Social business

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Social business or social enterprise is an economic concept that is often traced back to the Nobel Peace Prize winner Muhammad Yunus . Companies active in this area should solve social and ecological societal problems. The concept is intended to make capitalism sustainable.

The term social business is also coined by IBM and describes the increasing use of social software in companies in order to network them more closely with employees, partners and customers, both internally and externally.

definition

Social businesses differ from normal companies in two ways:

  1. Their intended purpose is aimed exclusively at solving important social problems.
  2. In social business , investors forego speculative profits.

In contrast to social projects with the same objective, social businesses work like conventional companies. However, most of the profit remains with the company and the dividend is case-capped and is used to expand the service as the company grows. Financing sources are investors who want to achieve a 'double bottom line' return on their investments.

Basically, social businesses can develop from three directions: on the one hand from the area of foundations and non-government organizations (NGOs) , which initially generate their own funds with sub-projects and then increasingly try to put their social activities on an economically sustainable footing. On the other hand, companies often start with corporate social responsibility projects, then link such activities with their own core competencies and at some point implement social aspects in their own company. Both developments can lead to a social business if social and economic goals are pursued equally. In addition, there are also start-ups of social businesses that are not spin-offs from existing organizations. The term social entrepreneurship is used for this.

A related economic concept is the base-of-the-pyramid approach. It describes business models and approaches for the successful integration of previously largely neglected poor sections of the population into entrepreneurial value chains. The basic idea is that in this way the pursuit of entrepreneurial opportunities can be purposefully combined with efforts to fight poverty over the long term.

Goal setting

When setting goals for social businesses , a distinction must be made between direct and indirect goals:

  • Direct goals: Areas of activity for social business in developing and emerging countries . Be it the example of microfinance banks , be it self-financed education or health programs. In principle, every product and every service whose value is at least partially measurable can also be designed as a social business .

In modern industrial nations , social problems are of a different nature. In Europe in particular, the state usually ensures that nobody goes hungry. The target groups for microfinance here are people who do not have the money for special training to take up their dream job. Educational offers improve the already existing comprehensive system at its weak points. Health promotion, for example, consists of supporting research into neglected diseases. Critics argue that money for social business (like charity ) should be better invested in the existential problems of the third world .

  • Indirect goals: In addition to the direct solution to social problems, social businesses often aim to intensify individual, community and social progress. In this way, social businesses take into account the fact that people are not one-dimensional but rather multidimensional and that they combine to form certain organizational forms that not only serve to maximize profit.

financing

Many social businesses were originally classic non-government organizations (NGOs) that initially set up individual projects to generate their own sales and gradually developed into social businesses . On the part of large companies and corporations, there have so far been few developments from corporate social responsibility (CSR) to social business . The majority of this type of engagement still takes place in cooperation with NGOs.

At the beginning of the social business movement there are models with two organizations, with one NGO owning a subsidiary that generates the profits that finance the social goals of the NGO. The business model of the for-profit subsidiary does not necessarily have a positive 'social impact'. Such structures are referred to as 'separate bottom line models'.

If a project or company is to be a holistic social business, this is referred to as an 'integrated business' or 'double bottom line model' (in the case of additional ecological 'return', of course, the 'triple bottom line model' '). Here, however, a distinction must be made according to market maturity:

  • A social business first enters a market whose customers do not yet see a need for social issues or are not willing to pay for them. A compromise must therefore be found between 'social impact' and financial success (profit) ('trade-off' or 'compromise model').
  • When the market has reached 'social maturity', customers are also willing to pay a premium for the social added value, provided the quality of the products is constant. The business model then not only has a direct social impact, but its generation even correlates (increasingly depending on market maturity) with the level of profits ('win-win model').

It must be taken into account that socially acceptable economic activity is associated with higher costs in most cases. On the one hand, this may be due to the fact that new production processes are not yet fully developed - only in the course of time can efficiencies be achieved that conventional competition has long since achieved through years of lead. On the other hand, the conventionally manufactured products are cheaper because the follow-up costs of their production are borne by society ( i.e. external costs are not included in the price ). Socially equitable management avoids such follow-up costs - mostly by accepting higher costs in production ( internalization ).

A source of funding for social businesses in the start-up, growth and development phases can be social investment companies . These award so-called social risk capital to companies that follow the double bottom line model according to strict investment criteria. LGT Venture Philanthropy and the Social Venture Fund are among the most important institutionalized social investors of this type in the international arena and the BonVenture Group in German-speaking countries .

Since 2010 there has been an effort on the part of the federal government in Germany to promote social business. In cooperation with the Federal Ministry of Family Affairs , KfW Bankengruppe has been offering a financing program for social enterprises since January 1, 2012.

