








































1 

Trends Making Social Responsibility Easier: Two 

Corporate Structures, A Certification and the United 

Nations Global Compact 

Doug Nay 
East Stroudsburg University of Pennsylvania 

Denise T Ogden 
Penn State University – Lehigh Valley 

In our global business environment, short term profit focus, stock price fluctuations, global 

competition and disruptive technological change tempt leadership toward disregarding corporate 

social responsibility and in many cases behaving unethically. There are four positive trends underway 

that encourage achieving social good and more ethical governance. All four introduce a duality of 

purpose for achieving both business profit goals and social issue objectives: 1. Starting or changing 

to a Benefit Corporation, 2. Becoming a Certified B Company, 3. Operating as a L3C organization 

and, 4. Following the United Nation’s Global Compact. This article examines the foundations for 

each. These trends are gaining traction as businesses focus more on corporate social responsibility. 

Keywords: Corporate Social Responsibility; Benefit Corporations: Low -Profit Limited Liability 

Corporations; B Corporations; Social Entrepreneur 

Introduction 

In his speech at the 2008 World Economic Forum, Bill Gates challenged people to engage in 
“creative capitalism” which is “a hybrid engine of self-interest and concern for others [which] serves 
a much wider circle of people that can be reached by self-interest or caring alone” (Gates, 2008).   
Because of Bill Gates and others, creative capitalism is changing the way many conduct business, 
with more focus on behaving more socially responsible while making a profit.  More companies are 
focusing on the triple bottom line, a phrase coined by Elkington (1997) to designate those 
companies focusing on people, planet and profits.  In our global business environment, short term 
profit focus, stock price fluctuations, global competition and disruptive technological changes tempt 
leadership toward disregarding corporate social responsibility and, in many cases, behaving 
unethically. Proactive social responsibility (Torugsa, O’Donohue & Hecker 2013) occurs when firms 
voluntarily go beyond regulatory requirements to support sustainability and contribute to society.   

http://journals.sfu.ca/abr ADVANCES IN BUSINESS RESEARCH 
2018, Volume 8, pages 1-14 



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Our paper outlines four positive trends underway that encourage achieving social good and 
more ethical governance: 1. Starting or changing to a Benefit Corporation 2. Becoming a Certified B 
Corporation 3. Operating as a Low-profit Limited Liability Company (L3C) and 4. Following the 
United Nation’s Global Compact. All four introduce components related to the tenants of corporate 
social responsibility: This article examines the foundations for each trend. These structures are 
gaining traction as businesses focus more on corporate social responsibility. 

These structures are important because of the potential for mutually beneficial partnerships 
that focus on improving society.  The impetus to focus on corporate social responsibility helps to 
grow communities by helping to solve local problems.  Many people prefer to buy from companies 
that align with their own altruistic goals and these trends allow companies to focus on social goals 
over profits or both social goals and profits. These business formats provide opportunities for social 
entrepreneurs and legal protection for corporate managers who can now better balance societal 
concerns with shareholder returns (Stecker, 2016).   

Corporate Social Responsibility 

While there are many definitions of corporate social responsibility (CSR), most consider the 
welfare and values of society.  One of the first attempts to define CSR was Bowen (1953) who said 
business management “must be used with a view to the interests of society at large” (p. 135). His 
idea was reinforced and broadened through the years, including McGuire (1963) who included 
employee and community welfare and education and political needs of society.  The Committee for 
Economic Development (CED) (1971) published a report, Social Responsibilities of Business Corporations, 
which outlined the rationale to reexamine the role that companies play in society.  Their main 
premise is that “business functions by public consent, and its basic purpose is to serve constructively 
the needs of society –to the satisfaction of society” (1971, p. 11).  The CED presented corporate 
responsibility as three concentric circles.   The inner circle represents a companies’ primary 
economic responsibilities, the intermediate circle includes a corporation’s obligation to become 
more aware of societal values and align the company’s policies and practices with these values and 
the outer circle expands expectations so that companies are more active in improving society 
(Carroll, 1979, Davis & Blomstrom, 1975).  

