Skip to main content

Assessing the Accountability of the Benefit Corporation: Will This New Gray Sector Organization Enhance Corporate Social Responsibility?


In recent years the benefit corporation has emerged as a new organizational form dedicated to legitimizing the pursuit of corporate social responsibility (CSR). Eschewing traditional governmental authority, the benefit corporation derives its moral legitimacy from the values of its owners and the oversight of a third party evaluator. This research identifies the benefit corporation as a new type of gray sector organization (GSO) and applies extant theory on GSOs to analyze its design. In particular, it shows how the theory of GSO accountability can be used to assess the potential of benefit corporations for enhancing CSR. This research first examines the statutes that have established benefit corporations in five states in the US, along with bills in other states, to show how legislation defines their specific public benefits and holds them accountable for delivering these benefits. It then compares the accountability of the benefit corporation with that of other corporate-centric GSOs, e.g., GSOs that closely resemble traditional corporations. It concludes with significant design-based concerns about the utility of the benefit corporation as an effective organization for implementing CSR.

This is a preview of subscription content, access via your institution.

Fig. 1



Corporate social responsibility


Government-sponsored enterprise


Gray sector organization


Quasi-autonomous nongovernmental organization


  • Adams, S. (2010). Capitalist monkey wrench: Can a new corporate structure get companies to do good by not always putting shareholders first? Forbes Magazine, April 12. Accessed November 15, 2010.

  • André, R. (2010). Assessing the accountability of government sponsored enterprises and Quangos. Journal of Business Ethics, 97, 271–289.

    Article  Google Scholar 

  • Archibald, T. (2007). A new kind of company. Inc, 29(7), 23–24.

    Google Scholar 

  • B Corporation. (2009). B Corporation Annual Report. Accessed February 8, 2011.

  • B Corporation. (2011). Benefit corporation legislation. Accessed October 4, 2011.

  • B Corporation. (2011). Make it official. Accessed February 8, 2011.

  • B Corporation Directory. (2011). Accessed February 10, 2011.

  • B Impact Assessment. (2010). Version 2.0, Sector: Manufacturing, Employees: 30+ Accessed February 8, 2011.

  • Birrell, D. (2008). Devolution and Quangos in the United Kingdom: The implementation of principles and policies for rationalisation and democratisation. Policy Studies, 29(1), 35–49.

    Article  Google Scholar 

  • Blair, M., & Stout, L. (2006). Specific investment: Explaining anomalies in corporate law. Journal of Corporation Law, 31(3), 719–744.

    Google Scholar 

  • Bochel, C., & Bochel, H. (2004). The UK social policy process. Basingstoke: Palgrave Macmillan.

    Google Scholar 

  • Brummer, J. J. (1991). Corporate responsibility and legitimacy: An interdisciplinary analysis. New York: Greenwood Press.

    Google Scholar 

  • Business Associations Committee of the Section on Business Law of the Pennsylvania Bar Association: undated, ‘Amendments to the Pennsylvania Consolidated Statutes with Official Source Notes and Committee Comments’.…/Draft_Pennsylvania-Legislation.pdf . Accessed February 20. 2011.

  • Cashore, B. (2002). Legitimacy and the privatization of environmental governance: How Non-State Market-Driven (NSMD) governance systems gain rule-making authority. Governance: An International Journal of Policy, Administration, and Institutions, 15(4), 503–529.

    Article  Google Scholar 

  • City of Philadelphia. (2009). Bill No. 090119-A, An ordinance amending chapter 19-2600 of the Philadelphia Code, entitled “Business Privilege Taxes”.

  • Clapp, J. (1998). The privatization of global environmental governance: ISO 14000 and the developing world. Environmental Governance, 4, 295–316.

    Google Scholar 

  • Connor, P. E. (1980). Organizations: Theory and design. Chicago, IL: Science Research Associates.

    Google Scholar 

  • Coppock, R., & Dierkes, M. (1973). Corporate responsibility does not depend on public pressure. Business and Society Review/Innovation, 6, 82–89.

    Google Scholar 

  • Crane, A., Matten, D., & Moon, J. (2008). Citizenship ecologies and the corporation: Examining the relevance of ecological citizenship for redefining corporate responsibilities. Organization & Environment, 21(4), 371–389.

    Article  Google Scholar 

  • Cutler, C., Haufler, V., & Porter, T. (Eds.). (1999). Private authority in international politics. New York: SUNY Press.

