The Cyclical Transformation of the Corporate Form: a Historical Perspective on Corporate Social Responsibility
Reuven S. Avi-Yonah
This article describes the transformations underwent by the corporate form from its Roman origins to the present. It shows that every time there was a shift in the role of the corporation, three theories of the corporation (the aggregate, artificial, and real entity theories) were brought forward in cyclical fashion. Every time, however, the real entity theory prevailed, and it was the dominant theory during periods of stability in the relationship between the corporation, the shareholders, and the state. The article describes this evolution in detail, and then attempts to derive normative consequences for the legitimacy of corporate social responsibility (CSR). The basic argument is that under the real entity view, which is historically the dominant view of the corporation, CSR is normatively acceptable even when it does not contribute to the long-run welfare of the shareholders.