Rasche (2017) supports corporate social responsibility as being good for business in growth, 
reputation, talent discovery and return on investment. Seminars, speeches and leaders teach social 
and environmental transparency and ethical responsibility with business accountability.  According 
to research, in general, consumers support companies that are socially responsible (Bhattacharya & 
Sen, 2004; Brown & Dacin, 1997; Creyer, 1997; Eccles, Ioannou & Sarafeim, 2012; Ellen, Mohr & 
Webb, 2000; Murray, 1997; Sen & Bhattacharya, 2001). 

Still, quarterly results, meeting company predictions, and financial success define the 
capitalistic model, supported by the contingency that believes social and environmental issues are 
not a business responsibility. Economist, Milton Friedman wrote: 

…there is one and only one social responsibility of business -- to use its resources 
and engage in activities designed to increase profits so long as it stays in the rules of 
the game, which is to say, engages in open and free competition, without deception 
or fraud, conforming to the basic rules of society, both those embodied in law and 
those embodied in social custom (1970, 133). 



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The first part of the quote is the most cited, but the second part is as important. 
Unfortunately, many corporations adhere to increasing profits no matter the costs.  Bowen (1953), a 
pioneer in corporate social responsibility, states that CSR is “…the obligations of businessmen to 
pursue those policies, to make those decisions, or to follow those lines of action which are desirable 
in terms of the objectives and values of our society” (p. 6).  Carroll (1991) simplifies the concept, “ 
…the CSR firm should strive to make a profit, obey the law, be ethical and be a good corporate 
citizen”(p. 43). 

CSR is a multidimensional construct with overlapping themes in several disciplines.  
According to Kashyap, Mir and Mir (2011) the multidimensional nature of CSR arises from six 
factors: 

1. Diversity in the set of processes that constitute a set of socially responsible firm behaviors
2. Multiple stakeholders with differing, often conflicting interests
3. Differences in corporation missions or values that motivate firms to engage in socially

responsible activities
4. Variances in performance attributed to socially responsible behavior
5. Subjectivity in judging what constitutes socially responsible behavior
6. Multiple domains of CSR (legal, ethical, economic) (p. 55)

While there are differences in opinion and approach, the pioneers of CSR laid the 
groundwork for policies and practices that are in existence today including Benefit Corporations, 
Certified B Corporations, Low-profit Limited Liability Companies (L3C), and the United Nations 
Global Compact.  These formats provide incentives to embrace the focus on both profits and social 
good, and to recognize that profits and helping society are not mutually exclusive 

Benefit Corporations 

A Benefit Corporation is one that is committed to creating public benefit.  The legal 
structure provides greater protection for directors and officers who may consider other aspects 
(such as employees, environment and community) besides profits to make decisions. Benefit 
Corporations are a relatively new legal corporate structure passed in 36 states which can be adapted 
from the start of life of an organization or transformed from an existing corporate form (C 
Corporation, Limited Liability Corporation, Sub Chapter S or any other legal incorporation type).  

A Benefit Corporation is a hybrid that “bridges the legal gap that separates for-profit 
companies from not-for-profit companies” (Poltenson, 2012, p. 1). In 2010, Maryland became the 
first state to allow Benefit Corporations (Haigh, Walker, Bacq & Kickul, 2015).  Kentucky is the 
newest member having implemented the legislation on July 1, 2017. In addition to the 36 states with 
legislation, an additional seven states are in the process of accepting these types of corporations.  
The end-result is more widespread and lasting impact (Wilburn & Wilburn, 2014). According to 
Haigh, Walker, Bacq and Kickul (2015). “With the market for socially and environmentally 
conscious products and services growing to 290 billion and the market for socially responsible 
investments growing to $3 trillion in the assets in the U.S. alone…” (p. 5), hybrid organizations are 
wanting to meet this market opportunity.  They define hybrid organizations as “those enterprises 
that design their business models based on the alleviation of a particular social or environmental 
issue” (p. 5).   