    Google Scholar 

  • Dembosky, A. (2010). Protecting companies that mix profitability, values. National Public Radio, March 9. Accessed September 7, 2010.

  • Denison, D. R. (1990). Corporate culture and organizational effectiveness. New York: Wiley.

    Google Scholar 

  • Donlan, T. G. (2009). Engines of destruction: Following the impulse that led Fannie Mae and Freddie Mac to disaster. Barron’s, December 21, 51.

  • Dyer, W. G. (1982). Patterns and assumptions: The keys to understanding organizational culture. Office of Naval Research Technical Report TR-ONR-7.

  • Freeman, I., & Hasnaoui, A. (2011). The meaning of corporate social responsibility: The vision of four nations. Journal of Business Ethics, 100(3), 419–443.

    Article  Google Scholar 

  • Greve, C. (1999). Quangos in Denmark and Scandinavia: Trends, problems and perspectives. In M. V. Flinders & M. J. Smith (Eds.), Quangos, accountability, and reform: The politics of quasi-government (pp. 83–108). Basingstoke, UK): Macmillan Press.

    Google Scholar 

  • Haufler, V. (2001). A public role for the private sector: Industry self-regulation in a global economy. Washington DC: Carnegie Endowment for International Peace.

    Google Scholar 

  • Hays, C. L. (2000). Ben & Jerry’s to Unilever, with attitude. The New York Times, April 13. Accessed September 7, 2010.

  • Herman, R. D., & Renz, D. O. (2008). Advancing nonprofit organizational effectiveness research and theory. Nonprofit Management & Leadership, 18(4), 399–415.

    Article  Google Scholar 

  • Hogarty, R. A. (2002). The paradox of public authorities in Massachusetts: Massport and Masspike. New England Journal of Public Policy, 17, 19–37.

    Google Scholar 

  • Accessed October 2, 2011.

  • Jones, A. (2001). Social responsibility and the utilities. Journal of Business Ethics, 34, 219–229.

    Article  Google Scholar 

  • Koppell, J. G. S. (2003). The politics of quasi-government: Hybrid organizations and the dynamics of bureaucratic control. Cambridge: Cambridge University Press.

    Google Scholar 

  • Kotter, J. P., & Heskett, J. L. (1992). Corporate culture and performance. New York: Free Press.

    Google Scholar 

  • Lee, I. (2009). Citizenship and the corporation. Law and Social Inquiry, 34(1), 129–168.

    Article  Google Scholar 

  • Maryland General Assembly. (2010). Session, department of legislative services: 2010, ‘Fiscal and Policy Note, House Bill 1009’.

  • Matten, D., & Moon, J. (2008). “Implicit” and “explicit” CSR: A conceptual framework for a comparative understanding of corporate social responsibility. Academy of Management Review, 33(2), 404–424.

    Google Scholar 

  • Meidinger, E. (2001). Environmental certification programs and US environmental law: Closer than you may think. Environmental Law Reporter, 31, 10162–10179.

    Google Scholar 

  • Messner, M. (2009). The limits of accountability. Accounting, Organizations and Society, 34, 918–938.

    Article  Google Scholar 

  • Mickels, A. (2009). Beyond corporate social responsibility: Reconciling the ideals of a for-benefit corporation with director fiduciary duties in the U.S. and Europe. Hastings International and Comparative Law Review, 32(1), 271.

    Google Scholar 

  • Moe, R. C. (1979). Government corporations and the erosion of accountability: The case of the proposed energy security corporation. Public Administration Review, 39, 566–571.

    Article  Google Scholar 

  • Moe, R. C. (2001). The emerging federal quasi government: Issues of management and accountability. Public Administration Review, 61, 290–312.

    Article  Google Scholar 

  • Moe, R. C., & Kosar, K. R. (2005). The quasi government: Hybrid organizations with both government and private sector legal characteristics. Congressional Research Service, The Library of Congress, May 18.

  • Palmås, K. (2005). The UK public interest company: The idea, its origins, and its relevance for Sweden. A report commissioned by the Swedish National Audit Office.

  • Pennsylvania Bar Association. (2010). Amendments to the Pennsylvania consolidated statutes with official source notes and committee comments.

  • Perry, J., & Rainey, H. G. (1988). The public-private distinction in organizational theory. Academy of Management Review, 13, 182–201.

