Just as thousands of babies are born each day, so too are thousands of start-up businesses. Some are brought into the world in rather deplorable conditions – garages, basements, and pubs – but nearly all with a common goal: to grow and thrive. Since Dartmouth v. Woodward in 1819, private corporations have been viewed as having many of the same rights as persons such as you or I. In many ways, early start-up businesses are a lot like infants; they’re a little awkward and clumsy, don’t fully understand the world around them, tend to be a serious liability for their parents and initially, don’t do much other than whine and crap themselves. Yet, when we play around with the corporate personhood metaphor, stark differences arise between the early days of a business and the early days of a child. Some of these differences are laughable, but others are downright concerning.
If corporations are persons, then we should be alarmed by the health of our children.
Depending on which statistic you choose, start-up failure rates are quoted as anywhere from 25% in the first year, to around 50% within five years, or even up to 90% in the case of tech companies (hang your heads in shame, you deplorable nerds). Whether with biological or corporate infants, heath issues can arise due to a number of environmental factors from nutrition to nurturing.
That said, if we take the corporate personhood metaphor to the extreme, we can assume the following conclusions about the business environment:
- The small business space is more congested than the highest density cities of India
- We are funding our start-ups with the equivalent nourishment of a minimal amount of the worst infant formula money can buy, mixed with tainted pond water
- Our professional aides, start-up guides and business-helping technologies are on par with medical advances from the Victorian era
- Entrepreneurs are fickle, deadbeat parents that are raising new business ventures in broken homes and are apt to periodically abandon their economic offspring
Should we be holding our entrepreneurs to higher standards when it comes to the management and development of small businesses? Should our governments be working to improve the surrounding environment for start-ups by providing greater access to funding, support and guidance than is currently available? If corporations are persons, then we’re neglecting our youth.
If corporations are persons, then why do we trust infants with such large responsibilities?
Let’s assume for a moment that your small business does not become a statistic. You survive the cull and manage to grow your infant into a toddler. How many toddlers do you know that own land? When was the last time you saw a three-year-old sue one of their colleagues?
At the core of these questions lies a harsh reality: we give young corporations far too much power with far too little oversight. Once a business flourishes and grows into an adult behemoth, we can trust them to understand and play by the rules (… right?), however, in the early days, why would we expect a young organization to know everything about law, management or accounting? Many of these businesses are still in developmental stages.
Much like we pamper, train and restrain our young, why not put corporate persons through the same rigorous education and slowly growing their responsibility? While I’m all for learning how to swim in the deep end, looking back to our first point on how frequently start-ups fail, there might be something to the concept of forced entrepreneurial education and limited power in early business phases.
Why are parents held accountable for the actions of their biological children, but not their corporate children?
Call me crazy but the concept of limited liability seems completely bonkers. While we are comparing companies to people here, these organizations don’t actually have sentience themselves. When someone screws up, we can’t just blame the company; odds are there was some significant human decision-making involved that deserves a good finger pointing or two.
If a young child were to pick up a weapon and injure another person, we might find the parents guilty of negligence and improper oversight. So why is it that when corporations pillage their way through society, we don’t point the finger at their parents? Of course, in cases of extreme corporate malfeasance, we have seen a number of white-collar criminals be brought down. However, in the absence of massive personal wrongdoing or illegal behavior, we still have to ask, ‘Who takes the fall when a corporation screws up?’ Somebody designed that part, somebody signed that contract, somebody authorized that product launch and somebody screwed up.
At the bare minimum, if we’re not going to blame the parents, can we at least do a better job of punishing the child? Where is our equivalent of corporate juvenile detention and what would it look like to lock up a company for a few years?
If you want your customers to start respecting you like a person, then start acting like one.