Abstract
The challenge of corporate commitment to purpose is well-known. This article examines it through a decision tree lens, revealing that corporations rationally avoid commitment unless legally compelled. Offering historical examples, this article argues that legal mechanisms were put in place to ensure commitment; in our present day, such mechanisms are gone, and so are the incentives of the corporation to adhere to its purpose. The article identifies only one setting in our existing framework — outlier corporations with a so-called “self-destructive” purpose — where the corporation opts to commit even in the absence of legal mechanisms that incentivize it to do so. This study contributes to interdisciplinary debates in law, economics, and organizational theory, reigniting the debate whether there is a need for legal enforcement mechanisms to ensure corporate adherence to purpose.