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Corpo ration vs. Individual-owned Businesses ...

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Topic: #4, Corpo ration vs. Individual-owned Businesses

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There exist various business options that are differentiated by the type of ownership. Individual-owned businesses and corporations are some of the major business options. Each form of business has its pros and cons. Indeed, individual-owned enterprises are owned by engaged in business agreements. Worth mentioning, individual-owned businesses are also referred to as business partnerships. On the other hand, corporations are owned by shareholders. The paper explores what differentiates a corporation from individual-owned firms. The internal, as well as external dimensions of corporate power, will be discussed.

Corporations are legal entities that are not only organized but also operate under the stipulated state's laws. Corporations aim to maximize their profits, just like other profitmaking firms (CFI para 1). Shareholders are the investors in this business. The creation of a corporation involves its incorporation by stakeholders who have a common goal. The incorporation of corporations attracts relatively high administrative fees when compared to other business structures such as business partnerships. Corporations must be registered with the state as well. After incorporation and registration, directors, and other officers, such as CEOs, should be appointed to govern and manage the corporation. Shareholders of a corporation are responsible for electing their directors while the board appoints key executives. The board also a role of monitoring the appointed executives. Corporations should depict high levels of transparency and disclose any pertinent information to the public (Kaymak et al. 556). Furthermore, the board makes decisions to adopt distinctive corporate strategies employees’ working for a corporation executive’s decision that managers and executives make.

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Indeed, corporations that are held by the public sell shares to raise substantial amounts to facilitate their business operations. A corporation can also raise capital by issuing bonds. Corporations have limited liability. For instance, a shareholder is liable up to his or her initial investment. In case of bankruptcy, the entity protects the shareholder's personal assets. Corporations have a perpetual life. The ownership of a corporation is passed through generations of investors. Notably, corporations have more efficient business structures, not forgetting their long-term stability as well as growth.

In business partnerships, individuals own the production's means and processes. Individuals raise capital to fund their business. Sole proprietorship and partnership are the primary forms of individual-owned businesses. Individual owned businesses are easy to organize and run. The owners of these enterprises are the managers, as well. Business partners are also responsible for making critical business decisions.

Further, business partnerships have unlimited liability. For instance, owners of individualowned businesses are responsible for debts. Few government regulations control business partnerships when compared to the strict rules governing corporations. Individual-owned businesses have organizational structures that are less efficient when compared to corporations. There exists a close relationship between individuals owning business partnerships and the community they operate in. In business partners, owners bring knowledge and critical resources to aid the operations of their businesses. Whenever there arise some disagreements between the business partners, profits are shared as it is stipulated in the detailed partnership articles. Business partnerships do not have a perpetual life. Most individual-owned businesses close when the owners die. 1

Corporations do exercise corporate power. Corporate power stimulates corporate control. Power influences people to do what needs to be done. Power enables leaders and managers to control various agendas of their institutions while ignoring the personal interests of some of the stakeholders. Corporate power has various dimensions. The dimensions are classified as internal or external dimensions. Economic power is an internal dimension of corporate power. Economic power refers to the power that controls labor processes, capital allocations, not forgetting strategic decision-making in a corporation. For instance, economic power control work decisions as well as lending and investment decisions. The internal dimensions have distinctive internal structures as well as corporate control mechanisms. Key executive officers use the internal accorded to them to control the corporation formally.

External corporate power shapes society. Market power is engaged in external corporate power control (Birch et al. 56). The external corporate power mechanism does not limit itself to the corporation’s actions or decisions. Notably, the external corporate power influences the environment in which it operates in. The external power mechanisms, including structural and ideological power, convince external stakeholders to accept certain societal narratives. Also, external corporate power enables leaders and managers to create legal frameworks that stipulates essential rules and values that need to be upheld. Worth mentioning, external corporate power makes executives have both social and political influence. Corporations should be in a position to balance their corporate power with corporate responsibility (Birch et al. 55). Socially responsible corporation leaders and key executives uphold high levels of social responsibility and are able to respond to their critics effectively.

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In conclusion, the creation of a corporation involves its incorporation by stakeholders who have a common goal. Corporations have limited liability. The ownership of a corporation is passed through generations of investors. Corporations have more efficient business structures, not forgetting their long-term stability as well as growth. Business partnerships have unlimited liability and do not have a perpetual life. Corporations do exercise corporate power that stimulates corporate control. The external power mechanisms, including structural and ideological power, convince external stakeholders to accept certain societal narratives. CSR enables corporations to respond to their critics.

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Works Cited Birch, Doctor Kean, et al. Business and society: A critical introduction. Zed Books Ltd., 2017.

CFI. Corporation. A legal entity created by individuals or Shareholders with the purpose of operating for profit, n.d. Accessed 08/10/2019. https://corporatefinanceinstitute.com/resources/knowledge/finance/what-is-corporationoverview/

Kaymak, Turhan, and Eralp Bektas. "Corporate social responsibility and governance: information disclosure in multinational corporations." Corporate Social Responsibility and Environmental Management 24.6 (2017): 555-569.

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