As an entrepreneur and small business owner I often find myself in conflict feeling comfortable with large corporations. I remember looking into a Sam’s Club membership about five years ago and walking out of the store when they offered, as part of their “Small Business Membership” to provide me a free website package.
Wait… that’s what I do… and Sam’s Club is offering this?
Now of course the quality and product support is completely different from what I offer and I quite frankly don’t take on clients that would even consider a Sam’s Club website.
However it is the large corporate concept that every company must do everything for everyone in order to grow that makes me uncomfortable.
Corporations – Were Born That Way
Anyone that has had an issue with corporate irresponsibility (actual or alleged) has often asked why don’t they just make better deciusions regarding the environment or at least the consumer?
Recently I have learned that they are just born that way. About six months ago I came to the realization that it is corporate law itself that forces a company to place the benefit to the shareholder above all others – even the actual consumer.
An article published last week describes how a New California Law Will Boost Social Entrepreneurship and may begin to change the current model.
“The modern corporation was ‘Born to be bad,’” Patagonia founder Yvon Chouinard wrote in a letter to Governor Brown. “Benefit Corporations are ‘born to be good’ because their corporate purpose must include the pursuit of a material positive impact on society, not just shareholders.”
Corporations are chartered by states, and a historic body of law makes clear that all company directors and executives owe their shareholders is profits, profits and more profits; their fiduciary duty is their only duty.
If you do expect company’s officers to take into account other goals—like environmental sustainability, the well-being of their workers, or general public benefit—conflicts with the profit motive can expose even well-meaning executives to legal difficulties.
CouchSurfing.org, a community I am recent member of just announced a move to become a B Corp and I have been reading more on the subject lately. While this may not be a final solution I think it is a definite step in the right direction.
Business owners have always intended to and are entitled to profit. Most business owners never plan to place profits above the consumer they serve or the environment they live in. It is the loss of control required to grow and go public that shifts a company’s priorities to the benefit of shareholders unnaturally over those of consumer the company actually serves.