The "Social Enterprise" vs "Social Business" Confusion: "Social-Change Business" to Simplify the Field


No, we’re not talking about companies that are "good at social" (media.) We’re talking about the revered trend of companies committed to social good- let’s clear some things up.

Social Business vs. Social Enterprise

When you look at the development of this field, it becomes even less surprising that there’s so much confusion. It doesn't have a singular unifying theory and there are contradictions among the various thinkers and practitioners that have defined it. 

Social Business

Mohammad Yunus, Nobel Peace Prize Laureate for establishing the Grameen Bank (the first micro lending bank in Bangladesh) is credited with being the father of social businesses. He coined the term "social business" and defines it as a cause-driven business that is financially sustainable and whose profit is re-invested back into the business:

“The impact of the business on people or environment, rather the amount of profit made in a given period measures the success of social business. The objective of the company is to achieve social goal/s.”

Social Enterprise

Compare this to ClearlySo, a platform connecting investors to socially impactful businesses; they consider “social enterprises” as more focused on social impact, and “social businesses” as focusing first on financial profit and then impact. As opposed to Yunus, ClearlySo is not explicit about what happens to those profits.

What does the real world say?

A simple Google image search reveals dozens of infographics for understanding these differences, where the only thing that does become clear is the range of differences in opinion about how to frame and think about the field. Two important takeaways:

  • The two terms are used about equally- a Google search of "social business" and "social enterprise" came back with about 917,000 and 950,000 results, respectively (we omitted the keywords "media" or "marketing" to sift out the latest digital marketing buzzword for businesses being savvy at social media) 
  • While often used interchangeably, "social business" tends to fall on the for-profit side of the spectrum, while "social enterprise" tends to fall on the "non-profit" side- Mohammad Yunus' vision aside, when the current discourse is not using the two terms interchangeably, "social businesses" favor profit over social impact.

So What? The Need for a New Term

  1. As the market demand for socially oriented businesses grow, particularly among millenials, the need for more research and resources on why it matters, how to build them, and how to support them will also grow. Right now the discourse is divided between these two terms and competes with other usages of the terms...
  2. Now that the digital marketers have appropriated both terms, the time has come to differentiate this unique and important trend.
  3. All businesses are "social," in that they exist in society. What sets these businesses apart is their commitment to changing the society in which they function.

Introducing: "Social-Change Business"

We believe that social change businesses adapt definitions of “social business” based on their founding values and business model. Here is ours at Sesamaise:

A company that is committed to financial profit and actively promoting positive impact and change in the world. These companies embody the change they want to see in the world by also promoting the welfare of everyone in their business ecosystem: consumers, employees, partners, and supply chain.

We intentionally did not hold profit or change in higher regard than the other because we do not believe in zero sum perceptions (ie. the old school capitalist view that if one side wins the other has to lose.) In this globally interdependent world, we believe it is possible to create frameworks and solutions that “expand the pie” and leave everyone better off than they began with hard work, creativity, communication and innovation.

See our Real Change page and stay tuned to our Peacebuilding Blog Series to learn more about how we’re bringing this definition to life for Israeli-Palestinian peace.

 

 

0 comments

  • There are no comments yet. Be the first one to post a comment on this article!

Leave a comment