Corporate law and the history of corporate social responsibility

Abstract

This chapter traces the historical relationship between corporate law and corporate social responsibility. After abandoning a regulatory philosophy by the close of the nineteenth century, the field of corporate law, along with mainstream corporate theory, has largely sidestepped full engagement with the ongoing societal quest for enhanced corporate responsibility. Instead, corporate law has loosened, not tightened, constraints on those who govern corporations. Corporate law took a deregulatory turn just as the corporation was emerging as a potent socio-economic force. The arrival of distinctive legal personhood for the corporation, although launching important and still-hot debates about the scope of corporate rights, did not likewise lead corporate law to pay heed to a broad-gauged corporate responsibility. Corporate law, instead, turned inward, toward a preoccupation with managerial duties, which were narrowly directed toward stockholders and away from others. With some exceptions, including occasional (failed) historical efforts to reform corporate governance by urging the adoption of a broader focus, and recent more successful (but flawed) benefit corporation statutes, corporate law's regulatory vacuum spurred an outsourcing of efforts to mandate responsible corporate conduct to an array of noncorporate law regimes. Ironically, then, corporate law and corporate theory have largely neglected the corporation as an influential social-legal actor in its own right and avoided the question of how it can best fulfill broader, evolving social expectations. Those who shape and work within the modern, narrow paradigm of corporate law have sidelined themselves from influencing one of the most important issues in modern America.