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Enterprise foundation

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A defining feature of enterprise foundations is that the foundation controls the company which it owns, and not the other way around. Consequently, the majority of corporate foundations around the world, who do philanthropy on behalf of a company, are not enterprise foundations. Moreover, enterprise
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Business ownership separates enterprise foundations from ordinary (purely charitable) foundations. Self-ownership means that it has no residual claimants. The foundation may choose to donate, but nobody has a claim on donations. By foundation ownership, foundations have controlling influence in a
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In most countries around the world, enterprise foundations are not a legal category and there is no unified body of enterprise foundation law. The Nordic country of Denmark is an outlier due to its tax regime and enterprise foundation laws. Consequently, Denmark has a high number of enterprise
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Many enterprise foundations are non-profits without a personal profit motive, which sets them aside from other ownership structures. Instead, they are legally bound by their purpose, which typically is to secure the longevity and independence of the companies that they own and to contribute to
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The enterprise foundation is committed to act in accordance to the purpose(s) stated in the foundation charter – which most importantly are the longevity and independence of the company. Consequently, the enterprise foundation is legally committed to the long-term ownership of the enterprise.
139:, they are long-term owners. However, not all enterprise foundations are equally idealistic. Some have strong ties to the founding family and continue to donate to its descendants. Others again have ties to government organisations, cooperatives or associations, which helped establish them. 29:. Enterprise foundations generally have philanthropic as well as business purposes, and often concentrate their investments in a single firm or a single business group. Many of the best known foundation-owned companies are publicly listed, while the enterprise foundation retains a 770:
due to its long-term commitment to philanthropy, charity, employee welfare, contributions etc. Greater trust in the company may result in greater customer loyalty, more engaged employees, more reliable suppliers, more supportive societies and more stable
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Ownership commitment by enterprise foundations may facilitate organisational commitment by employees in foundation-owned firms. Company commitment to employee welfare may be stronger and more credible in foundation-owned firms due to the
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Most enterprise foundations have a philanthropic purpose in addition to the business purpose. Since philanthropy is usually paid for by dividends from the company, the philanthropic purpose implies an incentive to generate
871:, claiming that their charitable actions can be interpreted as a defensive manoeuvre to shift the public focus away from their profitability. In 2016 the Danish pharmaceutical, and enterprise-foundation owned company, 860:
The founder's administrative heritage may lead to excessive conservatism and may impede flexible adaption to new circumstances. The lack of a personal profit motive may make foundation-owned companies less
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Purposes may include special attention to certain topics i.e. product quality, employee welfare, contributions to research, education, culture, social projects, and general charity.
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Enterprise foundations are independent, self-governing entities with no owners. They are characterised by long time horizons, philanthropic goals and the absence of personal
1299:"Henrik Holtermann (ed.), Denmark in International Affairs. Publications in languages other than Danish 1967–1995, København: DUPI og DJØF forlag, 1997, 230 s., 525,00 kr" 1559:"George A. Akerlof et Rachel E. Kranton, Identity Economics. How our Identities Shape our Work, Wages, and Well-Being Princeton : Princeton University Press, 2010" 815:. Since the enterprise foundation has little or no incentive to break implicit contracts, foundation-owned companies can more credibly negotiate contracts with their 1596: 811:
Customers are presumably more likely to buy from a company that has less of an incentive to abuse their trust. The same goes for employees, suppliers, and other
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an irrevocable separation from the founder. Irreversibility separates enterprise foundations from i.e. family trusts that are widely used in the US and other
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The idealistic purpose of an enterprise foundation can help motivate customers, employees and other stakeholders to identify with the firm
1657: 46:"industrial foundations", "corporate foundations", "commercial foundations", "business foundations", "commercial non-profits" 867: 431: 1597:"From CSR 'greenwashing' to general 'SDG washing': the potential threat to SDG implementation | Emerald Publishing" 864:
Highly profitable foundation-owned companies with philanthropic or charity purposes may fall prey to so-called
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Foundation ownership can mitigate the succession challenges and internal conflicts found in family-owned firms.
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influence. The companies owned by enterprise foundations may be active in any private business activity.
