Growing wealth and income inequality, and concerns about climate change, have chipped away at the normative belief that the fiduciary duty of directors of commercial enterprises lies in maximizing shareholder value regardless of the negative externalities created by a firm (Stout 2012). Building upon the turn in institutional theory toward a focus on institutional entrepreneurship and institutional work (DiMaggio 1988, Fligstein 2001, Maguire, Hardy et al. 2004, Lawrence, Suddaby et al. 2010) this paper examines the early results of an effort in the United States developed by B-Lab to create a certification for social business (the B-Corps) to change these norms, with a focus on examination of the “employment model” emergent in the B-Corps businesses.
Recent work on institutional change (DiMaggio 1988, Lawrence, Suddaby et al. 2010, Thornton, Ocasio et al. 2012) emphasize that, while new arrangements are possible (Clemens 1993, Rao and Sivakumar 1999), attention to the interplay of agents and institutional factors is needed when examining the formation and resilience of new arrangements (Giddens 1984, Sewell 1992, Canales 2010, Thornton, Ocasio et al. 2012). Drawing from publically available data, the paper provides an analysis of the early adopters of the B-Corps, including: descriptive statistics on mean scores for each of the certification criteria by industry, cluster analyses to explore the relationship between scores on social dimensions and industry location, and statistical tests of hypotheses predicting the types of organizations likely to be early adopters taken from the scholarly literature on organizational innovation, diffusion, and categories (Zuckerman 2000, Hsu, Hannan et al. 2009, Phillips, Turco et al. 2013, Leung and Sharkey 2014). Additionally, specific organizational practices that undergird the certification hurdles will be explored, with a focus on those aimed at restructuring the “employment model.”
We find that the largest segment of B-Corps membership is comprised of consulting, finance, legal and marketing agencies, all actors that have emerged to profit from and build capacity for social business firms, rather than social business firms in their own right. B-Corps also attracts small, private companies operating in industries with strong ideological commitments to the environment. Across all industry categories, B-Corps membership also contains sizeable segments engaged in restructuring the nature of employment practices through profit sharing, work integration for disadvantaged communities and worker ownership. These findings are discussed in terms of the implications for B-Lab’s broader institutional change project.
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Social enterprise, human resource management, employment creation and job quality
