Can Businesses Be a Better Agent for Social Change?
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Can Businesses Be a Better Agent for Social Change?
Possible Unintended Consequences
and Michael Naughton
An Economist’s Warning
Practical men, who believe themselves to be quite exempt from any intellectual influence, are usually the slaves of some defunct
The Good Business Does
Good Goods: making goods which are truly good and services which truly serve;Good Work: organizing work where employees develop their gifts and talents; andGood Wealth: creating sustainable wealth and distributing it justly.
The Logic of Gift
“The great challenge before us . . . is to demonstrate, in thinking and behaviour, . . . . that in commercial relationships . . . .the logic of gift . . . can and must find . . . [its] place within normal economic activity.” “From everyone who has been given much, much will be demanded; and from the one who has been entrusted with much, much more will be asked” (Lk 12:48).
Rule Fixation and the Logic of the Contract: Procedural RationalityIncentive Fixation and the Logic of the Market: Instrumental Rationality
Social Entrepreneurship and Benefit Corps: Creating Space for a Logic of Gift
Space “needs to be created within the market for economic activity carried out by subjects who freely choose to act according to principles other than those of pure profit, without sacrificing the production of economic value in the process. . . . . [The Logic of Gift] . . . requires that shape and structure be given to those types of economic initiative which, without rejecting profit, aim at a higher goal than the mere logic of the exchange of equivalents, of profit as an end in itself.”
The very idea of social entrepreneurship
The answer to all the challenges of business and justice
A really dangerous idea that could destroy capitalism or altruism
Social Entrepreneurship : broadening possibilities for value creation
Exciting new field
Has launched a thousand books, a dozen institutes, hundreds of courses and even some majors
Has broadened external interest in entrepreneurship
It is everyone’s new darling
The ‘lefties’ love it because it could be a way to humanize the inhumane world of business
The ‘right wingers’ love it because it encourages free individual action to solve problems without government
Social Entrepreneurship: the danger of creating another new ghetto
A tension already exists in business schools between the financial purpose “maximizing discounted cash flows” and the moral purpose “contributing to the greater good.”
Divisions and disciplinary boundaries have multiplied- hiding tensions, disguising essential paradoxes
Introduction of social entrepreneurship can contribute to yet more ghettoization between “business as finance” and “morality as a constraint”
Liberal education demands more integration less separation, more paradox, less certitude
Social Entrepreneurship: the danger of rhetoric
The rhetorical risk
The narrow definition of S.E. as non-profit.
Relatively benign re-branding of the word ‘charity’
Negates all the potential of “broadening the playing field” (Dees) and encouraging new structures
The broad definition
If everyone and everything creative is social entrepreneurship then the term becomes meaningless
If certain ventures are given honorific term “social” does that mean that ordinary entrepreneurship is “anti-social”, “asocial”
If we encourage ‘social entrepreneurs' to do the good stuff in the world, does that clear the consciences of ordinary entrepreneurs to not even have to think about what is good?
Social entrepreneurship: the danger to the meaning of work
Distorting the meaning of work
The field has struggled with definitions but there is some consensus
“Adopt a mission to create and sustain social value not just private value.”
“Recognize and relentlessly pursue new opportunities to serve that mission”
“Act boldly without being limited by resources currently in hand”
“Exhibit heightened accountability to the constituencies served and for the outcomes created.”
“Paying attention to market forces without losing sight of their underlying missions”
“A change agent to create and sustain social value without being limited to resources currently in hand”
But which of these characteristics do we think should NOT apply to all business institution, all entrepreneurs?
What does work mean if these characteristics are seen as being distinctive only to “social enterprises?”
So how do we get out of this hole?
We need to stop digging for more and better definitionsWe need to recognize that the problem is a symptom of the “separation thesis” (Freeman) that we need to stop trying to talk about value creation and meaning/ morality separatelyWe need to ask a different question
A better approach
Stop asking “What is social entrepreneurship?” “What is distinctive about social entrepreneurship?” “What are some unique theories of this new discipline?”
We need to ask “what does it mean to be a Good Entrepreneur?” “What is the difference between good entrepreneurship and bad entrepreneurship.
Fortunately we have some answers for this already. We draw from a framework of Catholic Social teaching, but these values are widely share across culture, religions and non-religions
There are at least three distinctive ways entrepreneurship can contribute to the greater good
Good goods: through the creation of good goods and services that enrich our lives
Good work: from the
development of good
character from the activity of working and development of community through the positive relationships trade requires
Good wealth: through the creation of sustainable fairly distributed wealth, augmented by altruism.
Good goods and services
A primary way
good in the world is through making excellent products for other people
It would be a bad world if everyone worked for the United Way, or making pacemakers. Shoes, hinges, yes even video games and mortgages can be morally good
Ask “is this product the best use of my talents?” “Is the product a net contribute to the common good?” Is it designed to be as good as it can be?” “Have I tried to minimize as many negative potential consequences as possible?”
