Democratizing profit‐with‐purpose corporations: Governance pluralism through new legal pathways from France

Abstract This study explores how democratizing governance within profit‐with‐purpose corporations can address the limitations of purpose‐driven governance. It analyzes two recent French legal frameworks that combine purpose and democratic principles: the entreprise commerciale de l'économie sociale et solidaire (commercial enterprise of the social and solidarity economy) and the société à mission (mission‐driven company). Drawing on a case study of a company that has adopted both legal forms, the study makes two main contributions. First, it responds to concerns in the literature regarding the governance of profit‐with‐purpose corporations by examining how new French legal frameworks embed democratic mechanisms within corporate structures. It demonstrates a positive relationship between democracy and purpose, leading to the identification of a new corporate governance configuration: governance pluralism. However, the study also reveals a key limitation: The implementation and sustainability of governance pluralism often rely heavily on the leadership of founders and executives. Although such leadership can enable pluralism, it can also threaten it.