Journal of Human Security

Contractual Governance of Social Enterprises: Balancing Social Missions and Commercial Obligations in Chinese Civil Law

Juan Zeng
Faculty of Law, Universiti Kebangsaan Malaysia (UKM), Bangi, Selangor, Malaysia
Hasani Mohd. Ali
Faculty of Law, Universiti Kebangsaan Malaysia (UKM), Bangi, Selangor, Malaysia
Mohd Shahril Nizam Md Radzi
Faculty of Law, Universiti Kebangsaan Malaysia (UKM), Bangi, Selangor, Malaysia

Abstract

This research examines the role of contractual governance in enabling social enterprises in China to simultaneously pursue social objectives and commercial sustainability within the framework of Chinese civil law. Employing the PRISMA methodology to conduct a Systematic Literature Review (SLR), twelve peer-reviewed articles were analysed to uncover recurring patterns and themes related to governance arrangements, legal provisions, and institutional factors. The findings are organised into three main areas: (i) contractual tools employed to safeguard social missions; (ii) approaches for harmonising social and commercial goals; and (iii) legal and institutional limitations influencing the enforceability of contracts in China. The analysis indicates that internal instruments such as mission lock clauses, dividend restrictions, and stakeholder agreements are commonly utilised to prevent mission drift; however, their effectiveness is frequently constrained by the rigidity of the codified legal system and inconsistencies in judicial practice. The study concludes that although contractual governance provides a flexible mechanism in the absence of a formal legal status for social enterprises, its long-term effectiveness depends on legal reform and institutionalisation to ensure governance aligns with mission objectives.

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