In exploring the role of business corporations in generating innovation and assuming wider public obligations in a globalized and decentralized knowledge economy, this research project assesses the nature and extent of the role of law in governing this process. From this perspective, the project focuses on the social and economic role of firms against a background of long-held, conflicting assumptions regarding the role of business corporations in society. Deciphering this role is important in view of the manifold functions that today's firms perform on the domestic and the transnational level. These functions of the firm include the furthering of prosperity for shareholders and stakeholders such as employees, creditors, and the community at large, guaranteeing of employee pension plans, investing in research and development and in disseminating resulting knowledge, as well as engaging in the protection of the environment or observing cultural requirements and human rights standards in the firm's operation in various political contexts. In addition, as firms present the prime agents of technological innovation, their role within regional and national economies is of utmost importance under conditions of global competition. Remarking a recently heightened awareness among policy makers in Canada, the US or in the European Union of the need to strengthen the innovative potential of their economies, it is mandatory to better understand the role of business corporations and the potential for, but also the shortcomings of regulatory approaches in this respect.

The de-territorialization of company activities that span the globe either from a central administration or from within an interfirm-network that brings together a multitude of autonomous organizational and economic actors, exhausts traditional regulatory aspirations of nation states and other political bodies. Studying the various existing regulatory frameworks for business corporations on the domestic, transnational and international level, the project will illuminate the embeddedness of firms in layers of rules (produced by regulatory and self-regulatory bodies), economic and political constraints and historically evolved legal cultures. Focusing on the embeddedness of business corporations in systems of production as well as legal and socio-economic cultures, the project differentiates between the hard law that governs the corporation through company law or, e.g. securities regulation and even labour law on the one hand, and the soft law of voluntary codes of conduct, corporate governance codes and Human Rights Codes on the other. As the latter present a dramatic challenge to traditional understandings of law-making, the analysis of voluntary codes of conduct will serve to further illuminate the complex nature of the regulated and self-regulating firm.

The research project not only situates business corporations within a multi-level regulatory field, made up of official and non-official norm-producers, but also aims at better understanding the changing nature of the law itself. As we witness the emergence of soft-law standards against regulatory dead-ends and political blockades, the question inevitably presents itself as to how we ought to draw the line between official law and non-official law, between hard and soft law, between law and non-law. The research project ultimately contributes to a legal theory inquiry into the nature of governance through law and as such will most likely produce fruitful insights into contemporary struggles over the adequate regulation of business corporations and their relations to shareholders and stakeholders.

This project is funded by the Social Sciences and Humanities Research Council (SSHRC), (Grant # 410-2005-2421).