Bachelor of General Studies (BGS) Degree Practice Exam

Which type of corporations typically engage in practices aimed at improving community well-being?

1. Small business corporations

2. B corporations

3. Traditional corporations

4. Limited liability companies

The correct answer is: B corporations

B corporations, or Benefit corporations, are designed specifically to balance purpose and profit. They are legally obligated to consider the impact of their decisions on stakeholders, including the community and environment, rather than focusing solely on maximizing shareholder profits. This legal framework encourages B corporations to engage in practices that contribute positively to community well-being, such as sustainability initiatives, support for local economies, and ethical labor practices. They must also report on their social and environmental performance, furthering their commitment to community-oriented practices. In contrast, small business corporations may engage in community improvement on a voluntary basis but are not bound by the same legal standards as B corporations. Traditional corporations often prioritize shareholder value, which can lead to a neglect of community well-being unless driven by public pressure or social responsibility initiatives. Limited liability companies primarily focus on protecting owners' personal assets and can be structured similarly to traditional corporations, often with less emphasis on community impact.