Why do companies obtain the B corporation certification?

Maretno Harjoto (Pepperdine Graziadio Business School, Pepperdine University, Malibu, California, USA)
Indrarini Laksmana (College of Business Administration, Kent State University, Kent, Ohio, USA)
Ya-wen Yang (School of Business, Wake Forest University, Winston-Salem, NC, USA)

Social Responsibility Journal

ISSN: 1747-1117

Publication date: 5 August 2019

Abstract

Purpose

This study identifies the factors that influence companies to obtain the B corporation certification. Drawing from institutional isomorphism, gender socialization theory, the ethics of care and social identity theory, the authors examine the impact of geographic locality, product market competitions and owners’ demographic characteristics on a firm’s decision to be a certified B Corporation.

Design/methodology/approach

Using two sets of data, a hand-collected sample of 743 small businesses receiving a B Corporation certification between 2007 and 2014 and a sample of 902 firms participating in a B Lab survey from 2011 to 2013, the authors examine factors that influence firms’ decision to obtain the B Corporation and their environment, social and governance (ESG) performance.

Findings

Firms in states that are democratic-leaning, have a lower hourly wage rate or have a greater religious population are more likely to be early adopters and leaders of the B Corporation movement than those in other states. On average, states with a higher unemployment rate and more democratic-leaning voters have more B Corporation certified firms in each year and over the years. Additionally, product market competition is positively associated with firms’ likelihood of obtaining B Corporation certification and their ESG scores.

Practical implications

This study brings new insights to the understanding of purpose-driven enterprises and factors that influence firms’ decision to go through the B Corporation verification and certification process.

Originality/value

This study establishes a theoretical foundation that becoming a B Corporation is a corporate social responsibility (CSR) action and shows that existing theories explaining the factors motivating companies to engage in CSR can also be applied to explain firms’ motivation to become B Corporations.

Keywords

Acknowledgements

The authors thank the anonymous reviewer and the Associate Editor Martin Samy. The authors are grateful for the research fund and data access provided by CASE i3 at Duke University, B Lab and the Rockefeller Foundation. Harjoto acknowledges the Julian Virtue and Denney Professorship research awards for the release time. Laksmana acknowledges the research funding provided by the College of Business Administration at Kent State University. Yang acknowledges the summer research grant provided by the School of Business at Wake Forest University.

Citation

Harjoto, M., Laksmana, I. and Yang, Y. (2019), "Why do companies obtain the B corporation certification?", Social Responsibility Journal, Vol. 15 No. 5, pp. 621-639. https://doi.org/10.1108/SRJ-07-2018-0170

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Publisher

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Emerald Publishing Limited

Copyright © 2018, Emerald Publishing Limited

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