Unlocking the Power of People: How Benefit Corporations enhance Human Capital

Human capital represents a key sustainability dimension, playing a pervasive role in the implementation of corporate sustainability. The dissertation investigates the innovative approach of Benefit Corporations in managing human capital, highlighting their response to key challenges, related to the misalignment of traditional human resource practices with employees’ evolving needs in the modern socio-economic landscape. The dissertation starts with a comprehensive review of the existing literature investigating the evolution of human capital management, from the early 20th century to the emergence of sustainable human resource management practices. It analyzes the emerging phenomenon of hybridization and the rise of purpose within organizations and its impact on human capital. The thesis then focuses on Benefit Corporations, which perfectly exemplify the paradigm shift introduced by purpose-driven organizations. Introduced in 2016 in the Italian legal system, these companies are revolutionizing the role of businesses, balancing the traditional goal of generating profit and the commitment to the common good. Considering human capital, Benefit Corporations invest significantly more in their employees compared to their non-benefit counterparts, leading them to implement actions to meet employees’ emerging needs. The 18,618 purposes of common benefit of Italian Benefit Corporations are empirically analyzed to understand how these companies interpret and translate their commitment to sustainability, particularly to human capital. This part reports the main results of the National Research on Benefit Corporations 2024, which analyses the purposes of common benefit using the SASB sustainability framework. This identifies five sustainability-related dimensions and explains their relevance in the seventy-seven codified industrial sectors. Focusing on the Human Capital dimension, this aims to address three general issue categories: Employee Health and Safety, Labour Practices and Employee Engagement, Diversity and Inclusion. From the analysis, it emerges that Benefit Corporations are more committed to pursuing the latter. Moreover, the purposes of common benefit of Italian Benefit Corporations are analyzed and categorized according to the degree of relevance of human-capital-related issues in the different industrial sectors according to SASB. The analysis shows that some industrial sectors, namely those for which human capital-related issues are relevant, place greater emphasis on this dimension, demonstrating that companies belonging to these sectors are aware of the processes impacting sustainability performance. Furthermore, the 3,270 human capital purposes of common benefit are categorized into fifteen HRM practices, including recruiting and selection, career opportunities, employee well-being, and work environment to identify how Italian Benefit Corporations concretely interpret their human capital commitment. This detailed analysis reveals that these companies are particularly interested in employee well-being, training and development, and a positive work environment. Finally, several characteristics of Benefit Corporations are empirically analyzed to identify recurring patterns related to size, geographical location, and year of incorporation. From the analysis, it is possible to identify the average Benefit Corporation’s profile and study its commitment to sustainability. In particular, the average Benefit Corporation results in a micro-sized company in Northern Italy operating in the services sector that was incorporated after 2016.