Good work: a) the development of character through entrepreneurship
Much neglected aspect of human action. “The subjective dimension of work.” Just as our work changes the world, so working on the world changes use.
Our character evolves from our habits. Our habits emerge from out decisions and our decision emerge from our actions.
The critical question becomes “what sort of an entrepreneur do I want to be?”
Leaders of character acting on good principle enhance the greater good, those who act on greed and cynicism dilute it.
Good work:b) the development of community through trading relationships
Investing in the training and development of employees to be more productive and meaningful
Finding creative ways to accommodate human needs and effectiveness in the work place
How you treat supplier relationships in good times and bad can strength or damage community
How you interact with the concerns of the communities that surround your business can have an impact on both the success of the business and the strength of the community
Once again little of this is dependent on your for-profit or non-profit status. Non- profits can exploit and treat people inhumanly, for profit can greatly strengthen community and thrive.
Beyond pure altruism: too often the “good” of entrepreneurship is restricted to cash donations after trading is done.
(Cash donations cannot undo the harm done by neglecting the first three goods.)
Good wealth requires a balance of reward for labor/ creativity with the provision of a living wage to
Good wealth is often captured by individual action but has social strings
of good wealth implies a particular solidarity with the poor.
even here, altruism is only one of a number of possible
serves no interests to donate cash in the startup phase and then go
But there are always problems and needs that slip through the cracks. Some problems cannot wait for entrepreneurial action.
“Good entrepreneurship” NOT “Social versus Conventional Entrepreneurship”
For sure it is hard to juggle the three goods
The growth phases and business realities will affect the ability to do each of the goods at any particular time
But in the long run good entrepreneurship requires us to succeed in all dimensions
Its just like developing a good diet….impossible to do most of the time, but deadly if you neglect in the long run
The more the Good of entrepreneurship is integrated into our “daily doings” , rather than an end of year check, the more likely we are to succeed at doing good by doing well.
What does this change? How do we teach?
Launched undergraduate and graduate classes on social entrepreneurship
Developed class on “Faith, career and Entrepreneurship
on the three goods of entrepreneurship is the philosophical
xperiential learning, case studies, few lectures
Developing our own local cases
Students present their “entrepreneurial dreams
”/ “This I Believe”
at mid point
The danger of the “pretense of knowledge”
If man is not to do more harm than good in his efforts to improve the social order, he will have to learn that …
he cannot acquire the full knowledge which would make mastery of the events possible
. He will therefore have to use what knowledge he can achieve, not to shape the results as the craftsman shapes his handiwork, but rather to cultivate a growth by providing the appropriate environment, in the manner in which the gardener does this for his plants…
The recognition of the insuperable limits to his knowledge ought indeed to teach the student of society a lesson of humility which should guard him against becoming an accomplice in men's fatal striving to control society.”
Social enterprise is an emerging field which needs to be carefully nurtured with humility, experimentation and in a way that protects the belief that ALL work should be GOOD work, ALL work should build character and community, and ALL work should contribute to the GREATER GOOD.
The term Social Entrepreneurship has experienced a huge growth in influence over that last decade. The literature proposes a number of advantages to social entrepreneurship as a frame of reference:Promoting innovation within non-profitsLeveraging and focusing scarce philanthropic resourcesFaster response to strategic challengesInfusion of business skills to non-business worldInvolvement of non government assets in social problemsCreation of hybrid (blurred) organizations between for profit and non profit worlds.It is widely observed that practice has outpaced theoretical development leading to little agreement on definitions or frameworks for social entrepreneurship. We believe that widespread and unchallenged acceptance of the term Social Entrepreneurship masks some dangers and has contributed to confusion in the field.We believe that if we apply some insights from Catholic Social Teaching to the issue of social entrepreneurship we can move beyond the false dichotomy of Entrepreneurship/ Social Entrepreneurship and identify three specific entrepreneurial strategies which support a more robust discussion of the nature of the work that is entrepreneurship.We believe that the field would benefit from spending less time discussing social entrepreneurship and more time discussion the nature of the good entrepreneur.
The dangers of naïve acceptance of Social Entrepreneurship The rhetorical risk:Narrow definition: if S.E. is simply used to rebrand non-profits then much of the value of the new activities, hybrid design, stimulation of new resources and innovation is lost.Implied dichotomy: if “good” ventures are termed “social” it can imply that other forms of entrepreneurship are “asocial” or “anti social”Boundarylessness: In contrast, if all business activities are deemed “social”, to some degree or other, then the term loses all meaning focus on the distinctive phenomenon that is S.E.Despite these risks we are more concerned with a risk beyond rhetoric; the risk of undermining the meaning of work, particularly from the perspective of Catholic Social Teaching.While this perspective is drawn from the Catholic tradition, accepting the content of CST does not require acceptance of Catholic faith (Guitan, 2009).
