Building social businesses to alleviate poverty
The rise of social business
The economic, social and environmental challenges we have to face today are immense. These challenges call for a sustainable response involving all parts of society, including large companies. Corporations have understood that they can play a role in the alleviation of poverty, precariousness, and exclusion, but the question remains as to how to do this.
The innovative model of social business appeals to an increasing number of large companies, who have created joint-ventures to fight against poverty in the global South.
The definition of social business was forged by the 2006 Nobel Prize laureate Professor Muhammad Yunus, who founded the Grameen Bank in Bengladesh. A social business is a social enterprise whose aim is to provide a new solution to a social problem. Its business model entails a more global and a fairer approach to value creation.
A social business is a non-loss, non-dividend company, which means that it has to be financially self-sustainable, and that the profits realized by the business are reinvested in the business itself, with the aim of increasing social impact.
This approach must be distinguished from the « bottom of the pyramid » (BoP) approach. The rationale underlying BoP-driven businesses is that poverty at the very bottom of the Maslow pyramid of needs is a huge and promising market for large companies. Adressing this market would enable them to make a profit while serving the poorest of consumers and contributing to development.
Social business embodies an alternative and sustainable model which can serve as a real catalyst for change.