The world has seen many changes in recent years, and business structures have been more than a little unhinged. The corporate supremacy of the United States and almost all other countries has been shaken by globalization, emergence of Asian countries like China, India, and Japan. The form of business organization most heavily regulated by the government is the Corporation. It is the corporation that has made the greatest impact on today’s world, and it is being scrutinized by governments as never before.
The corporation was first recognized in law in the 18th century, when it became a legal entity distinct from its owners. In Britain, for example, corporations were given charters of incorporation that gave them their rights and obligations. A charter was a document which stated the company’s purpose and state law under which it could operate. From the beginning there has been tension between two trends: One favors corporations, arguing that they enable people to work together to distribute collective knowledge and power; another argues that corporations are instruments of oppression–tools of wealth inequality and exploitation.
The corporation has received lots of criticism from the labor movement and the media, but today it is more than ever an important part of our society. Despite the recent global recession, business in general has been thriving, and corporations are an extremely important factor in this growth. The focus on corporate accountability should be a positive thing, as long as it leads to improvements in corporate transparency and a strengthening of democratic institutions. In fact, if our society is to do well in this century, it must have accountable global corporations at its core. We need them to help govern markets and to realize innovations that can improve human lives around the world.
1. Corporations are not created by the government.
The corporation is not a legal entity but instead more of a governance tool in which people choose to engage with others on a regular basis. A corporation is created by the members who sign up to be part of it. The state government is not required to acknowledge the corporation. Once it does, this gives the corporation limited liability for its owners and the right to sue and be sued in its own name. In fact, corporations can serve as a shield for their members from legal liability because of the strict financial separation between them.
2. Corporations do not have human rights.
The word “corporation” may bring up images of big businesses with political clout but in truth, corporations are very limited in their abilities to act or to change. The most common misconception about corporations is that they have human rights or legal personhood as it is also termed. However, this is not true. The rights of humans come from their status as human beings and these rights cannot be transferred to non-humans; that is why a corporation is not considered a person and will never be. Corporations do have legal status but it does not come from their being people.
3. Corporations do not have feelings.
There is a common belief that corporations have feelings and can be offended. Such beliefs are not factual; in fact, corporations cannot have feelings. This is because corporations are not capable of experiencing emotions, or at the very least, no studies have been conducted proving that it has emotions.
A corporation simply does not have feelings. However, one does not need to prove this fact as it is widely understood by all people regardless of their perspective on the matter; although this myth persists in large part due to various business owners who claim their company has a feeling of its own.
4. Corporations are not people.
There is a common misconception that corporations are people or even less than people. This notion is not supported by the law, and the media itself reports on corporations as individuals or groups of people, despite their status as non-human entities. Corporations are considered legal persons and that means their bodies can be held responsible for criminal acts and for civil wrongs.
This can be seen with the recent scandal involving BP who was found guilty of criminal charges relating to the oil spill in Alaska’s Gulf of Mexico in 2010. The corporation was also liable to pay $20 billion in civil damages to compensate victims of the spill and their families.
5. Corporations can think.
This is a common misconception that corporations can think and have thoughts. The fact is that a corporation is just a legal entity which cannot think at all. A corporation cannot feel, love, or hate any human; it cannot feel pain or happiness. A corporation has no emotions and is not capable of having ideas of its own.
It lacks the ability to develop new thought processes, so it does not manufacture them nor does it understand them in any way at all. Corporations are not sentient beings and again this myth persists due to various business owners who claim their company has feelings of its own. It has been shown that corporations have intellectual abilities but they do not possess the ability to think or appreciate creativity.