Corp Certification Research Articles

Effect of B Corp Certification on Short-Term Growth: European Evidence

This paper investigates the effect of sustainability certification on the short-term growth rates of socially responsible companies. A changing business environment in which stakeholders became more sensitive to the sustainability practices of companies induced a growing popularity of hybrid firms, which use market-based approaches to pursue environmental and social goals. However, stakeholders do not take unsubstantiated claims about companies’ sustainability efforts for granted, creating a potential economic role for independent certification organizations. In addition, the internal processes brought about by the external verification procedure could turn the social mission, which is often creating tension with financial goals, into a strategic advantage. B Lab is one such well-known and rapidly growing organization, granting so-called B Corp certificates across many countries around the world. This paper contributes to the hybrid firm literature by ascertaining the benefit of certification as measured by firm growth. Using a panel dataset of financial data of European firms that obtained B Corp certification between 2012 and 2018 and a quasi-experimental difference-in-difference research design, this paper empirically shows that B Corp certification positively impacts the turnover growth rates one year pre versus one year post certification. No significant effects on employee growth rates or total asset growth rates are found.

Pursuing B Corp Certification: Exploring Firms’ Entrepreneurial Orientation and Prosocial Motivation

Our work is motivated by the empirical finding that Benefit corporations (B corps) that pursue certification experience a short-term slowdown in financial performance. To shed light on this finding, we examine whether entrepreneurial orientation (EO) changes across eight weeks in a sample (n = 17) of B corps pursuing certification relative to a sample (n = 24) of emerging ventures not pursuing B corp certification. Our abductive, exploratory research finds that EO does not change over time as a function of B corp certification pursuit. However, after further examination of these data, findings show that firms pursuing B corp certification, at the study launch, demonstrated lower EO, and that the EO gap between the two types of companies remained throughout the study. We found this curious, and we thus examined our data for possible explanations with regard to prosocial motivation. We then augmented our quantitative data with qualitatively derived insights from eight semistructured interviews with participants to more fully examine the developmental processes at work in B corp certification pursuit. We discuss the implications of our findings, from both theoretical and practical points of view, and we describe multiple compelling lines of future research that can build on this exploratory research.

Business model innovation as a window into adaptive tensions: Five paths on the B Corp journey

The B Corporation (B Corp) audit and certification acts as a third-party signal of social purpose business model innovation. It is argued that B Corp certification helps organizations to capture value above economic gains, from activities with ethical, sustainable or moral objectives. However, the varying journeys and certification motivations of B Corps are poorly understood. In this paper we use theory related to the process of organizational design (Zott & Amit, 2010) to unpack these variations. Starting from a longitudinal data set, we employ a deductive case analysis approach of 47 B Corps to identify five certification paths: brand wagoners, reprioritizers, evangelists, inertial benchmarkers and reconfigurers. Our findings help to identify and describe distinct B Corp journeys over time. We conclude with a discussion of how these findings contribute to current theory on social purpose business model innovation, firm value characteristics and how B Corps manage competing tensions among identity and action.

An Investigation into the Reasons Organizations Forgo Their B Corp Certification Status

An Investigation into the Reasons Organizations Forgo Their B Corp Certification Status

B Corp Certification and Its Impact on Organizations Over Time

This study explores the impact of B Corp certification and its associated impact assessment on four case studies of small and medium-sized Brazilian companies certified as B Corps. The results reveal that although all companies had achieved high scores in the certification assessment, awarded on the basis of existing performance, they did not subsequently develop road maps for the future to improve their scores in the way which the B Corp Impact Assessment process endorses as one of the benefits of certification. Their incremental changes are discussed in the light of the main motivations and expectations of these companies’ founders with regard to the certification. A central role of the B Corp certification for this group of companies was to improve their external reputation with investors, clients and consumers. They were not strongly driven to reshape internal processes in ways which would advance their scores in the impact assessment and which would tackle complex problems of corporate governance. Our findings contribute to enriching the discussion of stakeholder engagement and corporate governance in hybrid organizations and contribute to the emerging agenda on studying change over time in B Corps.

