The Business Case of Social Business (PDF)

Bachelor Thesis from the year 2010 in the subject Business economics - Business Ethics, Corporate Ethics, grade: 1,5, EBS European Business School gGmbH, language: English, abstract: During recent years, much has been written about Corporate Social Responsibility
(CSR), sustainability, sustainable and ethical supply chains, and the power of
organizations that reaches beyond their core business activities. Social Business, a rather
new form of using corporate power in order to act in a socially desirable manner, was
first established by Professor Yunus, Noble Peace Prize winner (2006). It is in contrast
to charity because it is not a donation or charitable giving but a real investment into a
business. The important difference is that with a social business the entrepreneur or the
participants in a social venture business do not intend to maximize profits but will
always reinvest profits into the business and will keep costs and prices low so a broad
range of non-affluent consumers can afford the product or service (Yunus, Bertrand, &
Lehmann-Ortega, 2009, p. 5). Yunus (2006) calls this "doing business for others instead
of for oneself" (p. 4).
Since Social Business is a very new concept, little has been written about it yet. There is
not even a generally accepted and shared definition of the term "Social Business".
Millions of small social start-ups, whose founders intend to do something socially
beneficial and who only take out from the business the money they need for their own
upkeep, already exist. However, to differentiate between charity projects and real social
businesses is difficult. For this reason, it is impossible to collect empirical data about
these start-ups and projects. Much more in the focus of the public eye are social
businesses founded by multinational companies (MNCs) or at least renowned national
companies. This often includes a product relating to the key competence of the firm
which is adapted to the needs of less-well-off consumers and thereby solves a shared
social problem. MNCs often use the know-how and competence of non-governmental
organisations (NGOs) or similar institutions and start social joint-ventures. Since it is
much easier to collect data about this kind of social business and since their influence
and recognition in industrialized countries at the moment is much bigger than of the
numerous small start-ups, this paper is going to focus on social businesses initiated by
big companies.[...]