BY ANTONIO ARGANDOÑA.
Professor of the departments of Economics and Ethics
Antonio Argandoña is Emeritus Professor of Economics and holder of the “la Caixa” Chair of Corporate Social Responsibility and Corporate Governance at IESE. He teaches classes mainly in the areas of macroeconomics, monetary economics, and international economics, as well as publishing research on business ethics, corporatesocial responsibility, and governance of organizations.
Posted on 09/21/2015
Sometimes we have a rather rigid vision of the world and, in particular, of the economy. There are people who work and people who run, already established companies that follow developed legal channels, products and markets, functions and objectives that, if we pay attention to economists (at least the most theoretical), are given. But then it turns out that life is much richer.
I say the above because these days I have been reviewing my ideas about social entrepreneurs. And I have come to the conclusion, nothing new, that they are like the others. Well, not like the idea we have of others, which follows the rigid scheme mentioned earlier, who we consider as people who want to make money, sometimes at whatever cost. And, of course, then it turns out that entrepreneurs and managers of for-profit companies do not have a single motivation, but many, which, in addition, change over time, at the pace of changes in the environment, technology and customers.
A social entrepreneur is a person or a team that discovers and exploits opportunities for the satisfaction of social needs and / or to act as a catalyst for social change. And we already started with the nomenclature: what does a social need mean? We will not agree; perhaps we can stay with the simple idea that it is a need that is not being met by the market right now. For example, the need of a disabled person to find a job: of course she can have it, if she offers to work at a very low salary, but then she will not be able to meet her minimum material needs. Or the need of the children of a neighborhood to have a place to play safely, which the city council could serve by building a sports center, but which does not, for whatever reasons. I know that this way of defining social needs is unsatisfactory, but let me remind you that we should not get carried away by rigid corsets. Note that this need can be met by the market, even if it does not do so now: that is precisely what the social entrepreneur will do, who has, let’s say, great confidence in what the market can achieve.
I follow. The social entrepreneur mobilizes resources (creates companies, we would say with the language of business), trying to involve the beneficiaries and / or society. So do business firms, seeking shareholders, investors, and employees. But social entrepreneurs seek precisely those who have social needs that are not being met. And they set up, for example, a catering service staffed by long-term unemployed, the kind that there is no way they will find a job. Or they give microcredits to entrepreneurial women, to whom no one would lend because they have no guarantees, no wealth, no contacts, or luck.
I follow. They create social value for their beneficiaries or “clients”. Sometimes directly: the lady who has received the microcredit and starts making clothes for her neighbors creates economic value, which we can indirectly attribute to the microcredit provider. And in addition to economic value, it creates other “values”, such as self-confidence, capacity development, reputation, autonomy of life, control of their situation … This is also done by for-profit companies, but social companies try from the beginning .
And they do this by setting up a company, that is, combining productive factors with a business plan, AND they pay their debts. And they cover their costs – this is the key to being a company – and, if they can, they make a profit. They do not do it only or mainly for the benefits, but they want and need them, to guarantee their continuity, their growth, the expansion of their business … And they assume a risk. And they innovate. With a long-term vision, that is, with a sense of continuity – which they will not always achieve, as is the case with any company. And all this not as someone who mixes water and oil, but intimately combining social mission and economic efficiency.