Rawhouser, Cummings and Crane (2015) cite reasons to become a B Corp including 
organizational flexibility, societal spillovers, stakeholder clarity and a cultural shift. There is more 



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protection for corporate officers and board of directors when using company resources pursuing a 
social goal. There is no tax advantage to Benefit Corporations and currently there are no state 
protected or legal precedents for protecting the social goal in the event of a takeover by another 
company. The opposing arguments made in legislative debate against creating Benefit Corporations 
included difficult regulatory enforcement, threat to the for-profit category, stakeholder confusion 
and category redundancy.  While a record number of companies are becoming B Corps, there are 
concerns about shareholders’ rights and some investors would rather keep profits than see them go 
to socially responsible endeavors (Holbrook, 2010; Stecker, 2016).  

In almost all 36 states Benefit Corporations are required to declare a social purpose, report 
on it annually and renew their charter annually or biannually. For example, Delaware shares a list of 
250 possible social objectives that businesses can select and report on, some of which include 
(Rawhouser et al., 2015): 

• The reduction or elimination of psychosocial distress in cancer patients and their
friends and family

• Providing employment opportunities for at-risk women around the world by
collaborating with artisan groups to form design partnerships and sustainable market
opportunities

• Making a positive impact on the planet by sourcing the majority of materials to fit
one or more of these criteria: locally made, natural, and/or recycled

• Help communities rise out of poverty and give customers assurance that the
products they buy from the Corporation are fair trade and ethically made

• Returning a minimum of 1% of net profit to fund education and healthcare projects
in partnership communities

• Provide tutoring and supplemental education

• Using its business to inspire social and environmental change that results in the
improvement of the human condition, increased social consciousness and the
amelioration of poverty

• Accelerate high-impact businesses innovating in business, science and technology
with the potential to make a positive social or environmental impact on the world

• To increase the social and environmental sustainability and positive social impact of
tourism activities

Benefit Corporations represent a growing trend in the pursuit of social goals as additional
states enact the legislation legitimizing social improvement goals adding to corporate social 
responsibility. Stecker (2016) concluded that the Benefit Corporation are a “strategic and helpful 
business form that social entrepreneurs, green businesses, millennials, consumers and social impact 
investors will continue to enthusiastically embrace” (p. 374).  According to Hiller (2013), “…this 



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new business structure is an ethical step toward empowering socially committed commercial 
entities” (p. 287). The stringent requirements to become a Benefit Corporation may reduce 
confusion about a firm’s goals (Rawhouser et al., 2015).  Haigh, Kennedy and Walker (2015) present 
a scored hierarchy of what strategic changes might be made in a Benefit Corporation. First on the 
list was satisfying the desire to better facilitate the mission. Other reasons for choosing a hybrid 
form included the need to raise capital, the need to be understood, the need to diversify income and 
the need for expedience. 

Oregon is a state with a growing number of Benefit Corporations. According to then 
Secretary of State Jeanne P. Atkins who issued a press release (2015) announcing the 500th Benefit 
company, “Oregon is a hotbed of socially conscious entrepreneurs looking for a new way to conduct 
business. It’s very exciting to see the number of Benefit Companies grow so rapidly.” Owner and 
founder Jenelle Isaac of Living Room Realty, the 500th Benefit Company commented “Living Room 
Realty wanted to become a Benefit Company because of our belief that we build a business by 
building community one great neighbor at a time. It was an extension of our company’s social 
environmental and ethical values.” In California and Washington an original Flexible Purpose 
Corporation has now been changed to a Social Purpose Corporation, similar to a Benefit 
Corporation charter. In almost all 36 states Benefit Corporations are required to declare a social 
purpose, report on it annually and renew their charter biannually. 

To get a clear picture of how many Benefit Corporations are in existence, The Secretary of 
State office or Corporate Commission offices for each state in the U.S. were contacted.   While all 
states do not keep a separate Benefit Corporation category, there are approximately 3400 
corporations chartered in the 36 states (Table 1). The corporation leader, Delaware, reports 756 
Benefit Corporations as of July 2017.   

