Social Enterprise─The Research of Enterprise Paradigm Shift
Date Issued
2015
Date
2015
Author(s)
Liu, Jung-Yu
Abstract
Abstract After exploring and analyzing the concept of “social enterprise” in European countries and that in the U.S, this thesis agrees with the European approach that “social enterprise” should ensure to pursue their social purpose and the specific governance structures which correspond to their purpose are essential. In the context of corporation law, this thesis argues that the crucial divergence between CSR and social enterprise is that CSR “allows” the board of directors to practice social responsibilities, which means they have the discretion, but social enterprise “requires” directors to carry out the social purpose, which means they bear the duty. Being aware of such substantial difference, it can be concluded that the transition from CSR to social enterprise actually evokes the reformation of “corporate governance” and brings about the enterprise/corporation paradigm shift. This thesis adopts the comparative study to compare the CIC act of U.K. and the four social enterprise legislations of the U.S. The thesis finds out that the difference between the two countries laws is the ""nature"" of the norms, not just the different criteria. The reason is that the CIC act appears to be a ""hybrid entity"" legal form given it combines characteristics of NPO regulations into company laws, the legislations of the U.S., however, merely expand directors’ discretion to decide whether or not to reinforce CSR, rather than ensure their duty of pursuing the social purpose. Given that both social enterprise legislation of U.K. and the U.S. adopt company/corporation as the legal entity, whether to conquer the conventional value of traditional corporation law which aims at shareholders’ value maximization resulting in the limitation of social purpose shall be the touchstone of social enterprise legislations. Therefore, this thesis further develops four touchstones: the first to the third touchstones which originate from the norm of the shareholder value maximization application cases are the fiduciary duty of the board of directors, dividend/surplus distribution and mergers and acquisitions. The last touchstones focus on the improvement of the stakeholders’ status since they are the beneficiary of social purposes. Via the examination of these touchstones, this thesis argues that the approach of the CIC act clearly establishes the distinctive standards and principles which are different from traditional corporation law so that the CIC could successfully conquer the existing difficulties and is exactly the social enterprise which prioritizes the social purpose. In contrast, the legislations of the U.S. merely pronounce that companies/corporations should pursue the social purpose and the board of directors must consider both the stakeholders’ and shareholders’ interests. It not only cannot solve the existing difficulties but even increases more disputes. In the context of the social enterprise development in Taiwan, the central government has proposed the social enterprise development guiding policy. However, this thesis contends that it contains a significant defect: failing to grasp the crux of social enterprise. This defect leads to the failure to distinguish the differences between a social enterprise and an ordinary business venture, and further causes that the guiding policy only emphasizes on the deregulation for raising capitals. Especially, when permitting NPO to set up a corporation which is engaged in CSR, this policy would rather worsen and deteriorate the existing regulatory defects and loopholes of NPO. This thesis contends that this policy needs to be revised.
Subjects
social enterprise
CSR
fiduciary duty
shareholder value maximization
dividend/surplus distribution
mergers and acquisitions
stakeholder
Type
thesis
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