Renewing the debate on the purpose of the corporation: A purpose-driven model of the corporation

In the debate on corporate purpose, the shareholder value criterion has been largely discarded, as shareholders are not legally the owners of corporate assets, nor the sole “residual claimants”. The owner is the corporate entity, which can mediate between different parties and pursue objectives that differ from those of the shareholders. However, this theoretical argument is empirically weakened by the fact that the corporation is exclusively monitored by shareholders. Can corporations genuinely pursue a variety of purposes despite shareholders being the only associates or are they necessarily shareholder-oriented? In this article we study new corporate forms (such as Flexible Purpose and Benefit Corporations) to reveal that corporations can pursue a variety of objectives, provided they specify their own purpose and lock it into their statutes. We develop a purpose-driven model of the corporation, which both revives the original corporate model and accounts for the management function in law. This model, we argue, profoundly reshapes the debate on corporate purpose.