The Organizational Turn in Corporate Sanctioning Regimes: Rebalancing Profit–Seeking and Stakeholder Protection

Modern shareholder primacy is commonly justified by reference to an equilibrium famously articulated by Milton Friedman: business may pursue profits provided it operates “within the rules of the game.” The legitimacy of shareholder–oriented governance thus depends on effective legal mechanisms capable of constraining harmful profit-seeking. This Article argues that corporate sanctioning regimes play a constitutive role in sustaining that equilibrium and in structuring the relationship between shareholder-oriented corporate purpose and stakeholder protection. Drawing on examples from EU competition enforcement, benefit–based attribution models of corporate criminal liability in the United States and Finland, and the organizational failure-to-prevent regime exemplified by the UK Bribery Act, the Article shows how sanctioning regimes institutionalize competing conceptions of the corporation as an economic instrument or as an organizational actor. Economically calibrated liability models reflect a conception of the corporation primarily as an economic instrument, framing compliance in instrumental terms and narrowing the boundaries of corporate accountability. By contrast, organizationally informed liability models embed responsibility in internal governance structures and preventive capacities. The Article conceptualizes this development as an emerging organizational turn in corporate sanctioning in which liability increasingly serves to shape internal corporate governance, encourage the prevention of harm, and protect stakeholders. It thereby conditions the legitimacy of corporate profit-seeking and redefines the institutional role of corporate sanctions in shaping corporate responsibility.