Business & Economy

The For-Benefit Enterprise

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Heerad Sabeti

This article comments on the rise of a new form of entity it calls “for-benefit” enterprise (another name for social enterprise). The author suggests that the rise of this new entity is taking root in many established economies and would happen more readily if entrepreneurs could better navigate the various organizational structures that would align with this intent. Sabeti warns that many entrepreneurs fail to give adequate thought to the organizational structure up front and advises that they don’t give in to conventional legal structures. Failing to do this can cause problems for the organization down the road because it may feel that its values are compromised due to legal requirements related to the structure designed. Furthermore, Sabeti argues that careful design up front also preserves the organizational mission once ownership is transferred from the founder. He offers a few examples of enterprises who have successfully navigated these challenges but also recognizes that new legal and market structures are needed along with corresponding support networks for this effort to blossom more fully. Sabeti concludes by recognizing the unique role that “for-benefit” enterprises can play within the economy.

Those who are interested in exploring alternative forms of business and the degree to which the structure of the entities help in fulfilling a business’s mission will find this article an enjoyable place to start.

What legal changes do you think would be helpful to accelerate the rise of these enterprises within local economies?

Source: Harvard Business Review

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