In 2006 Muhammad Yunus created the Grameen Bank, an organisation specialised in microcredits for rural Bangladesh, and with it a new form of entrepreneurship: social business. Saluting a resolutely humanist and pragmatic approach, he received the Nobel Peace Prize the same year. Social enterprise is part of the current diversity of capitalism models. It introduces poverty, vulnerability, and development concerns into the business area, which may lead to new approaches. This concept advocates a profit-based approach through the sale of a product or service, with a strict self-financing objective and not the payout of dividends. It differs from traditional market models because its main purpose is social utility; the creation of social value is interdependent with the objective of financial sustainability.
The 7 principles of social business according to Muhammad Yunus:
- Business objective will be to overcome poverty, or one or more problems (such as education, health, technology access, and environment) which threaten people and society; not profit maximization;
- Financial and economic sustainability;
- Investors get back their investment amount only. No dividend is given beyond investment money;
- When investment amount is paid back, company profit stays with the company for expansion and improvement;
- Gender sensitive and environmentally conscious;
- Workforce gets market wage with better working conditions;
- ...Do it with joy.
The 7 principles of social business according to Muhammad Yunus:
- Business objective will be to overcome poverty, or one or more problems (such as education, health, technology access, and environment) which threaten people and society; not profit maximization;
- Financial and economic sustainability;
- Investors get back their investment amount only. No dividend is given beyond investment money;
- When investment amount is paid back, company profit stays with the company for expansion and improvement;
- Gender sensitive and environmentally conscious;
- Workforce gets market wage with better working conditions;
- ...Do it with joy.
Therefore, the social business follows the principle "no losses, no dividends" and is a structure able to offer products or services likely to satisfy the basic needs of a community. The idea is to benefit the collective interest through an economic model that is sustainable for the structure and the consumer. It seems relevant that the social business model is oriented towards multinationals. Indeed, their assets (health and financial weight, commercial expertise, technical skills, innovation, production and distribution capacity, R&D potential, and free competition) are powerful levers for experimentation and project implementation.
This model should not be confused with the Bottom of the Pyramid (BoP) principle. The latter considers that the primary needs at the bottom of Maslow's pyramid are real economic opportunities for companies that would target this segment of the population. These companies are thus developing strategies to make products or services available at very low cost on this large market, generating very low profits but on huge volumes. The offers meet populations' specific needs (specific dietary deficiencies, etc.) and thus contribute to fight against poverty.
Social businesses created from the core business of a large company are a real vector for change: they provide economically sustainable solutions to major social or environmental problems such as hunger or malnutrition, food waste, access to drinking water, education for people who prematurely leave the education system, medical care, housing, the welcome and integration of refugees, etc. This approach, which is very enriching for the company, is a real breeding ground for innovation, whether technical or social. Same for interactions with the various stakeholders involved in the subject, from the academic world, public institutions and associations, to representatives of civil society. Social business, therefore, has a bright future and completes the action of the State and associations.
