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From Social Entrepreneurship to Social Business - Conference in Heinrich-Böll-Foundation

On May 8, 2009, the Heinrich-Böll-Foundation invited to an expert meeting on "Social Entrepreneurship in an area of tension between the third sector and civic commitment" in its premises in Berlin-Mitte. The conference revealed many similarities and the willingness to cooperate between the traditional third sector of non-profit organizations and the new Social Entrepreneurship scene. However, it also revealed a still relatively big confusion of ideas between social responsibility of companies (Corporate Social Responsibility), Social Entrepreneurship and Social Business. Therefore, in the following an article by Peter Spiegel, Head of the Genisis Institute, in which he picks up this confusion of ideas observed at the conference.

The Social Business approach as perspective of reconciliation of economics and social concerns

Theses by Peter Spiegel, Head of the Genisis Institute for Social Business and Impact Strategies, Berlin

The Social Business approach by far outreaches the one of Social Entrepreneurship; respectively it forms the high end of its scale. What both have in common is that social problems are tackled in an innovative and scalable manner, and in this sense, in an entrepreneurial way. Within Social Entrepreneurship, the implementation of the innovative approach doesn’t necessarily have to be carried out in an entrepreneurial sense, which in this case means: The activities of a Social Entrepreneur do not need to be self-supporting. Social Business, however, is a social service which is both entrepreneurial innovative and scalable as well as entrepreneurial self-supporting.

With this claim the Social Business approach brings a new challenge and, in a positive way also a new quality into the discussions about civic commitment, the third sector and Social Entrepreneurship. An analogy to the development of the commitment to environmental concerns can be seen here. Until about the mid-1990s, there was a focus on the civic commitment to the fulfillment of environmental objectives and the request to the state to impose ecological requirements on the economy. Since then, additionally, the idea has been developing that environmental action can be reconciled with economic thinking. An eco-industry has emerged, which today is recognized, even by one-sided economic considerations, as a particularly promising sector of the global economy.

Analogical, the Social Business approach and the so-far in its sense implemented projects of the Grameen social enterprises family and other institutions (see: Genisis-study entitled "Social Impact Business", 2009) can significantly raise the incentive to reflect on new, especially innovative concepts, which correspond to both of the two aforementioned entrepreneurial approaches of Social Business. For this far-reaching step towards entrepreneurial thinking in the social context it is important, indeed crucial, that the motivation remains clearly focused on solving societal problems. This motivation should not be linked with a motivation based on profit orientation. Muhammad Yunus, the initiator of the Social Business movement, therefore claims that investors in Social Business should not receive more than the repayment of the purely nominal investment, thus, completely forgo any return. Others advocate a clearly defined limited interest, which however, scarcely lies above an inflationary compensation. This is called Social Impact Business by the Genisis Institute. But also here any speculative moment is excluded due to clear limits.

Reason for investing in Social Businesses is consequently only the social benefit, “social profit”, coupled with highest entrepreneurial creativity and rationality. If investors in Social Businesses can have such a certainty about the cleanliness of the social motivation beyond the business, investing will not only become attractive for socially motivated people, but also for companies willing to intelligently implement their Corporate Social Responsibility, for foundations in terms of efficiently implementing their objectives and last but not least for the state. The state itself can occur as an investor for Social Businesses, given the fact that there are social entrepreneurs, who are willing to tackle with an entrepreneurial Social Business spirit with a state task, e. g. in the field of education. The state could cross-finance in such areas, up to the extent to which the Social Businesses relieve it from its state duties.

According to Prof. Yunus, provider of the idea, people in Social Businesses should receive a fair, market-driven pay, which is enriched with a particularly high level of motivation to work in a meaningful and creative business. Consequently, Social Businesses are able to change the social environment substantially for the better. Furthermore, many social projects, which so far have been dependent on donations, will strive for developing into Social Businesses - to aim for sustainability and scalability.

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