Social Business as a Sustainable Business Concept

List of Contents

List of Figures

List of abbreviations

Abstract

German Abstract (Zusammenfassung)

1. Introduction

2. Social Entrepreneurship (SE) – Concept and Facets
2.1. Definitions of relevant terms
2.1.1. Definition of “Entrepreneurship”
2.1.2. Definition of “Social“
2.1.3. Definition and Scope of Social Entrepreneurship
2.2. Social Entrepreneurship – a Concept of Systematic Change
2.3. Social Business (SB) vs. Social Enterprises
2.3.1. Most Common Concepts of Social Enterprises
2.3.2. Double and Triple Bottom Line
2.3.3. Two Forms of Social Business
2.3.4. The Seven Principles of Social Businesses
2.3.5. The Midas Touch and the Ancient Greeks
2.4. Key Characteristics of Successful Social Entrepreneurs
2.4.1. Social Commitment as Leitmotif
2.4.2. Social Entrepreneurs as the Best Fundament for SB
2.5. Social Business vs. Corporate Social Responsibility
2.6. Social Business vs Charity and Philanthropic Institutions
2.7. The Base of the Pyramid as a Parallel Development
2.7.1. Definition and Brief Overview of the BoP
2.7.2. Breaching the Gap between BoP and Social Business
2.8. Interim Conclusion

3. Applied Social Business in Reality and its Evaluation
3.1. Applications of Social Businesses as Role Models
3.1.1. Grameen Bank - the Eradication of Poverty
3.1.2. Grameen Danone Food - the Fight against Malnutrition
3.1.3. Grameen Shakti - Commitment to Renewable Energies
3.1.4. Grameen Veolia - the Provision of Arsenic Free Water
3.1.5. Grameen BASF - a German-Bangladeshi Cooperation
3.1.6. Grameen Otto Group and Other Social Businesses
3.2. Critics on Social Business

4. Sustainable Development as Social Business’ Overall Objective
4.1. Definition of Sustainable Development
4.2. Sustainable Development within the SE Sphere
4.2.1. Sustainable Performance and Methods of Measurement
4.2.2. The Third Sector and its Activity
4.2.3. Ethically Conscious Consumers Pursue Sustainability
4.2.4. LOHAS as a Sustainable Consumer Category
4.2.5. Stern Review on Climate Change as a Present Excursus
4.3. Interim Conclusion

5. Outlook
5.1. Public awareness of the Social Business concept
5.2. Expansion of the Third Sector to enhance its efficiency
5.3. Establishment of a sustainable infrastructure for SB
5.4. Social Entrepreneurship at Business Schools
5.4.1. Social Competence among the Top Management
5.4.2. Social Entrepreneurship at Business Schools
5.5. Conclusion Mark

6. Bibliography

7. Appendix: Impressions on Social Businesses

8. Acknowledgements

List of Figures

Figure 1: Social Business Motivation

Figure 2: Embedded Social Enterprise

Figure 3: Integrated Social Enterprise

Figure 4: External Social Enterprises

Figure 5: A Model of Social Entrepreneurial Intentions

Figure 6: The World Economic Pyramid

Figure 7: Sustainability Triangle

Figure 8: Framework of social needs underlying sustainable development

Figure 9: Functional chain of Organisations

Figure 10: Functionality of the SRoI

List of abbreviations

[illustration not visible in this excerpt](Mahatma Gandhi)^[1]

Abstract

The combination of the traditional way of the capitalistic thinking company, which aspires to maximise its profits (homo economicus), and the selfless approach of non-profit organisations, which contribute to society and are dependent on generous and periodic donations, create a new and sustainable business concept. This concept has emerged – mainly during the last decade – within the broader context of Social Entrepreneurship and is defined as Social Business.

Inspired by the energy of Muhammad Yunus and the time the author spent in Bangladesh, one of the poorest countries on a global scale, this research will provide a scientific approach to the sphere of Social Entrepreneurship and Social Business as a specific and innovative business model. Furthermore, this academic work examines the sustainability of the concept, evaluating it deductively by means of deriving the necessary information from several case studies and expert interviews carried out among others with Muhammad Yunus, Nobel Peace Laureate and founder of the Grameen Bank in Bangladesh, as well as Frédéric Dalsace, head of the Social Business Chair at HEC University, Paris. Finally, the thesis conveys an outlook on the upcoming development of Social Entrepreneurship and especially Social Business as well as proposes steps to be taken in order to guarantee the sustainability of Social Businesses within a macroeconomic and microeconomic perspective, based on the academic research and expert interviews.

German Abstract (Zusammenfassung)

Durch die Verbindung von traditionellem kapitalistischen Denken, das eine maximale Gewinnerzielung anstrebt (homo economicus), und der selbstlosen Einstellung von gemeinnützigen Einrichtungen, die den gesellschaftlichen Beitrag maximieren wollen und dabei auf großzügige und regelmäßige Spenden angewiesen sind, entsteht ein neues Geschäftsmodell, das sogenannteSocial Business. Dieses nachhaltige Konzept gehört zum Sozialen Unternehmertum(Social Entrepreneurship) und wurde besonders im letzten Jahrzehnt entwickelt.