Social business and politics

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As social problems are dealt with sustainably through entrepreneurial approaches, there are overlaps and points of friction with politics. Both the availability of resources and proven problem-solving skills are power factors. In the area of ​​development cooperation in particular, new approaches to social business often shift existing power relations, which can lead to distribution conflicts. The thought leader Muhammad Yunus has recently had to face numerous conflicts both in his company and with local politics.

In a western welfare state such as In the Federal Republic of Germany, for example, the commitment of social business meets the welfare associations, whose monopoly position is only slowly being dissolved by the principles of subsidiarity . The already shrinking allocation of public funds in the third sector promotes competition. A market economy orientation is advancing with social business. On the one hand, the dangers of a one-sided focus on costs are growing, since there are currently no suitable means for comparing the success of social initiatives. At the same time, social business gives politicians a field of experimentation for entrepreneurial action in the light of a public that seeks impulses for new approaches to solving social problems. Under market conditions, both social business and the classic third sector develop in the sense of an economy of attention .

See also

Web links

literature

  • Suitable legal forms for social enterprises in Germany , Scientific Services of the German Bundestag, file number WD 7 - 3000 - 148/16, Oct. 2016, PDF document
  • Muhammad Yunus , Karl Weber: Building Social Business: the new kind of capitalism that serves humanity's most pressing needs. Public Affairs, New York 2010, ISBN 978-1-58648-824-6 .
  • Muhammad Yunus: Defeat Poverty (Original title: Creating a world without poverty). Carl Hanser Verlag , Munich 2008, ISBN 978-3-446-41236-1 .
  • Peter Spiegel , Roger Richter: The Power of Dignity - The power of dignity . Essay and illustrated book on the Grameen Family. With a foreword by Muhammed Yunus. Published by Hans Reitz. Kamphausen Verlag, 2008, ISBN 978-3-89901-169-2 . (German English)
  • Maritta Koch-Weser, Tatiana van Lier: Financing Future, Innovative funding models at work. 2nd Edition. 2008.
  • Franz Alt , Peter Spiegel: Good business - humane market economy as a way out of the crisis. Aufbau-Verlag, 2009, ISBN 978-3-351-02707-0 .
  • Urs P. Jäger: Managing Social Businesses. Mission, Governance, Strategy and Accountability. Palgrave McMillan, 2010.
  • Thomas Leitner: Basics for the social enterprise. The concept of social business according to Muhammad Yunus as an institution within the Austrian legal system . Verlag NWV, Vienna / Graz 2011, ISBN 978-3-7083-0751-0 .
  • Nancy Wimmer: Green Energy for a Billion Poor — How Grameen Shakti Created a Winning Model for Social Business . MCRE Verlag, 2012, ISBN 978-3-943310-00-9 .
  • Fabian Gail: Entrepreneurship in the public eye. A normative draft for the reconciliation of economy and politics. Grin Verlag, 2012.
  • Tobias Lorenz: Social Entrepreneurs at the Base of the Pyramid . Metropolis Verlag, 2012, ISBN 978-3-89518-922-7 .

supporting documents

  1. ^ Muhammad Yunus on Social Business. ( Memento from September 1, 2008 in the Internet Archive ) As of November 19, 2008.
  2. ^ Berlin declaration on "New Deal for Sustainability". November 10, 2008.
  3. ^ IBM: Social Business. ( Memento from November 30, 2012 in the Internet Archive )
  4. ^ Muhammad Yunus: Creating a World Without Poverty: Social Business and the Future of Capitalism. 2008
    Muhammad Yunus: Social Business Entrepreneurs Are the Solution. ( Memento from August 22, 2008 in the Internet Archive ) As of November 19, 2008 - archive version August 22, 2008.
  5. ^ Muhammad Yunus: Building Social Business: Capitalism That Can Serve Humanity's Most Pressing Needs. New York 2010, p. 13.
  6. ↑ The new generation of founders is on the march. In: Handelsblatt. July 7, 2012.
  7. ^ R. Hahn: Multinational Enterprises and the 'Base of the Pyramid' - New Perspectives on Corporate Citizenship and Sustainable Development. Gabler, Wiesbaden 2009, ISBN 978-3-8349-1643-3 .
  8. ^ Muhammad Yunus: Social Business Entrepreneurs Are the Solution. ( Memento from October 11, 2011 in the Internet Archive ) As of November 19, 2008.
  9. ^ Grameen Danone Foods Limited: A Unique Model of Social Business Enterprise. ( Memento of June 9, 2008 in the Internet Archive ) July 3, 2007.
  10. ^ Understanding Social Enterprise: Theory and Practice. ( Memento of June 8, 2008 in the Internet Archive ) at: www.nextbillion.net , November 19, 2008.
  11. ↑ European Venture Philanthropy Association as of May 3, 2012.
  12. ↑ Thomas Friemel: A big step ". From 2012 the federal government will support social entrepreneurs. In: enormous. Economy for people. 04/2011, p. 38.