The Stakeholders’ Perspective within the B Corp Certification for a Circular Approach

A circular economy has been gaining momentum as the most innovative approach in business. Its proposed model, based on sustainability and new product-driven differentiated strategies of production and organizational exchange, has brought to light the need to better understand the relevance of stakeholders as a critical factor in the creation of new added value in business management. The primary purpose of this paper is to investigate how the B-Corp Certification System could contribute to a process of awareness raising in business organizations. It also focuses on the stakeholders’ commitment, within the framework of circular economy principles, and demonstrates that those companies who are adopting the certification concerning “recycling service and waste management” strongly contribute to the development in the direction of the circular economy. The analysis of the case studies shows two possible scenarios describing the circular approach in business and the different roles of stakeholders in the activation of such a virtuous path. “Social recycling” considers the key role of social participation and contribution in circular-economy related activities of primary and secondary stakeholders, and “highly regenerative recycling” aims to involve qualified stakeholders to start inter-organizational symbioses within the circular process of waste recycling. Key factors, such as industrial symbiosis, tax benefits, financial incentives, legislative harmonization, and the consumers’ behavior, represent the tenets of the circular economy model An awareness-raising perspective and the capacity on the part of companies to understand the relevance of stakeholders and the way to transform their role into the most effective lever to reinforce competitiveness is therefore necessary. Accordingly, the whole system of Benefit Corporation certification could boost business towards new business models involving stakeholders in several directions.

To B or not to B? The Journey of “Coding Autism” Toward the B Corp Certification

This case is based on Coding Autism, a limited liability company founded in April 2017 and located in Westlake Village (California). The case features the decision process followed by the cofounder, Oliver Thornton regarding the opportunity to seek B Corp certification. B Corp is a certification granted by the nonprofit B Lab founded in Philadelphia in 2006 that recognizes for-profit organizations for meeting the “highest standards of verified social and environmental performance, public transparency, and legal accountability and aspire to use the power of markets to solve social and environmental problems.” The case describes the social issue, the start-up, and the social entrepreneur’s background as well as his rationale and analysis finally to become a certified B Corp. The case introduces the students to the social issue of unemployment among young adults within the Autistic spectrum. It also explains what a B Corp is, the process to become certified, the B Impact Assessment, as well as the advantages and disadvantages of seeking the certification. It also describes the differences between the B Corp certification and the relatively new legal status, the benefit corporation. This case sheds light on a critical question relevant for social entrepreneurship students, scholars, and sustainable business practitioners.

The double-edged sword of purpose-driven behavior in sustainable venturing

This paper examines the relationship between purpose and purposeful organizing and how such arrangements influence the entrepreneurial journey as sustainable ventures move from idea to markets. We leverage an iterative multi-stage process-tracing design to understand the mechanisms whereby 14 different B Corp certified organizations embed purpose before, during and after the certification process. Our analyses reveal three types of venture paths for purpose-driven entrepreneurs, which are shaped by distinct imprinting sequences with three critical sensitive windows playing a pivotal role: the definition of scope of purpose, timing of purpose formalization through B Corp Certification and shifts in the source of feedback. Different imprinters occurring within the critical sensitive windows shape particular imprinting sequences triggering situations of both productive and counterproductive path development. Our results challenge the assumed linear relationship between purpose and purposeful organizing and more specifically the belief that seeking (purposeful) B Corp certification at firm foundation is necessarily productive for society and for the ventures themselves regardless of when the certification is achieved.

Category membership, identity control, and the reevaluation of prosocial opportunities

We extend current knowledge on prosocial organizing by explaining how membership in organizational categories lead entrepreneurs to reevaluate their firms' activities and opportunities. Through a qualitative study of 46 firms that pursued B Corp certification, we developed an identity control model of prosocial opportunity. Our findings suggest that joining a prosocial category catalyzes identity-driven reflexivity, which can alter the firm's engagement in prosocial activity. This identity-driven process occurs in tandem with evaluations of opportunity viability and attractiveness, the potential for intra-organizational conflict, and the relative power and position that category legitimacy affords the firm. Our findings contribute to literature streams on prosocial organizing, identity, and categories.