Certified B Corporations 

While a Benefit Corporation is a legal entity, a Certified B Corporation (CBC) designation is 
a third-party certification that verifies the company is socially and environmentally responsible.  
Often Benefit Companies also seek the Certified B Corp certification.  The companies who seek 
CBC status embrace the triple bottom line philosophy to focus on people, planet and profits.  A 
third-party verification is beneficial because the company is assessed by a neutral unregulated party 
that has strict guidelines and assessment procedures. Organizations use the certification (identified as 
a circumscribed B) on their product or service advertisements as a differentiator, to attract 
customers, generate public relations, pass legislation and to benchmark performance.   

The Certified B Corporation is not a legal structure; therefore, any for-profit company can 
seek the designation. Although nonprofit organizations cannot seek the certification due to their 
legal status, many Certified B Corporations partner with nonprofit organizations, as their goals often 
overlap.   Many companies use the designation on all company collateral to attract socially-conscious 
consumers and job seekers who care about working for a socially-responsible organization.  Annual 
fees for certification range from $500 to $50,000, depending on the size of the organization Gellman 
and Feintzeig 2013; B Lab 2018).  In terms of disadvantages, due to the newness of Certified B 
Corps there is uncertainty about the benefits.  While the certification is useful in marketing an 
organization, the accountability required to maintain Certified B Corp certification may also be an 
obstacle in terms of time and money.   

Many products and industries embrace third-party certification as an indication of quality.  
Examples include coffee (Fair Trade certification), milk (USDA organic certification, livestock on 
farms and ranches (American Grassfed Association) and recycling (R2 Certification).  To become a 
Certified B Corporation, a company is assessed by B Lab, the nonprofit organization behind both 



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Benefit Corporations and the Certified B Corp designation. According to their website, B Lab 
“serves a global movement of people using business as a force for good.”   

Patagonia, Ben and Jerry’s, King Arthur Flour, and Dansko Footwear are four of the better 
known Certified B Corporations. These are four B Corporations of the twelve hundred companies 
in seventy-five countries world-wide as of July 2017. Their social purpose is examined and approved 
by B Lab and renewed every two years after a re-examination. The requirements for Certified B 
Corporations are outlined in the handbook subtitled “How to Use Business as Force for Good” 
(Honeyman, 2014), describing how private enterprise can create public good through inter-
dependent action.  

The three founders of B Lab are Jay Coen Gilbert, Bart Houlahan and Andrew Kassoy. The 
idea of B Corps was directed at millennials and changing expectations of what a business does and 
how work should be different. The founders described B Corps as a capitalism evolution. The B 
Impact Assessment tool from B Lab is a free, online management tool, for the business, pursuing 
what is “good for workers, good for the environment, good for the community, good for long term 
and good to the core”. The Impact Assessment tool looks at what is happening inside a Certified B 
Corp and benchmarks the results which are shared anonymously among fifteen thousand users in 
the Certified B and Benefit Corporation community (Honeyman, 2014).  

The founders of B Lab had already experienced business success with their 1993 start-up, 
“And 1”, basketball shoes, growing to two hundred fifty million in sales by 2000 and acquired by 
Global International Inc. in 2005 (Nicholson, 2011).   Many of the ideas for B Corps and Benefit 
Corporations were taken from that experience and driven by their experience that a family-centric, 
socially responsible approach could be successful. The Impact Assessment tool now has a long-term 
focus on the company mission and methods to maintain the social focus after an acquisition 
(Bogage, 2016).   

Table 2 summarizes the difference between Benefit Corporations and Certified B 
Corporations. 