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Strong preference for survival and retaining the foundation may prevent the company from taking part in
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The key decision makers in enterprise foundations – the foundation board members – are not rewarded by
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Enterprise foundations may earn the trust and goodwill of customers, suppliers, employees, and other
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Academic literature has identified the following key characteristics of enterprise foundations:
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Several big international companies are owned by enterprise foundations, including the Indian
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Examples of significant, international companies controlled by an enterprise foundation
1270: 746: 1512:"Why Do Firms Have "Purpose"? The Firm's Role as a Carrier of Identity and Reputation" 1426:"Inside the Family Firm: The Role of Families in Succession Decisions and Performance" 1646: 1543: 1410: 1192: 1154: 1107: 1019: 850: 753: 318: 102:. In Denmark, enterprise foundations own three of the four largest Danish companies; 26: 1511: 872: 742: 181: 107: 75: 1176: 1315: 1298: 1062:
Thomsen, Steen; Poulsen, Thomas; Børsting, Christa; Kuhn, Johan (25 April 2018).
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Advantages and disadvantages to enterprise foundations and foundation ownership:
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Enterprise foundations are able to make long-term decisions that avoid economic
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Bennedsen, M.; Nielsen, K. M.; Perez-Gonzalez, F.; Wolfenzon, D. (1 May 2007).
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business company. To qualify as enterprise foundations, they have to have
1002: 521: 237: 1378: 1394: 1080: 1063: 649: 627: 619: 559: 512:– enterprise foundations do not have to own 100% of the companies. The 95: 1496: 1035:"Publicly listed foundation-owned firms around the world: an overview" 481: 211: 103: 1464: 1122: 986:"Enterprise Foundations: Law, Taxation, Governance, and Performance" 1480: 1138: 741:
As long-term owners, enterprise foundations are less pressured by
455: 370: 94:. Enterprise foundations are most common in the Nordic country of 87: 775:, which in turn generate greater revenue, lower costs and higher 1040:. Center for Corporate Governance, Copenhagen Business School. 422: 1379:"The Future of the Corporation and the Economics of Purpose" 908:"What is an Enterprise Foundation? – Enterprise Foundations" 548:
Foundations created to secure and promote the wealth of the
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German multinational media, services and education company
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in a business company, it is an enterprise foundation.
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Henderson, Rebecca; Steen, Eric Van den (1 May 2015).
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foundations are private entities not governmental or
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Other terms used to describe the same phenomenon are
37:. Ownership can be full (100% ownership) or just a 1622:"Insulin maker Novo Nordisk walks moral tightrope" 1175:Fama, Eugene F.; Jensen, Michael C. (March 1985). 984:Thomsen, Steen; Kavadis, Nikolaos (8 March 2022). 846:The founder's substantial loss of personal wealth. 632:Including foundation purpose and governance rules. 558:: Combinations of purposes so that a foundation's 1121:Fama, Eugene F.; Jensen, Michael C. (June 1983). 791:and philanthropic nature of foundation ownership. 875:, faced criticism in the US over its pricing of 592:a separate legal personality for the foundation. 489:Danish multinational hearing healthcare company 1255:"Foundation Ownership and Economic Performance" 1177:"Organizational forms and investment decisions" 727:Key benefits of enterprise foundation structure 33:, commonly through voting rights via different 1216:"Foundation ownership, reputation, and labour" 1259:Corporate Governance: An International Review 1068:Corporate Governance: An International Review 712:Multiple objectives (business, philanthropy) 404:Technical and business services organisation 8: 1064:"Industrial foundations as long-term owners" 841:Criticism of enterprise foundation structure 552:and other family members of the founder(s). 