Ziel dieser vorliegenden Diplomarbeit ist eine wissenschaftliche Annäherung an das Thema „Soziales Unternehmertum“, wobei der Fokus verstärkt auf das Geschäftsmodell desSocial Businessgerichtet werden soll. Darüber hinaus lässt der Autor persönliche Erfahrungen zu diesem Thema einfließen, da er von seinem Praktikum bei derGrameen-Bankim Sommer 2009 geprägt ist, die ihren Sitz in einem der ärmsten Länder der Welt, in Bangladesch, hat. Ferner wird die Nachhaltigkeit des Sozialen Unternehmertums betrachtet und anhand von Fallbeispielen näher untersucht. Mithilfe von Experteninterviews, die unter anderem mit Muhammad Yunus, Friedensnobelpreisträger und Gründer derGrameen Bankin Bangladesch, sowie mit Frédéric Dalsace, Vorsitzender desSocial BusinessLehrstuhls derHEC Universityin Paris geführt wurden, soll das Konzept schließlich auf seine Nachhaltigkeit hin bewertet werden. Am Ende der Arbeit wird ein Ausblick auf die bevorstehende Entwicklung des Sozialunternehmertums, besonders im Hinblick auf dasSocial Business-Geschäftsmodell gegeben. Mithilfe von akademischer Recherche sowie Experteninterviews werden abschließend mögliche weiterführende Schritte erörtert, die die Nachhaltigkeit desSocial Businessinnerhalb einer makroökonomischen und mikroökonomischen Betrachtungsweise gewährleisten sollen.

1. Introduction

The crisis we are currently facing puts us in front of a new challenge. We have split the atom, walked on the moon, linked people all over the world in the blink of an eye with technological advances in communication. However, poverty, violence, discrimination, water scarcity, illness and climate change have become even greater challenges than those we have historically faced. New and emerging problems, such as environmental and economic collapse, terrible disease, over-population, war, terrorism and menacing new forms of weaponry challenge us to think differently. There must be the emergence of new concepts promoting sustainability which goes far beyond the current system of capitalism or social market economy in order to deal with these.

The future of humanity might lie in the power and effectiveness of socially motivated and highly empowered individuals who fight for changes and commit to the society in the way we live, think and especially behave. The world is interconnected and due to globalisation, we cannot shut our eyes to what happens in the rest of the world. “Everyone can make a difference”^[2]in the world and change it for the better with potential to make a change not only in one’s local community but to society as a whole.

In August 2009, the author went to Dhaka in Bangladesh in order to carry out an internship at Grameen Bank and to get in contact with its founder and CEO, Muhammad Yunus, the Nobel Peace Prize Laureate of 2006. The Grameen Bank as institution and Yunus as outstanding individual, were both honoured by the Swedish Committee on account of two achievements: firstly, for its Microfinance Initiative and the social change they caused with the national microcredit movement expanding to a global one; secondly, Muhammad Yunus and the Grameen Bank were recognised for the commitment and enthusiasm related to the Social Business Concept that Yunus describes in his book “Creating a world without poverty” (2007) and which has been applied to several businesses that have been launched as subsidiaries of the Grameen Bank in Bangladesh.

The proclamation “Everyone can change the world for the better” is exactly what Muhammad Yunus and many other remarkable individuals thought, and therefore, converted their lives into the change they wanted to see in the world as Mahatma Gandhi^[3]used to communicate.They created a new form of business which goes beyond the classical theory of the one-dimensionalhomo oeconomicus^[4](economic human) that tries to maximise profits. The new model combines two aspects: First, it takes advantage of the profit generating approach from the traditional capitalistic company, and second, it adds the charity aspect of social contribution as we know it from a conventional not-for-profit company such as a Non-Governmental-Organisations or Philanthropic Institutions. This extraordinary merger between capitalistic and philanthropic ideologies is called a Social Business^[5]and gives rise to a new perspective of a sustainable business concept.

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^[1] Mahatma Gandhi (1869-1948), Indian Philosopher, admired for his doctrine of nonviolent protest.

^[2] Mrs. Connie Hedegaard (*1960) is Danish Minister of Climate and Energy and was President of the Copenhagen Climate Summit in December 2009.

^[3] Mahatma Gandhi (1869-1948), Indian Philosopher, admired for his doctrine of non-violent protest promoted his message: “Be the change you want to see in the world.”

^[4] From Latin:oeconomicus, meaning economic: the human being, exclusively driven by economic reasons (Albert Martin Online Lexikon).

^[5] Social Business is a term defined by Professor Muhammad Yunus and represents a specific type of Social Enterprise which will be explained in detail in the upcoming chapters.