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Social Enterprise and Big Business – A New Approach to Corporate Responsibility?

June 9, 2011

Typically social enterprise evokes images of small start-ups lead by scrappy, passionate young entrepreneurs. Big Business doesn’t exactly spring to mind.

But Fortune 500 companies and large national chains are increasingly discovering the potential that social enterprise holds to advance corporate citizenship goals in a sustainable, efficient, and potentially more effective manner. Certainly, the captains of industry are not abandoning their focus on profit margins and market share to transform themselves into multinational B corporations. But they are exploring new approaches to giving back, and are increasingly pursuing opportunities to create “shared value” through new products, services, and partnerships. And these activities are starting to look a lot like social enterprise – albeit lodged within a traditional corporate structure.

While traditional corporate giving (i.e. one-time grants) still predominates, models such as those undertaken by Nestlé and HP are gaining traction. The Nestlé Prize in Creating Shared Value, reflects this new approach. Nestlé is offering an investment (*note* not a grant) of up to 480,000 USD for an innovative project that advances nutrition, water quality, or rural development in developing nations. The recipient can be an individual entrepreneur, a governmental or NGO organization, or a small enterprise, but the winner must demonstrate a viable business model, a successful pilot project, and the potential to scale for significant impact.

Nestlé, believes that it is necessary to create value for society as a whole in order to create value for its shareholders. And it doesn’t take too much abstract thinking to see how improving the livelihood, health, and access to nutritional goods enjoyed by millions of emerging consumers could serve Nestlé’s bottom line interests in the long-term. Yet in the short-term, their funding commitment will help deliver much-needed goods and services to disadvantaged populations. Perhaps more importantly, by structuring the funding as an investment Nestlé creates an incentive for sustained performance by the recipient, and may even be able to recycle the funds it recoups into similarly beneficial projects.

Recently on the Huffington Post, Gabi Zedlmayer described HP’s collaboration with the Botswana-based NGO PING. The partnership is one of several channels through which the company is adapting its technology to advance disease prevention and health services throughout Africa. HP is applying its webOS and cloud technology to develop mobile health monitoring technology that has the potential to aid in preventing major disease outbreaks (such as malaria) in Botswana. Together, the company and the NGO are creating a mobile disease surveillance system, which will enable health workers to build a geographic map of disease transmission in the country by tagging the geographic location of an outbreak using a mobile phone ap. This map will facilitate faster response to outbreaks, the measurement of cases, and the monitoring of treatment.

As over 75 million Africans are at risk of contracting malaria, the social and economic benefits of this model are clear. Yet the benefits to HP are also significant, and extend far beyond a mere halo effect. HP is piloting health systems that rely upon the company’s technology. If these models succeed in scaling across the continent, the company will have created a vast market for its own technology. Cynics may sneer that this is just corporate self-interest masquerading as social responsibility. I’d say that corporate self-interest is as natural and immutable as national self-interest, so we might as well embrace efforts like HP’s as a highly enlightened and socially beneficial form.

Furthermore, it’s quite probable that HP’s work in Africa will never become profitable. But it’s unquestionable that by providing capacity-building support and technological resources – rather than simply a check – HP is helping to build a system that can be sustained by the local population to deliver lasting impact. If successful, the model may be replicated across Africa, for even greater benefits.

Tomorrow I’ll look at one more corporation that’s taking a cue from social enterprise in order to address hunger here in the United States, and I will wrap up with some thoughts on where Investing In Communities fits into this entrepreneurial new world of corporate social responsibility.

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