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Table 1:   Number of Benefit Corporations as of July 2017 

Legislation 
Passed 

State Number of Corps 

2011 Vermont 47 

2011 Virginia 12 

2011 Hawaii 15 

2012 Maryland 136 

2012 Massachusetts 67 

2012 New York 884 

2012 South Carolina 15 

2013 Arkansas 13 

2013 Delaware 756 

2013 Illinois 146 

2013 Pennsylvania N/A 

2013 Washington, DC 6 

2014 Arizona N/A 

2014 California 541 

2014 Colorado 51 

2014 Connecticut 24 

2014 Florida 18 

2014 Nebraska 4 

2014 Oregon 545 

2014 West Virginia 119 

2015 Indiana 6 

2015 Louisiana N/A 

2015 Minnesota 122 

2015 Montana N/A 

2015 Nevada 4 

2015 New Hampshire 54 

2015 New Jersey 4 

2015 Rhode Island 8 

2017 Kansas 

2017 Kentucky 

Pending Alaska 

Pending Iowa 

Pending Mississippi 

Pending North Dakota 

Pending New Mexico 

Pending Oklahoma 

Total:  30 states, 2086 Benefit Corporations 
Data collected in July 2017 



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Table 2: The Difference between Benefit Corporations and Certified B Corporations 

Issue Benefit Corporations Certified B Corporations 

Purpose Legal structure that allows a 
corporation to legally pursue 

social goals ahead of or equally 
with profits 

Third-party certification based 
on a company’s verified 

performance 

Accountability Directors required to consider 
impact on all stakeholders 

Same 

Transparency Must publish public report of 
overall social and 

environmental performance 
assessed against a third party 

standard* 

Same 

Performance Self-reported Must achieve minimum 
verified score on B Impact 

Assessment  
Recertification required every 

two years against evolving 
standard 

Availability 
Available for corporations only 
in 30 U.S. states and D.C.** 

Available to every business 
regardless of corporate 
structure, state, or country of 
incorporation 

Cost 
State filing fees from $70-$200 

B Lab certification fees from 
$500 to $50,000/year, based 
on revenues 

Role of B Lab Developed Model Legislation, 
works for its passage and use, 
offers free reporting tool to 

meet transparency 
requirements; No role in 

oversight 

Certifying body and 
supporting 501(c)(3), offering 

access to Certified B 
Corporation logo, portfolio of 

services, and vibrant 
community of practice among 
B Corps; To learn more about 

B Corp certification, 
visit www.bcorporation.net 

* Delaware benefit corps are not required to report publicly or against a third-party standard
** Oregon and Maryland offer benefit LLC options

Source:  Benefit Corporations and Certified B Corps.  Accessed April 2018 from 
http://benefitcorp.net/businesses/benefit-corporations-and-certified-b-corps 

https://www.bcorporation.net/
http://benefitcorp.net/businesses/benefit-corporations-and-certified-b-corps


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Low-Profit Limited Liability Company (L3C) 

Another encouraging new legal form is the Low-Profit Limited Liability (L3C) Company. 
L3C s combine the advantages of the traditional Limited Liability Corporation with the social 
mission of nonprofit organizations (Lane, 2010). Nonprofit and for-profit organizations may seek 
L3C status.  Social entrepreneurs are especially attracted to these legal forms.  Social entrepreneurs 
tailor their activities with the goal of creating social value (Abu-Saifan, 2012). Unlike Benefit 
Corporations or Certified B Corps, tackling charitable or educational purposes has first position and 
profits are second in a L3C.  

The original idea for L3Cs was created by Robert Lang in 2005. His concept was to have a 
hybrid corporation with a profit and a nonprofit component. He described the L3C as “the for-
profit with a nonprofit soul” (Williams, 2009, p. 1).  According to Lang, the L3C is the “perfect 
vehicle for economic development, medical research, operation of social agencies, museums, concert 
venues, housing and any activity with a charitable purpose and a revenue stream” (Americans for 
Community Development, 2011, p. 2). L3Cs were also seen as an opportunity to increase grants and 
investments from private foundations through program-related investments (PRIs).  PRIs allow 
investments and grants from private foundations to social enterprises while maintaining tax-exempt 
status (Schmidt, 2010). 

