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Public interest-orientation: (New) organizational forms

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Since recently, a new organizational form is emerging to accommodate the pursuit of both profit and social or environmental purposes (e.g. the ‘benefit corporation’ in the U.S.). This development is especially striking as this new form basically re-embodies the original idea behind the organizational form of the corporation: In early 19th century Europe, the permission to found a corporation (and, connected to that, to be endowed with limited liability and legal personhood) was a royal privilege that was granted only if the enterprise served the interests of the general public (e.g., any kind of infrastructure: railways, insurance companies, banks, etc.).

In our project, we trace the development of the organizational form of the corporation and reconstruct its institutionalization in the German speaking context – a context in which the ‘B-corporation’ has not yet gained much attention. This may be due to the fact that here the public interest of the corporation has had a distinct development: In the early 20th century, the corporation was increasingly perceived as a social institution per se and not primarily as an instrument of its stockholders. Both ideas, the pursuit of public interests and the idea of the corporation itself having own interests that may deviate from its share- and stakeholders’ became codified in the corporate act of 1937 by the Nazi regime – and have survived until today in Austrian and German corporate law. We especially analyze how (a) the contested, yet robust ideas of the ‘best interest of the company’ and the ‘interest of the public’, as formulated in the Austrian corporate act of 1965 (article 70), survived, albeit with changing interpretations over time, and (b) these developments impact the potential interest in the new organizational form of the B-corporation.

In this project, we bridge the disciplines of organization research and legal history. We analyze legal documents from the last two hundred years and supplement these data by other material, such as ministerial protocols and administrative files. In addition, we conduct interviews with leading experts that have been involved in or carry relevant knowledge about the significant 1965 reforms of corporate law in Austria and Germany. Our project collaborates with a research team at MINES ParisTech that analyzes the developments in France.

Team: Renate Meyer, Stephan Leixnering

Partner: Peter Doralt (WU Vienna), Eva Boxenbaum (MINES ParisTech and Copenhagen Business School), Blanche Segrestin (MINES ParisTech)  

Support: Thomas E. Hofer