This Article challenges the conventional view that corporate law should principally strive to increase shareholder value, arguing that rather, corporate law should principally strive to ensure consumer satisfaction in consumer-centric businesses. Consumer-centric businesses are defined here as businesses in which consumers occupy a central role in the creation and distribution of corporate value and risks. For example, a consumer of a crowdfunded product does not take shares, but provides capital and product-design feedback during the early and critical stages of the product’s development. A consumer using a ridesharing app makes significant contributions to building the platform and provides real-time ratings and feedback regarding their experience, which are then used to incentivize desirable behavior within the platform. A purchaser of a token in an initial coin offering (ICO) purchases a medium of exchange that can be used within a particular network, with the value of the token being determined by the network’s success. In each of these examples, consumers have taken on roles that are the functional equivalents of the characteristics that legal theories of the firm have long relied upon to justify the law’s treatment of shareholders as owners and principals of firms. Based on this observation, I argue that consumers in these and other consumer-centric businesses should be provided with rights and obligations (such as the right to vote, standing to sue, and participation rights) commensurate to their contributions. In this Article, I show how this consumer-oriented model of the firm, which I refer to as the consumer primacy model, is useful as a mechanism to align corporate and societal interests and to inject diversity, long-termism, accountability, and social responsibility into the corporate boardroom, the lack of which has given rise to long-standing critiques of corporate culture in the United States.
Sung Eun (Summer) Kim, Consumer Primacy: A Dynamic Model of Corporate Governance for Consumer- Centric Businesses, 2022 ULR 235 (2022). doi: 10.26054/0d-qfgh-wnb0.