Lang also saw the social purpose as an opportunity to develop a steady revenue stream 
through investments in for-profit companies to raise L3C revenues, governed by the IRS code 
defining charitable activities (Lang & Minaugh, 2010). Lang uses a “tranches” (different investment 
levels) strategy, where each tranche is a class of members with different levels of risk and different 
expectations of returns.  The L3C would invest capital from private foundations’ donor gifts by 
giving a market return to that level, while a social purpose level from donors would receive little or 
no return and a middle level would be below market, though still higher than a previous nonprofit 
return (Lang and Martin 2015). 

There were significant differences of opinion during the legislative process before Vermont 
allowed the Low-Profit Limited Liability Company in 2008. The lawmakers and interested parties 
welcomed the L3C’s social purpose as another vehicle of corporate social responsibility.  There were 
mixed opinions about the investment message. Specifically, Lang expected foundations and other 
nonprofits would embrace the new format.  He thought a new federal law, including IRS review of a 
new foundation information form, would add a comfort level for using the L3C as the business 
model. This new federal legislation has not been passed to date (Lang, 2015).  There was a re- 
introduction in 2016 as the Philanthropic Facilitation Act. 

During the debate process, four selected law review articles presented points of view on the 
L3C; two supported and two did not. Callison and Vestal (2012) recommended the L3C be shelved 
until or unless tax laws embraced the L3C and gave the opinion that private foundation investment 
in social entrepreneur projects would not be optimized with the L3C. Murray and Hwang (2011) 
postulated that social business would be facilitated by the L3C.  Tyler (2010) proposed a framework 
for governance, fiduciary duties to resolve the problem of solving two masters, profits and social 
missions and supported the L3C. Finally, Kleinberger (2010) in his Delaware Law Review took the 
position that attracting foundation investments though a tranching strategy was “flatly wrong” and 
would not happen in a meaningful way. 

As of April 2018, InterSector Partners, itself a ten-year old L3C, reports there are 1,599 
active L3Cs in nine states, Puerto Rico, and in the Oglala Sioux and Navajo tribes, formed since the 
original 2008 implementation in Vermont. The L3C is seen as a natural extension of an LLC, 
carrying with it limited liability, flexible operating plans and contractual-like form. Efforts seem to 
have been discontinued to add the L3C business formats in additional states. Also introduced was 



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the idea that since Delaware would accept the L3C in the LLC category to secure Program Related 
Investments, that a social entrepreneur could file in Delaware and operate in any state, much like any 
other Delaware corporation could. The Delaware corporate database does not include a separate 
category for L3Cs, and it is difficult to confirm that L3Cs would be accepted, except as an LLC.  

Schmidt (2010) surveyed existing L3Cs eighteen months after forming. What Schmidt found 
was: 

1. The possibility of receiving Program Related Investments (PRI) while intriguing was not
the most important factor in the entrepreneurs, decisions to form L3Cs.

2. The L3C fit the entrepreneurs’ business needs for a legal entity that bridged the for
profit and nonprofit worlds.

3. The simplicity and flexibility of the L3C were important considerations in choosing a
business form, as was the branding potential.

4. Had the L3C not been available, pioneers would have chosen a for profit entity over a
501(c)(3).

5. For the most part the L3C business form has not provided a branding or fundraising
advantage to these (pioneer) entrepreneurs.

6. Vermont’s social hybrid pioneers remain pleased with the L3C business format despite
its relative obscurity and their inability to secure Program Related Investments.

InterSector Partners L3C is an advocate of L3Cs, led by founder Rick Zwetsch.  In an 
interview on August 1, 2018, Zwetsch stated that he believes social mission achievements are the 
main drivers for his L3C and the other L3C company leaders whom he advises and consults. 

United Nations Global Compact 

Another positive force making Corporate Social Responsibility activities more visible is the 

United Nations Global Compact (UNGC). The Compact was established in 2000 with the 

agreement of three stakeholder sets including the United Nations, non-governmental special interest 

groups and multinational business actors. The UNGC is a voluntary initiative in which business 

leaders commit to implement stated sustainability principles.  As of 2018, there were over 9,600 

business signers in 161 countries committed to the United Nations Compact.  Signers agree to 

follow ten principles as shown below (UN Global Compact, 2018).  Each signer chooses one 

principle to improve and is required to report on actions in a biannual report. 

