Emilie Aguirre

Emilie Aguirre

Associate Professor of Law, Duke Law School

Dissertation Title:  "Pairing Purpose with Profit"Companies that pursue social and commercial goals have seen an unprecedented rise over the last 40 years. These companies have significant potential for social and economic impact and are emerging amidst increased pressure and expectation for businesses to pursue social and environmental goals. But they are also hotly contested—not only whether they should exist, but how they can succeed and the management and business law frameworks necessary for their success. These companies present empirical and theoretical puzzles for organization studies, corporate law, and economic theories of the firm. Each discipline has established strong but disconnected foundations for studying organizations with objectives beyond profit. Important opportunities remain, including for cross-level and cross-perspective conversation among disciplines.

 

In this dissertation, I argue that to understand companies with objectives beyond profit, it is crucial to understand and consider all three of organization studies, corporate law, and economic theories of the firm. I situate my research at the intersection of these fields and seek to begin bridging their theoretical and methodological perspectives. Three thematic sets of research questions motivate my dissertation papers: What distinct challenges do companies with objectives beyond profit face at different stages of the business life cycle? What role do capital transitions and decisions about corporate finance play in their success? How do these companies engage with corporate law structures, and what role does and should corporate law play in their success? I seek to better understand the managerial, legal, and economic antecedents, processes, and outcomes of companies with objectives beyond profit. In each paper, I bring together theoretical insights and new empirical findings from both organization studies and corporate law, and I offer legal innovations that aim to help corporate law better serve these companies.

 

Paper one investigates the beginning of the business lifecycle through fourteen months of participant observation at an early-stage startup with objectives beyond profit. I find that the startup faces two special categories of challenges, in internal governance and external finance, and perceives available legal structures as a hindrance to success. I also find its use of organizational democracy is instrumental to overcoming internal governance challenges, while its “code-switching” is only partially successful in overcoming external finance challenges. It may also signal deeper structural shortcomings in corporate law. I theorize that corporate law could better facilitate these companies’ success by improving both the attractiveness and accountability of benefit corporation law and I offer preliminary suggestions for reform.

 

Paper two investigates special challenges associated with capital transitions at the scaling up phase. Standard accounts point to market forces to explain why companies often lose their hybridity as they scale. But this paper identifies a more fundamental problem: business law is not designed to facilitate scale-ups for companies with objectives beyond profit. It lacks a durable commitment mechanism for these companies to bind themselves to the pursuit of multiple objectives at scale. I argue for providing a voluntary commitment mechanism in business law, housed within benefit corporation law, that would leverage multiple stakeholder board representation and socially conscious executive compensation. 

 

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