Making Corporations Responsible: The Parallel Tracks of the B Corp Movement and the Business and Human Rights Movement

AbstractThe business and human rights (BHR) movement shares several goals with the Benefit Corporation (B Corp) movement: corporations respecting human rights; maintaining a “wide aperture” so that all impacts of a company on people and communities are addressed; and creating rigorous standards of conduct and means of accountability. This paper argues that nonetheless the movements are traveling along parallel tracks and thus missing an opportunity for mutual learning that can improve their effectiveness. The BHR movement can look to B Corps for concrete examples of viable companies that value human rights intrinsically and not just where there is a “business case” to do so. The B Impact Assessment, the B Corp certification tool, can better ensure that B Corps are in fact respecting human rights by adopting BHR standards. And both movements must give greater consideration to the potential contradiction between unlimited scaling—a key goal of B Corps—and the ability of large multinational corporations to respect human rights.

The Implications of the B Corp Movement in the Business and Human Rights Context

In recent decades, issues of corporate accountability and social responsibility have risen to the forefront in international debates. The U.N. Guiding Principles on Business and Human Rights (Guiding Principles), unanimously endorsed by the U.N. Human Rights Council in June 2011, authoritatively lay out the State duty to protect and the corporate responsibility to respect human rights. In an effort to operationalize the Guiding Principles, the U.N. Human Rights Council called on all States to develop National Action Plans (NAPs) for domestic implementation of the Guiding Principles. A key first step in the creation of a NAP is the completion of a national baseline assessment of the current frameworks and conditions affecting the protection and promotion of human rights by the State and businesses alike. With over thirty-five countries now committed to the creation of a NAP, it is increasingly important to evaluate existing corporate structures that claim to be socially and ethically motivated. The “B Corp” movement began in earnest in 2006, through the work of U.S.-based non-profit B Lab. A B Corp is a business certified by B Lab as a corporation committed to creating and supporting social and environmental rights. The B Corp movement has grown in size and stature, spreading into over thirty countries and garnering a reputation for excellence. Boosts to the movement have recently come from the certification of large multinational companies and the interest of businesses that followed. As the B Corp movement continues to proliferate, its technical and normative value within the business and human rights field merits close consideration. Through a comparative analysis between the B Corp certification requirements and the Guiding Principles, this paper seeks to answer the following questions: Do B Corps fulfill the Guiding Principles’ corporate responsibility standards to respect human rights? Are they a desirable normative shift in the business and human rights context?

Making Corporations Responsible: The Parallel Tracks of the B Corp Movement and the Business and Human Rights Movement

The business and human rights (BHR) movement shares several goals with the Benefit Corporation (B Corp) movement: corporations respecting human rights; maintaining a “wide aperture” so that all impacts of a company on people and communities are addressed; and creating rigorous standards of conduct and means of accountability. This paper argues that nonetheless the movements are traveling along parallel tracks and thus missing an opportunity for mutual learning that can improve their effectiveness. The BHR movement can look to B Corps for concrete examples of viable companies that value human rights intrinsically and not just as a means to higher profits. The B Impact Assessment, the B Corp certification tool, can better ensure that B Corps are in fact respecting human rights by adopting BHR standards. And both movements must give greater consideration to the potential contradiction between unlimited scaling – a key goal of B Corps – and the ability of large corporations to respect human rights.

Tests of Alternative Theories of Firm Growth

This study examines the relationships among firm growth, firm size, and firm age for a sample of manufacturing firms between 1976 and 1982. Firm growth is found to decrease with firm age and firm size. These findings are robust to alternative assumptions concerning the effects of sample censoring and the functional form of the growth relationship. The inverse growth-age relationship is consistent with a theory of firm learning proposed by Boyan Jovanovic while the inverse growth-size relationship is inconsistent with a number of theories that assume or imply Gibrat's law. Copyright 1987 by University of Chicago Press.