Providing encouragement for business enterprise
The business law framework should establish a system that encourages entrepreneurship and business enterprise while ensuring accountability and transparency.
Academic research has indicated that the most successful entrepreneurs are not simply those who take risks (indispensable though that may be), but rather those who are able to manage risk sensibly. (CRSE 2015) Countries may consider adopting a limited liability corporate structure to limit entrepreneurs’ exposure to risk while making sure there are systems to encourage sensible risk taking. Alternatively, generous limits around personal bankruptcy can perform a similar function in situations where entrepreneurs see the operation of separate legal personalities as less advantageous.
The limited liability corporation has been characterised as nothing more than a mechanism for shifting personal liability for mistakes made in pursuit of profit onto society generally. This fails to recognise the corresponding benefits to society of enabling the limited liability corporate form. Business as a whole exists in society as more than simply a means of generating profit. The interdependencies between the economic, social and wider environmental factors create a ‘triple context’[1] within which business exists, and there is increasing recognition that a long-term sustainable business model relies upon balancing the enterprise’s contribution to all three ’contexts’. Corporations ‘enable society to achieve feats which would not be available to it without some way of aggregating capital and managing risk”[2] Recent events have highlighted that profit maximisation is not the only goal. There is an increasing drive towards ‘re-incorporating society into corporate purpose” and companies should remain keenly aware of the importance of integration into the wider tapestry of societal interactions.