Social Business

Social business is an economic concept that is often attributed to the Nobel Peace Prize winner Muhammad Yunus. In the area of ​​active companies to solve social and environmental problems of society. The concept is to make capitalism sustainable ..

The concept of social business is also influenced by IBM and describes the increasing use of social software in enterprises in order to link them both internally and externally more with employees, partners and customers.

Definition

Social Businesses are different from conventional companies by two features:

In contrast to social projects with the same content, objective social businesses like traditional businesses. However, the benefit remains largely in the company and the dividend is limited and event is the expansion of the service by the growth of the company. Funding sources are investors who want to achieve, double bottom line ' return on their investment.

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 with subprojects own resources and then increasingly trying to raise their social activities on economically sustainable legs. On the other hand, companies often start with Corporate Social Responsibility ( CSR) projects, then link these activities with their own core competencies and social aspects set sometime around in their own companies. Both developments may lead to a Social Business when social and economic objectives of equal dimensions are pursued. In addition, the establishment of new social businesses are taking place that are not spin-offs from existing organizations .. For this purpose, the concept of social entrepreneurship used.

A related concept in economics is the base of the pyramid approach. He describes business models and approaches to successful inclusion of hitherto largely neglected poor people in business value chains. The basic idea is that the pursuit of entrepreneurial opportunities can be combined in a targeted manner with the efforts of long-term poverty reduction in this way.

Objective

With the objective of social businesses must distinguish between direct and indirect targets:

• Direct objectives: activities for social business in developing and emerging countries. Be it the example of microfinance banks, whether they are self-funded education and health programs. In principle, makes every product and every service whose value is at least partially measurable, make as social business.

In modern industrial nations are social problems of a different nature. In particular, in Europe generally causes the state to ensure that no one has to go hungry. Target groups for microfinance are here people who lack the money for a special training in order to take their career choice can. Education programs to improve the already existing nationwide system to its vulnerabilities. Health promotion consists, for example, to support research for neglected diseases. Critics argue that funds for social business (as Charity ) more should be invested in the existential problems of the Third World.

• Indirect objectives: In addition to the direct solution of social problems social businesses often have the intensification of the individual, community and social progress as a goal. To carry social businesses account the fact that people are not one-dimensional, but multidimensional, and they join together to form certain forms of organization that are not only of profit maximization.

Financing

Many social businesses were originally classical non -government organizations ( NGOs), which initially established individual projects for the achievement of its own revenues and evolved gradually become social businesses. On the part of large companies and corporations can be found up to now few developments of corporate social responsibility ( CSR ) towards social business. The majority finds such a commitment still held in cooperation with NGOs.

At the beginning of the social business movement are models with two organizations, one NGO has a subsidiary that generates the profits that fund the social objectives of the NGO. The business model of for-profit subsidiary does not necessarily have a positive social impact '. Such structures are called, separate bottom-line models '.

If a project or business holistically should be a social business, this is called, integrated business ' or ' double- bottom-line Model' (in the case of additional ecological 'return' of course, triple- bottom-line model '). Here, however, a distinction based on market needs to be done:

• A social business enters a market first, see its customers no need for social concerns or apply any willingness to pay for it. Therefore, a compromise must be made between, Social Impact ' and financial success (profit ) are found (' trade-off 'or' compromise model ').

• If the market has gained, social maturity ', customers are willing to pay a premium for the added social value, provided that the quality of the products is consistent. The business model is then not only has a direct social impact, but its production is correlated even (depending on market increasingly ) the amount of profits ( win- win model ').

It should be noted that socially responsible operations is associated in most cases with higher costs. Firstly, it may be because that new production processes are not yet mature - only in the course of time, efficiencies can be achieved, as it has the conventional competition achieved through years of long projection. However Secondly, the conventionally produced products are also cheaper because of that, because the follow-up costs of production are borne by society (ie not included in the price, but external costs ). Social Just economies avoids such subsequent costs - mostly by higher costs can be taken into account in the production ( internalization ).

A source of funding for social businesses in start-up, growth and construction phases can be Social affiliated companies. This awarded according to strict investment criteria so-called social venture capital to companies which pursue the Double Bottom Line Model. Among the most important institutionalized social investors of this type include the International Space LGT Venture Philanthropy and the Social Venture Fund, as well as in German-speaking BonVenture the group.

Since 2010 there are in Germany by the Federal Government, the effort to promote social business. In cooperation with the Federal Ministry for Family Affairs provides the KfW Banking Group since 1 January 2012, a funding program for social enterprises.

Social Business and Politics

By social problems are handled by sustainable entrepreneurial approaches to intersections and points of friction with the policy result. Both the disposition of resources and proven problem-solving power form factors. Especially in the field of development cooperation existing power structures are displaced by new approaches of social business often, which can lead to distribution conflicts. Even the thought leader Muhammad Yunus has to face lately numerous conflicts both in his company as well as with the local policy

In a Western welfare state such as the Federal Republic of Germany meets the commitment of the social business on the charities whose monopoly is slowly dissolved by the principles of subsidiarity. The already shrinking allocation of public resources in the Third Sector promotes competition. With the Social Business penetrates a market- orientation. Here grow the one hand the dangers of a one-sided focus on costs, as previously suitable means for comparable measurement of the success of social initiatives are lacking. Nevertheless, results from the social business for the policy as a testbed for entrepreneurial activity in the light of a public, the impetus for novel approaches to social problems investigated. Under market conditions evolve both the Social Business and the classic third sector in terms of economy of attention.