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Which Corporate Personality Are You: Market Basket or Hobby Lobby?

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For the past six weeks, many of us in New England were startled out of our summer lethargy to see a rare coalition of workers, managers, customers and suppliers of the Market Basket grocery chain come together. And perhaps more remarkable and rarely heard these days was their message to the small group of Market Basket corporate shareholders: "We are stakeholders in this corporation -- as much, if not more so, than you."

As we head into Labor Day after this unlikely set of allies, driven primarily by workers who aren't formally unionized, has won its central demands - the reinstatement of fired CEO Arthur T. Demoulas and the acceptance by other family shareholders of "Artie Ts" buyout bid - many will be wondering if the Market Basket story will have any lasting significance.

In an era when the U.S. Supreme Court is rapidly expanding the bizarre and previously circumscribed legal fiction of corporate personhood, Market Basket offers a conception of the corporation that is a welcome counterpoint to the nearly feudal view underlying the recent Hobby Lobby case. Market Basket poses a stark choice to those real, live persons shaping any 21st century business: Will your company be one that recognizes a diversity of stakeholders to whom some responsibility is owed? Or one whose shareholders can impose their will on employees and others affected no matter what?

The Hobby Lobby case posed the question of whether that corporation had to comply with the Affordable Care Act's requirement that all employees be afforded full health insurance coverage for contraception. The majority of the Supreme Court reasoned essentially as follows: Corporations are legally "persons"; persons have certain rights protected under a statute called the Religious Freedom Restoration Act (RFRA); a corporation's religious beliefs are determined by the beliefs of its owners; and in this case, the "owners of the businesses have religious objections to abortion, and according to their religious beliefs the four contraceptive methods at issue are abortifacients"; therefore, Hobby Lobby is not required to provide coverage for contraception.

Putting aside the fierce debate over whether the Court wrongly decided Hobby Lobby, what is significant here is the Court's underlying view of just who and what confers corporate personhood: property ownership. For five members of this Supreme Court, stock ownership trumps everything else. The religious freedom provided by RFRA is granted to shareholders alone.

This type of corporate "person" does not include, and so does not need to account for, the views of employees, managers, customers, suppliers, the local community or any other stakeholders. In effect, the shareholders are the lords of their corporation. Their beliefs are privileged over anyone else's. When as with Hobby Lobby there are only a handful of shareholders whose religious, political or economic views profoundly impact thousands of others, the feudal analogy becomes even more apt.

This "shareholders above all others" corporate personification is completely in line with a widely promoted (although historically relatively recent) assertion popularized particularly by Milton Friedman: that the sole purpose of a corporation is to maximize profits for its shareholders. It is precisely this view that the Market Basket coalition has just turned on its head.

Many of the 25,000 workers at Market Basket's 71 stores who rallied, urged customers not to shop there, and risked getting fired, told of just wanting to hold on to the respect and fair treatment they had experienced while Arthur T. was CEO. They were not rallying for higher wages or better benefits -Market Basket under Arthur Ts leadership reportedly was already paying starting clerks $12/hour and cashiers could earn over $40,000 a year. Instead, the workers said they were motivated by the sense of being part of a company family and the desire to carry on a company mission (including a commitment to low prices for their largely middle class consumers) that the ousted CEO had pursued over many years.

Before the virtual shutdown of Market Basket, the privately held company was reported to be highly profitable, with $4 billion in revenues. Indeed, in the lead-up to the recent showdown, the family group that ousted Arthur T. had voted to pay out a reported $250 million in special annual dividends to their nine shareholders.

In the Friedman worldview of corporations, shareholders deserve whatever they can vote themselves - they create corporate value by their investment, and are entitled to the resulting profits. Other considerations should be irrelevant to this corporate purpose. But to the employees of a corporation like Market Basket, some of whom started as teenagers and had worked for the same employer for over 40 years, and others who risked their livelihoods to support the virtual boycott of the past six weeks, the corporation's value was created by them - the entire family of Market Basket stakeholders. And to prove the point, their widely supported protests almost destroyed that value in just six weeks, as stores shelves and aisles went empty.

If corporations are increasingly able to exercise rights and privileges that used to be reserved for actual people -- engage in constitutionally protected speech that can trump campaign finance rules under the Citizens United ruling, or claim religious values that can trump social welfare legislation -then it becomes ever more important to ensure that the corporate "person" is composed of all those with a stake in the entity and its role in society: its workers, its managers, its customers as well as its financially benefited shareholders.

Market Basket is not alone in viewing its mission differently than some, perhaps the majority, of American corporations. There is a growing movement for states to charter benefit corporations - so-called B corporations -- that explicitly include a positive benefit to society as a corporate purpose. Some companies like Patagonia and perhaps Costco have essentially hard-wired a broader vision of corporate social responsibility into their way of doing business.

But at present and for the foreseeable future, the great majority of corporations will be owned and governed in a way that defines social benefit as a side effect, not a central mission. For these corporations, the increasingly urgent question should be: Which corporate personality are you?