Principle 1 - Businesses should support and respect the protection of internationally 
proclaimed human rights 

Principle 2 - Make sure that they are not complicit in human rights abuses 

Principle 3 - Businesses should uphold freedom of association & effective recognition of 
the right to collective bargaining 

Principle 4 - The elimination of all forms of forced and compulsory labour 

Principle 5 - The effective abolition of child labour 



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Principle 6 - Eliminate discrimination in respect of employment and occupation 

Principle 7 - Businesses should support a precautionary approach to environmental 
challenges 

Principle 8 - Undertake initiatives to promote greater environmental responsibility 

Principle 9 - Encourage the development and diffusion of environmentally friendly 
technologies 

Principle 10 - Businesses should work against all forms of corruption, including 
extortion and bribery 

These principles had been previously introduced in the United Nations before adoption by 
the Global Compact. The tenth principle about preventing corruption was added in 2004 (Williams, 
2004). The addition of corruption is further evidence of progress in Corporate Social Responsibility. 
In some parts of the world bribery is considered an accepted business practice. Adding the 
corruption principle and defining bribery as corruption focuses on public good. According to Pitelis 
(2013, p. 662), “For corporate governance to help foster sustainable world-wide value creation, it 
should be aligned to public and supra-national governance.” The United Nations Global Compact is 
a step toward this vision. 

Some critics say that reporting on one principle leaves a signer free to ignore the others and 
there is no legal enforcement of the Compact.  The investment community sees the signing of the 
Compact as a reputation signal and a symbol of corporate social responsibility (Janey, Dess & 
Forlani, 2009). The Compact requires an increase in transparency of both positive and negative 
news. Baumann-Pauly and Scherer (2013) reviewed five well known Swiss companies who signed 
the Compact (UBS, CS, Nestle, ABB and Novartis) and confirmed that corporate citizenship is 
enhanced by adopting the ethical principles of the Global Compact. 

Conclusion and Future Research 

Proactive social responsibility is seen as a competitive advantage and the trends described in 
this paper help to make actions more visible.  According to Torugsa, O’Donohue and Hecker 
(2013), proactive corporate social responsibility occurs when firms voluntarily go beyond regulatory 
requirements to support sustainability and contribute to society.  The challenge is to please 
numerous stakeholders with differing priorities.  

The four active efforts to increase Corporate Social Responsibility actions outlined in this 
paper are growing as the number of companies adopt new approaches and states pass legislation 
creating new corporate forms. These are the first new corporate forms since the Limited Liability 
Corporation (LLC) was passed in 1977. Increases in numbers of companies pursuing these new 
formats indicate acceptance of the tenets of corporate social responsibility.  Chen and Kelly (2014) 
document the rapid growth of B Corps since 2007. They found that B Corps have exceeded the 
financial performance of their public company competition, both large and small. Their studies used 
B Lab data from B Lab’s partner, Duke University.  These structures provide marketing support 
and, in some cases, legal protection for companies who pursue altruistic goals along with profit 
motives. 

Future research should include assessment of companies adopting social responsibility 
structures.  More information is needed on the successes and failures of these types of companies.  



12 

Because state legislatures control the incorporation rules and the federal government controls some 
of the levers of success, the growth of these new socially focused business types may be slowed. 
Thus far, these obstacles have not stopped the growth. It took eleven years for the IRS to change 
the rules for Limited Liability Companies (LLC) so perhaps the interest and social impetus will 
speed the change. The creation, growth and acceptance of the new corporate types and certifications 
are cause for encouragement and evidence that business is taking a wider interest in addressing social 
problems.   As the number of companies engaging in formal forms of CSR grow, research on these 
forms will also grow.  Of interest is whether the hybrid form results in higher ethical standards and 
values among managers and employees. Future research should examine the marketing practices of 
these firms as well as the satisfaction levels of various stakeholders. 

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