    Google Scholar 

  • Purssell, A. (1999). Local government and the unelected state. In M. V. Flinders & M. J. Smith (Eds.), Quangos, accountability and reform (pp. 132–143). New York: St. Martin’s Press.

    Google Scholar 

  • Richter, U. (2010). Liberal thought in reasoning on CSR. Journal of Business Ethics, 97(4), 625–649.

    Article  Google Scholar 

  • Schreck, P. (2011). Reviewing the business case for corporate social responsibility: New evidence and analysis. Journal of Business Ethics, 103(2), 167–188.

    Article  Google Scholar 

  • Senate of California. (2011). S. 201, introduced February 8 by Senator DeSaulnier.

  • Senate of Maryland. (2010). S. 690, Chapter 97, (enacted).

  • Senate of New Jersey. (2010). S. 2170, 214th Legislature, (introduced).

  • Senate of New York. (2010). S. 7855, Calendar 72, (passed Senate).

  • Senate of Vermont. (2010). S. 263, Sec. 1. 11A V.S.A. chapter 21, (enacted).

  • Skelcher, C. (1998). The appointed state: Quasi-governmental organizations and democracy. Buckingham, UK: Open University Press.

    Google Scholar 

  • Social Capital Markets. (2010). Accessed January 4, 2010.

  • Social Capital Markets: At the Intersection of Money and Meaning. (2010). Accessed December 28, 2010.

  • Stanton, T. H. (2002). Government-sponsored enterprises: Mercantilist companies in the modern world. Washington DC: AEI Press.

    Google Scholar 

  • State of Maryland. (2010). Laws of Maryland.

  • State of Maryland, Maryland General Assembly. (2010). House Bill 1009, Corporations—Benefit Corporation.

  • State of New Jersey, 214th Legislature. (2010). Senate, No. 2170, July 1.

  • State of Vermont. (2010). No. 113: An act relating to the Vermont Benefit Corporations Act.

  • Stout, L. A. (2008). Why we should stop teaching Dodge v. Ford. Virginia Law & Business Review, 3(1), 163–176.

    Google Scholar 

  • Suchman, M. C. (1995). Managing legitimacy: Strategic and institutional approaches. Academy of Management Review, 20, 571–610.

    Google Scholar 

  • The Economist. (2009). Capital markets with a conscience: social investing grows up. The Economist, September 1. Accessed December 28, 2010.

  • The Economist. (2010). Social innovation: Let’s hear those ideas. The Economist August 12, 2010. Accessed November 15, 2010.

  • Tozzi, J. (2009). Turning nonprofits into for-profits: New hybrid corporate structures allow nonprofits to accept private investment without diluting their missions. Bloomberg Businessweek, June 15. Accessed December 28, 2010.

  • Turnbull, S. (1995). Innovations in corporate governance: The Mondragon experience. Corporate Governance: An International Review, 3(3), 167–180.

    Article  Google Scholar 

  • van den Heuvel, K. (2010). Making the economy more just. Washington Post, July 21. Accessed December 28, 2010.

  • Waddock, S. (2004). Parallel universes: Companies, academics, and the progress of corporate citizenship. Business and Society Review, 109(1), 5–42.

    Article  Google Scholar 

  • Waddock, S., & Mcintosh, M. (2011). Business unusual: Corporate responsibility in a 2.0 world. Business and Society Review, 116(3), 303–330.

    Article  Google Scholar 

  • Weber, J. (2010). “Impact Investing” Teeters on Edge of Explosive Growth. New York Times, October 10, 31A.

  • Zattoni, A. (2011). Who should control a corporation? Toward a contingency stakeholder model for allocating ownership rights. Journal of Business Ethics, 103(2), 255–274.

    Article  Google Scholar 

Download references

Author information

Authors and Affiliations


Corresponding author

Correspondence to Rae André.

Rights and permissions

Reprints and Permissions

About this article

Cite this article

André, R. Assessing the Accountability of the Benefit Corporation: Will This New Gray Sector Organization Enhance Corporate Social Responsibility?. J Bus Ethics 110, 133–150 (2012).

Download citation

  • Received:

  • Accepted:

  • Published:

  • Issue Date:

  • DOI:


  • Accountability
  • B-corporation
  • Benefit corporation
  • Government-sponsored enterprise
  • Gray sector organization