1214:Børsting, Christa; Thomsen, Steen (2017). 1091:10398/2fee4ba1-c713-4951-9086-f3769cd19129 598:which goes beyond benefitting the founder. 556:Enterprise foundations with multiple goals 365:Swedish conglomerate and business dynasty 206:Alcoholic beverages, beer and soft drinks 176:Alcoholic beverages, beer and soft drinks 150: 1314: 1089: 1079: 1001: 148:foundations compared to other countries. 745:fluctuations, earnings expectations, or 663: 516:is focused on voting rights rather than 896: 391:Global transport and logistics company 219:Global transport and logistics company 782:Enterprise foundations may experience 463:Swiss watch designer and manufacturer 50:"foundations with corporate interests" 1123:"Agency Problems and Residual Claims" 979: 977: 975: 973: 971: 969: 967: 965: 963: 961: 959: 957: 955: 953: 951: 949: 947: 945: 417:German automotive parts manufacturer 7: 1292: 1290: 1288: 1170: 1168: 1166: 1164: 1057: 1055: 1053: 1051: 1049: 1047: 943: 941: 939: 937: 935: 933: 931: 929: 927: 925: 902: 900: 100:domestic stock market capitalisation 22:are foundations that own companies. 796:Mitigation of succession challenges 784:"the mutual commitment hypothesis". 1557:Dherbécourt, Clément (June 2011). 1465:"The Role of Nonprofit Enterprise" 1430:The Quarterly Journal of Economics 1338:Jensen, Michael (September 2001). 1271:10.1111/j.1467-8683.1996.tb00150.x 672:Disadvantages (costs, weaknesses) 476:Indian multinational conglomerate 14: 1463:Hansmann, Henry B. (April 1980). 1297:Amstrup, Niels (1 January 1997). 669:Advantages (benefits, strengths) 534:Charitable enterprise foundations 1220:Oxford Review of Economic Policy 1127:The Journal of Law and Economics 704:No market for corporate control 562:may oblige it to own a business 1253:Thomsen, Steen (October 1996). 352:Swedish furniture manufacturer 1601:www.emeraldgrouppublishing.com 1377:Mayer, Colin (21 April 2021). 1181:Journal of Financial Economics 990:Annals of Corporate Governance 879:which fuels the growth of the 618:i.e., a board of directors or 546:Family enterprise foundations: 31:controlling ownership position 16:Foundations that own companies 1: 1383:Journal of Management Studies 1344:European Financial Management 608:shares in a company or other 1316:10.7146/politica.v29i4.68173 1193:10.1016/0304-405x(85)90045-5 638:voting control of a company. 131:society by philanthropy. As 540:Pure enterprise foundations 1674: 806:Absence of monetary motive 652:and the law are respected. 616:A foundation organisation: 106:(A.P. Moller Foundation), 1575:10.4074/s2113520711012114 566:to contribute to charity. 163:Description and industry 1658:Types of business entity 1516:American Economic Review 1356:10.1111/1468-036x.00158 881:Novo Nordisk Foundation 450:and cosmetics company. 430:Certification body and 378:Norwegian food company 112:Novo Nordisk Foundation 71:businesses, the Danish 1442:10.1162/qjec.122.2.647 696:Financial constraints 693:Social responsibility 596:A non-selfish purpose: 432:classification society 339:American food company 326:German optics company 292:Spanish multinational 73:pharmaceutical company 20:Enterprise foundations 1528:10.1257/aer.p20151072 685:Ownership commitment 580:Creation by donation: 514:controlling influence 510:controlling influence 502:controlling influence 446:French multinational 309:Danish multinational 275:Danish multinational 245:Danish multinational 189:Danish multinational 1469:The Yale Law Journal 1232:10.1093/oxrep/grx023 1003:10.1561/109.00000031 732:Long-term commitment 642:Outside supervision: 584:common law countries 500:If a foundation has 262:German conglomerate 212:A.P. Moller – Maersk 199:Anheuser Busch Inbev 120:Carlsberg Foundation 104:A.P. Moller – Maersk 877:diabetes medication 830:economic incentives 665: 648:to ensure that the 571:Key characteristics 153: 1395:10.1111/joms.12660 1081:10.1111/corg.12236 1033:Schroeder, David. 857:to finance growth. 