J. William Callison
Joseph A. McCahery
Erik P.M. Vermeulen
Faegre Baker Daniels LLP
Tilburg University and ECGI
Tilburg University and Philips Lighting
Corporate Disruption: The Law and Design of Organizations in the 21st Century
This paper explores the issue of “re-making” corporate law through the prism of the United Nations’ recent efforts at reducing legal obstacles experienced by micro, small and medium-sized enterprises in starting and scaling a business. In order to be successful, we recommend that the UN should go back to business fundamentals and should attempt to build from the ground up based on the real world needs of entrepreneurs, rather than work off already existing corporate legal systems. In this way, it is possible to engage in a more imaginative form of regulatory design in which a clear, open and preferential legal framework for stimulating innovation and business creation can be developed.
In economies characterized by static, closed markets, the formal hierarchies of modern corporate law functioned as an important and effective site of innovation and business creation that drove economic development. However, in today’s hyper-competitive, global markets such structures are proving far less durable. Many policy makers and other commentators have identified the need for new organizational forms appropriate to the new economy, particularly in the context of smaller enterprises in the formative and early stages of the corporate life cycle. There is a sense that existing corporate law forms are overly bureaucratized and out of touch with the contemporary business needs of micro, small and medium-sized enterprise (MSMEs).