverted away from issues the ultimate legitimacy of state killing toward a discussion of the reliability of the process of guilt determination.”

In my recent paper, Does Social Enterprise Law Matter? (Alabama Law Review, forthcoming), one of my claims about the potential role of social enterprise legislation is similar. Benefit corporations, and social enterprises more generally, cannot solve every social problem. There will always be critical roles for nonprofits, government, and traditional corporations to play. However, discussions about “corporate social responsibility” and the proper roles of nonprofits and government remain highly contentious. By contrast, I’ve noticed that social enterprise as a general concept often receives strong support from both sides of the political spectrum. Observers on the right like its free-market approach to social issues, and those on the left like how it supplements other philanthropic efforts. It’s only when actual social enterprise laws pop up that controversy tends to arise (i.e., do benefit corporations offer anything new, or will they just undermine CSR efforts at existing firms?).

Yet, if commentators who all agree that social enterprise has value come together to discuss experiments like the benefit corporation form, the resulting dialogue may prompt them to reconsider how they approach more controversial issues in the field. It's plausible that this dialogue might even render some of the new legal forms obsolete, if, for example, it causes participants to reframe ideological disputes surrounding corporate purpose or duty in ways that lead social entrepreneurs to feel less dependent on a separate statutory regime.

In this way, founders and investors might come to see corporate law as reaching a stage where distinctions between “regular” corporations and benefit corporations appear unnecessary - thanks in part to using social enterprise law as an initial rallying point and source of common ground.  

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