Explaining the Location of Mission-Driven Businesses: An Examination of B-Corps

Publisher: GSE Research

E-ISSN: 2051-4700|2014|55|13-25

ISSN: 1470-5001

Source: The Journal of Corporate Citizenship, Vol.2014, Iss.55, 2014-09, pp. : 13-25

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Abstract

In his well-known essay, Milton Friedman (1970) argued that it is the social responsibility of business to maximize profit. While such laissez-faire reasoning theoretically considers the welfare of all the stakeholders in the business enterprise through market pricing mechanisms, there is a growing and pressing concern with market failures. Among these failures are externalities, issues of inter-generational equity and short-termism, the commons problem, and decision making biases. The ramifications of these market imperfections have manifested themselves in climate change, financial crises, and deforestation, among other global challenges. Some businesses have responded by refocusing their mission away from solely profit maximisation to broader, more sustainable goals. In this paper, we explore the factors that contribute to businesses adopting one such innovation, the B-Corporation designation.

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