Defining 'social enterprise'
TOMS Shoes has a simple mission: For every pair it sells, another is donated to a child in need. This model might not seem like the best for the bottom line, but it's what most people consider a “social enterprise.”
Quinlan Professors Uğur Uygur and Alexei Marcoux set out to answer that question in their latest paper, The Added Complexity of Social Entrepreneurship: A Knowledge-Based Approach, recently published by the Journal of Social Entrepreneurship.
Theirs is a philosophical examination, looking at what separates socially driven businesses from the rest of the pack.
“It’s something more than having a social benefit flowing from business,” Marcoux says, “because just about all businesses have some kind of social benefit flowing from them.”
After poring over scores of business models, Uygur and Marcoux settled on the distinction that social enterprises must consider knowledge sharing an essential part of their missions, lest they be deemed chiefly self-serving.
In order to earn the moniker of a “social enterprise,” then, a company must ask itself what matters more: keeping information proprietary to benefit the bottom line or sharing it with anyone committed to advancing its cause.
“Once social entrepreneurs finds a novel way to solve a social problem, it’s difficult for them not to share that knowledge with others who want to solve a similar problem,” Uygur says.
In the case of TOMS Shoes, the one-for-one model has largely been replicated, placing it squarely in the “social enterprise” camp. That's one foothold, according to Uygur and Marcoux, that it shouldn't have to share with just anyone.