Victoria Schnure Baumfield (Bond University – School of Law) and Akshaya Kamalnath (ANU Law School) have posted The Long Arm of the State in the Tech Sector and Its Impact on Corporate Purpose on SSRN. Here is the abstract:
Corporate purpose debates, in large part theoretical, have captured academic and industry attention in the recent past. This paper will examine the specific case of recent government investment in companies within the tech sector with a view to understanding the aims of such investment and, further, the implications of this for the idea of corporate purpose. The tech sector is particularly relevant because, at every stage in history, the cutting-edge technology of the time has been a matter of interest for governments and continues to be so at this current moment of fraught geopolitics. This paper uses case studies from the U.S. and Australia. The use of case studies allows us to delve into context-specific issues and, to an extent, glean some more generalizable takeaways. Based on the analysis of case studies in this paper, we argue that governments are pursuing strategic aims through their investments in the tech sector—something we call strategic socialism. To be clear, we are skeptical of this and caution against the long arm of the State. Government investors have the potential to influence corporate decision-making, possibly even de facto changing these companies’ corporate purpose. To address this, we highlight the need for greater transparency around the relationship between government investors and the companies in which they own shares. We propose that companies with government involvement should state their corporate purpose on the official company website as a preliminary solution so as to ensure clarity and transparency. The paper not only contributes to our understanding of corporate purpose based on practical insights from the tech sector but also contributes to our broader understanding of the intertwining of business and government.
To receive new posts from Legal Theory Blog by email, get a free subscription to Legal Theory Stack.
Lawrence Solum