Edited by Robert W. Hillman and Mark J. Loewenstein
Chapter 15: State laboratories and social enterprise law
In her iconic book The Genius of American Corporate Law, Professor Roberta Romano claims “federalism spurs innovation in public policy because of the incremental experimentation afforded by fifty laboratories of states competing for citizens and firms.” The legal academy has given much attention to jurisdictional competition for traditional business associations such as corporations and limited liability companies (“LLCs”). Delaware has long been recognized as the clear winner in the competition among the states for traditional corporations and LLCs, with some academics arguing that the competition has been a “race to the bottom” and others contending that the competition has been a “race to the top.” To date, however, the behavior surrounding emerging social enterprise forms, such as low-profit LLCs and benefit corporations, has not been thoroughly discussed or analyzed. Also, unlike the situation with the more traditional business associations, Delaware does not seem to have dominated the social enterprise law market yet. Section 2 of this chapter provides an overview of the social enterprise forms in the United States and the early academic literature regarding these forms. Section 3 describes many of the innovations in the social enterprise law area and the various iterations of the laws.
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