What is a Social Business?


Dr. Yunus' new about "social business"

If you look at the fringes of commerce and entrepreneurship there is a growing field emerging. You will see people who call themselves social entrepreneurs, high-impact entrepreneurs, eco-entrepreneurs. There’s many names and it’s growing fast. In Building Social Business, Dr. Muhammad Yunus, tries to frame this movement by defining social business, provides examples of existing operations, states reasons for creating one, and identifies its challenges.

He defines social business as a new kind of business with “a goal to solve a social problem by using business methods, including the creation and sale of products or services.” There are two types of social business. Type I is a non-loss, non-dividend company that reinvest all profits in expanding and improving the business (i.e. Grameen Danone, a venture to eliminate malnutrition amongst children in Bangladesh). Type II is a profit-making company owned by poor people, directly or through a trust, dedicated to a predefined social cause (i.e. Grameen Bank).

There three main reasons for creating social business are 1) it is immoral to make a profit from the poor; 2) profit always trump the other “bottom lines” in times of stress; and 3) to change mindsets, reshape economic structures, and encourage new forms of thinking. Moving forward, it is vital to create a definition of legal and regulatory system of a social business that will be consistent and accepted globally, similar to a profit-maximizing company and a traditional non-profit organization.

Dr. Yunus makes a timely attempt to define social business and present a framework for making it a common part of the business landscape. Majority of the examples are primary sources – projects he is involved in directly. Personally, I see social business as a change agent that is attempting to alter the existing business framework, from within the structure. A social business gives ordinary citizens the ability to address activities that were traditionally the government’s responsibilities. This method empathize with poor people by helping them pull out of poverty on their term. In the process it reduces their co-dependence on a welfare system that is kept alive through charity and philanthropic organizations.

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About John Costa

I am a farmer in training with a background in finance, organizational sustainability, and project management. My expertise is making the business case for local food enterprises.
This entry was posted in Practicum, Social Entrepreneurship and tagged , , , . Bookmark the permalink.

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