761:Trust and goodwill 677:Long-term horizon 664: 628:foundation charter 345:Inter IKEA Holding 294:financial services 151: 58:quasi-governmental 777:shareholder value 747:corporate raiders 724: 723: 717:Company survival 680:Muted incentives 644:for example by a 493: 492: 1665: 1638: 1637: 1635: 1633: 1628:. 1 October 2019 1618: 1612: 1611: 1609: 1607: 1593: 1587: 1586: 1554: 1548: 1547: 1507: 1501: 1500: 1460: 1454: 1453: 1421: 1415: 1414: 1374: 1368: 1367: 1335: 1329: 1328: 1318: 1294: 1283: 1282: 1250: 1244: 1243: 1211: 1205: 1204: 1172: 1159: 1158: 1118: 1112: 1111: 1093: 1083: 1059: 1042: 1041: 1039: 1030: 1024: 1023: 1005: 981: 920: 919: 917: 915: 904: 873:Novo Nordisk A/S 853:or from issuing 666: 610:financial assets 154: 135:which cannot be 82:, German Robert 1673: 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Retrieved 868:SDG-washing" 865: 823: 817:stakeholders 813:stakeholders 783: 773:shareholders 768:stakeholders 743:stock market 660: 657:Perspectives 641: 635: 625: 615: 601: 595: 589: 579: 574: 563: 555: 545: 539: 533: 506: 499: 460:Switzerland 439:Pierre Fabre 388:Switzerland 255:Robert Bosch 182:Novo Nordisk 146: 143:Distribution 133:perpetuities 129: 108:Novo Nordisk 76:Novo Nordisk 62: 54: 49: 45: 43: 24: 19: 18: 1653:Foundations 910:(in Danish) 709:Succession 550:descendants 225:Bertelsmann 39:controlling 1647:Categories 1569:(2): 327. 1309:(4): 446. 892:References 636:Ownership: 358:Wallenberg 319:Carl Zeiss 268:Leo Pharma 69:Wallenberg 65:Tata Group 1632:16 August 1606:16 August 1583:2113-5207 1563:OEconomia 1544:153746145 1536:0002-8282 1489:0044-0094 1450:0033-5533 1411:226329929 1403:0022-2380 1364:1354-7798 1325:2246-042X 1279:0964-8410 1240:0266-903X 1201:0304-405X 1155:151111003 1147:0022-2186 1108:197776483 1100:0964-8410 1020:247373467 1012:2381-6724 914:15 August 885:endowment 789:long-term 646:regulator 604:endowment 469:Tata Sons 302:Novozymes 285:CaixaBank 169:Carlsberg 137:dissolved 116:Carlsberg 1303:Politica 836:profits. 620:trustees 524:rights. 522:dividend 486:Denmark 414:Germany 323:Germany 313:company 306:Denmark 296:company 279:company 272:Denmark 259:Germany 249:company 242:Denmark 238:Lundbeck 229:Germany 216:Denmark 203:Belgium 193:company 186:Denmark 173:Denmark 160:Country 157:Company 86:, Swiss 650:charter 560:charter 443:France 427:Norway 375:Norway 362:Sweden 349:Sweden 311:biotech 126:Purpose 96:Denmark 80:Hershey 1581:  1542:  1534:  1497:796089 1495:  1487:  1448:  1409:  1401:  1362:  1323:  1277:  1238:  1199:  1153:  1145:  1106:  1098:  1018:  1010:  861:agile. 855:equity 473:India 289:Spain 114:) and 1540:S2CID 1493:JSTOR 1407:S2CID 1151:S2CID 1104:S2CID 1038:(PDF) 1016:S2CID 887:size. 528:Types 456:Rolex 410:Mahle 371:Kavli 88:Rolex 84:Bosch 78:, US 1634:2022 1608:2022 1579:ISSN 1567:2011 1532:ISSN 1485:ISSN 1446:ISSN 1399:ISSN 1360:ISSN 1321:ISSN 1275:ISSN 1236:ISSN 1197:ISSN 1143:ISSN 1096:ISSN 1008:ISSN 916:2022 92:IKEA 90:and 48:and 1571:doi 1524:doi 1520:105 1477:doi 1438:doi 1434:122 1391:doi 1352:doi 1311:doi 1267:doi 1228:doi 1189:doi 1135:doi 1086:hdl 1076:doi 998:doi 564:and 520:or 423:DNV 122:). 1649:: 1624:. 1599:. 1577:. 1565:. 1561:. 1538:. 1530:. 1518:. 1514:. 1491:. 1483:. 1473:89 1471:. 1467:. 1444:. 1432:. 1428:. 1405:. 1397:. 1387:58 1385:. 1381:. 1358:. 1346:. 1342:. 1319:. 1307:29 1305:. 1301:. 1287:^ 1273:. 1261:. 1257:. 1234:. 1224:33 1222:. 1218:. 1195:. 1185:14 1183:. 1179:. 1163:^ 1149:. 1141:. 1131:26 1129:. 1125:. 1102:. 1094:. 1084:. 1072:26 1070:. 1066:. 1046:^ 1014:. 1006:. 992:. 988:. 924:^ 899:^ 626:A 52:. 1636:. 1610:. 1585:. 1573:: 1546:. 1526:: 1499:. 1479:: 1452:. 1440:: 1413:. 1393:: 1366:. 1354:: 1348:7 1327:. 1313:: 1281:. 1269:: 1263:4 1242:. 1230:: 1203:. 1191:: 1157:. 1137:: 1110:. 1088:: 1078:: 1022:. 1000:: 994:6 918:. 866:" 824:. 819:. 779:. 749:. 630:: 622:. 612:. 606:: 586:. 118:( 110:(

Index

profit motives
controlling ownership position
share classes
controlling
quasi-governmental
Tata Group
Wallenberg
pharmaceutical company
Novo Nordisk
Hershey
Bosch
Rolex
IKEA
Denmark
domestic stock market capitalisation
A.P. Moller – Maersk
Novo Nordisk
Novo Nordisk Foundation
Carlsberg
Carlsberg Foundation
perpetuities
dissolved
Carlsberg
Novo Nordisk
pharmaceutical
Anheuser Busch Inbev
A.P. Moller – Maersk
Bertelsmann
Lundbeck
pharmaceutical

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