Posts Tagged ‘impact consulting club’

Given my interest in both business and social issues, I have been exploring the varying definitions of social enterprise and social entrepreneurship.

Antonio Meloto, the founder of Philippines-based NGO Gawad Kalinga, recently spoke to a group of students at London Business School and discussed some social enterprise success stories his organization has helped create. For Gawad Kalinga, social enterprise means fostering businesses that are socially and environmentally responsible, as well as profitable. Meloto spoke about how companies should seek optimal profit as opposed to maximum profit. He put forward a vision of business where the primary purpose is the common good. No doubt this vision will be compelling for many people, and it’s great that Meloto and his team have been able to recruit and train a large number of young entrepreneurs that share such a vision; the impact on the Philippines has clearly been very positive.

But I’m left questioning whether this vision of a more caring form of capitalism – one that aims for broad societal welfare as much as it does shareholder profits – is realistic. Is this approach really sustainable in the big, bad world of business? Is it scalable beyond a micro level? I worry that social enterprise is being heralded as a panacea for economic, social and environmental problems when in reality it only works in some very specific cases. These sorts of questions have also been floated in a core MBA class I’m taking this term called Business, Government, and Society. As we examine topics such as competition, regulation, and corporate responsibility, we are struggling to square the circle that results when you combine unbridled capitalism with a genuine desire to do good.

There is another meaning of social enterprise that I find a bit more troubling. Much of the commentary that lauds social entrepreneurship seems resigned to the fact that governments can no longer afford to administer programs. Social enterprise is presented as an alternative way to deliver programs and solve societal challenges such as homelessness, a lack of healthcare, or environmental disaster. This approach posits that private-sector entities can use their entrepreneurial spirit to do more good than government can. I worry about social enterprise, sustainable business, and corporate philanthropy supplanting the role of the state. In my opinion, this is a dangerous path for two reasons.

First, this approach ignores the democratic benefits of governments and civil society. I’m the first to admit the public sector and civil society could benefit form a little private sector thinking. Many government bureaucracies and most NGOs are bloated, inefficient, and have failed to adopt some of the improvements in management practice that the private sector has benefited from over the last 50 years. But injecting a little business efficiency into government is not the same as replacing government with business when it comes to administering services. Governments are elected and accountable to the public and civil society organisations are governed by their membership; both are open to all but the same cannot be said about corporations.

Second, and more importantly, resolutely concluding that governments can no longer afford to administer the services we expect of them means accepting that existing taxation policy cannot be changed and that the unbelievable disparity between rich and poor is here to stay. The truth is that the state’s ability to build affordable housing, fund healthcare services, take care of an ageing population, or regulate environmental law relies on public policy decisions we make collectively. Rather than throw our hands up and turn to business to solve the problems we’ve created, why not sit down and see if it still might be possible to do it ourselves, together?

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