AcknowledgmentsI am indebted to Michael Naughton and Laura Dunham for their reflections and thoughts on this paper.
The three goods of social entrepreneurshipWe are concerned by the side-effects of a concentration thesis that suggests that the moral responsibilities of entrepreneurship can be concentrated in a subset of businesses called social enterprises, presumably leaving other enterprise to simply concentrate on serving themselves. We are concerned by the impact such a concentration thesis could have on the conception of the meaning of work beyond the world of social enterprise. We are concerned with how such an approach can focus attention solely on the altruistic contributions of entrepreneurial ventures as the sole measure of their contribution to the Common GoodInstead we propose that, rather than trying to determine the difference between entrepreneurship and social entrepreneurship, it would be more productive to focus on the questions “What is Good Entrepreneurship? What action and activities define that goodness?” We further propose that, by apply the perspective of Catholic Social Teaching, we can identify three specific strategies through which entrepreneurial ventures may contribute to the Common Good thus suggesting that good entrepreneurship requires a focus on:1. Good Goods. The primary way an entrepreneurial venture can contribute to the Common Good is by bringing into existence new products and services which are inherently good and which enrich lives and minimize any unintended harms. This can include what we call the “entrepreneurship of the mundane”, that is, the manufacture of the nuts and bolts and basic necessities of life as well as the creation of life saving treatments. However, inclusion of good goods as a primary moral contribution of entrepreneurship must also require of the entrepreneur analysis of what goods are not good, and what aspects of even good goods should be redesigned or re-thought in order to minimize unintended consequences. We find, in our discussions, that this is a much under appreciated dimension of the good of entrepreneurship.2. Good Work. The second way an entrepreneurial venture can contribute to the Common Good is through the nature of the work that is carried out by the venture. This dimension has several aspects both internal and external to the entrepreneur:The development of good character in the entrepreneur. This aspect of the good is derived from the subjective dimension of work, that is, just as how-we-work ends up changing the world, so working-on-the-world changes us. Most professionals spend the majority of their waking hours at work. As habits, character and wisdom are developed through experience and activity, for the entrepreneur, doing good work is an important opportunity to develop character. Society as a whole is better off for having good, successful entrepreneurial leaders who, through that calling, can become leaders of character. This dimension of the entrepreneurial good is widely unappreciated even by entrepreneurs themselvesGood relations with employees, customers and other stakeholders. Value creation and trade creates opportunities for the building of social relationships. The central question is “Are you in good relation with those with whom you create value?’ Do your employees have opportunity to develop as people?3. Good Wealth. The third way the good entrepreneur can contribute to the Common Good is through the creation of good wealth. Good wealth requires a balance of reward for labor/ creativity with the provision of a living wage to all. Good wealth is often captured by individual action but has social strings attached. From the CST perspective the creation of good wealth implies a particular solidarity with the poor. One way to contribute to the common good is to donate altruistically to those in need. But even here, altruism is only one of a number of possible strategies. Good entrepreneurs may also contribute by donating their time or their particular skills. Indeed, since the donation of time and work often requires physical interaction with those in need, it often generates a solidarity of far greater integrity. Finally, it must be emphasized that altruism, for the entrepreneur, is always dependent, indeed subsequent to the creation of good wealth in the first place.
ConclusionsWe have argued that, while there is great promise in the contemporary social entrepreneurship movement, there are also a number of important dangers. We propose that, if we confront rather than acquiesce to these dangers, we can use the perspective of Catholic Social Teaching to broaden the scope of entrepreneurial ventures that we study, to enrich the moral dimension of entrepreneurial strategy and to deepen the teaching of entrepreneurship as a whole. We recommend the following to move toward these contributions: Incorporate social entrepreneurship into entrepreneurship in a way that enhances the three goods of entrepreneurship. Specifically we propose replacing the questions “What is social entrepreneurship?” with the questions “What does it mean to be a Good entrepreneur?” From this perspective we can then apply what we have called the three goods of entrepreneurship as a means of supplying critical challenge and inspiration to all forms of entrepreneurship such that the true moral dimension of this critical force in our lives comes into fruition.Encourage research within the entrepreneurship discipline that addresses traditional social entrepreneurial issues such as micro lending, fair trade products, etc. Develop bridge courses such as Theo/Cath 306 which help students understand and experience the meaning of the good entrepreneur as well as connect students to the spiritual and moral principles of a good entrepreneur.Expose entrepreneurship students to so-called social entrepreneurs as well so-called conventional good entrepreneurs so they can see the spectrum of entrepreneurial activities.
John F. McVea and Michael J. Naughton
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