Profit, Purpose and the ‘Price of Change’: Evidence From Benefit Corporation Transitions

ABSTRACT

This study investigates the short‐term financial consequences of transforming into a benefit corporation, a hybrid organisational form that embeds a dual mission of profit and public benefit. Drawing on the Social Resource‐Based View and sustainability‐oriented change management, we argue that the transition entails a reconfiguration of organisational priorities and resource allocation, which may temporarily affect firms' financial performance. Using a longitudinal event study on Italian firms, we compare transformed benefit corporations with a matched sample of non‐benefit firms. The results reveal lower performance in revenues, more tentative evidence on total assets, together with a reconfiguration of the debt structure following the transformation. Rather than signalling structural weakness, these dynamics may reflect transitional adjustment costs associated with the development of social and relational capabilities. The study contributes to research on hybrid organisations by clarifying the financial implications of benefit transformation and offers managerial insights on the need for careful financial planning during the transition process.