To understand the role that the corporation plays in modern society, you must first understand the unique functions of the corporation and what value it provides others. Corporations take on many of the more basic tasks of organizations today. The corporation as an organizational structure facilitates more than you might think of the everyday things you take for granted. The goods you consume and the work you do to earn them are tied to corporations.
The primary function of the corporation, as with all business entities, is to create wealth. By generating profits for their shareholders, corporations also help to enrich the greater society at large. Corporations leverage together large collections of capital to invest in business ventures that would otherwise be impossible. Through their ability to scale upward, corporations facilitate wealth creation at a global level. Creating new infrastructures and new positions of employment, corporations greatly increase general wealth.
Many corporations are owned at least in part by public stockholders who have a say in how they are run and take a share in their earnings. Corporations function in this way as a safe place to put savings and grow the wealth of individuals. The public ownership of corporations makes their existence a vital part of many individuals' retirement plans. Corporate investments are seen to provide a high upside with a low risk.
Unlike other business entities, corporations are not limited by the lifetimes of their owners and shareholders. The ownership of a corporation may easily pass hands an unlimited number of times. This gives corporations a permanence that is lacking in other organizations. The wealth and structures that a corporation builds up over its lifetime are in no danger of ever disappearing. This makes long-term planning a much more practical matter and part of general practice.
One of the benefits of the corporation for an owner or an investor is that what is known as the "corporate shield" will protect her from any legal liability. A corporation is considered as being legally equivalent to an individual under the law. This means that any wrongdoings committed by a corporation will be solely the responsibility of the organization. This fulfills the function of making ownership a more practical proposition for more people.
- "Academy of Management Review"; The Role of Corporations in Achieving Ecological Sustainability; Paul Shrivastava; October 1995
- "World Development"; Role of Transnational Corporations in the Evolution of a High-Tech Industry; Murali Patibandla and Bent Peterson; 2002
- University of Melbourne; Challenging the Role of Corporations in Society; John McFarlane; Aug. 31, 2005
- "The Canadian Bar Review"; Corporate Law and the Role of Corporations in Society; Ian Lee; July 2006
- "U.S. News & World Report"; Multinationals 2.0; James Pethokoukis; July 2006
- International Organization of Employers; The Role of Business in Society; July 2004