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When the law distinguishes between the enterprise and the corporation: the case of the new French law on corporate purpose

Blanche Segrestin (), Armand Hatchuel () and Kevin Levillain ()
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Blanche Segrestin: CGS i3 - Centre de Gestion Scientifique i3 - MINES ParisTech - École nationale supérieure des mines de Paris - PSL - PSL Research University - CNRS - Centre National de la Recherche Scientifique, PSL - PSL Research University
Armand Hatchuel: CGS i3 - Centre de Gestion Scientifique i3 - MINES ParisTech - École nationale supérieure des mines de Paris - PSL - PSL Research University - CNRS - Centre National de la Recherche Scientifique
Kevin Levillain: CGS i3 - Centre de Gestion Scientifique i3 - MINES ParisTech - École nationale supérieure des mines de Paris - PSL - PSL Research University - CNRS - Centre National de la Recherche Scientifique

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Abstract: A recent French reform has revised the legal definition of the corporation. In essence, the law stipulates that the corporation must be run with due regard to the social and environmental impacts of its activity. It also introduces the notion of raison d'être and affords the possibility for any corporation to assign social or environmental purposes to itself, defined in its by-laws. This reform is similar to recent reforms in the UK and the US, but is based on an original and distinctive theoretical argument. The aim of our article is to analyse the fundamental tenets of this reform and their implications for the theory of the corporation. It shows that the new law is based on a new positive definition of the enterprise as not only an economic organization or a productive entity, but more fundamentally a space for innovative collective action. We argue that this view of the enterprise challenges our conceptualization of the corporation in two important ways. First, it shows that the traditional theories overlook the activities of the enterprise and their related impacts, and that the corporation is not necessarily the appropriate legal vehicle for the innovative enterprise. Second, it suggests that the stipulation of the enterprise's purpose or raison d'être in the corporate by-laws can provide new promising legal foundations for corporate responsibility.

Date: 2020
New Economics Papers: this item is included in nep-hpe
Note: View the original document on HAL open archive server: https://hal-mines-paristech.archives-ouvertes.fr/hal-02441287
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Published in Journal of Business Ethics, Springer Verlag, In press

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