Can Businesses Be a
Better Agent for Social
Change?
Possible Unintended Consequences
John McVea and Michael Naughton
An Economist’s Warning
“Practical men, who believe themselves
to be quite exempt from any intellectual
influence, are usually the slaves of some
defunct economist.”
John Maynard Keynes
The Good Business Does
o Good Goods: making
goods which are truly good
and services which truly
serve;
Good
Goods
Good
Work
Good
Wealth
o Good Work: organizing
work where employees
develop their gifts and
talents; and
o Good Wealth: creating
sustainable wealth and
distributing it justly.
The Logic of Gift
o “The great challenge before us . . .
is to demonstrate, in thinking and
behaviour, . . . . that in commercial
relationships . . . .the logic of gift . .
. can and must find . . . [its] place
within normal economic activity.”
o “From everyone who has been
given much, much will be
demanded; and from the one who
has been entrusted with much,
much more will be asked” (Lk
12:48).
Dominant Logics
Rule Fixation and the Logic
of the Contract: Procedural
Rationality
Incentive Fixation and the
Logic of the Market:
Instrumental Rationality
Social Entrepreneurship and Benefit Corps:
Creating Space for a Logic of Gift
Space “needs to be created within the market
for economic activity carried out by subjects
who freely choose to act according to
principles other than those of pure profit,
without sacrificing the production of
economic value in the process. . . . . [The
Logic of Gift] . . . requires that shape and
structure be given to those types of economic
initiative which, without rejecting profit, aim
at a higher goal than the mere logic of the
exchange of equivalents, of profit as an end in
itself.”
Benedict XVI
The very idea of social
entrepreneurship
Possibilities.
The answer to
all the
challenges of
business and
Dangers.
justice
A really
dangerous idea
that could destroy
capitalism or
altruism
Social Entrepreneurship : broadening
possibilities for value creation
Exciting new field
Has launched a thousand books, a dozen institutes,
hundreds of courses and even some majors
Has broadened external interest in entrepreneurship
It is everyone’s new darling
The ‘lefties’ love it because it could be a way to
humanize the inhumane world of business
The ‘right wingers’ love it because it encourages free
individual action to solve problems without government
Social Entrepreneurship: the danger of
creating another new ghetto
A tension already exists in business schools between the
financial purpose “maximizing discounted cash flows” and
the moral purpose “contributing to the greater good.”
Divisions and disciplinary boundaries have multipliedhiding tensions, disguising essential paradoxes q
Introduction of social entrepreneurship can contribute to
yet more ghettoization between “business as finance” and
“morality as a constraint”
Liberal education demands more integration less separation,
more paradox, less certitude
Social Entrepreneurship: the danger of
rhetoric
The rhetorical risk:
The narrow definition of S.E. as non-profit.
Relatively benign re-branding of the word ‘charity’
Negates all the potential of “broadening the playing field” (Dees) and
encouraging new structures
The broad definition
If everyone and everything creative is social entrepreneurship then
the term becomes meaningless
Implied morality
If certain ventures are given honorific term “social” does that mean
that ordinary entrepreneurship is “anti-social”, “asocial”
If we encourage ‘social entrepreneurs' to do the good stuff in the
world, does that clear the consciences of ordinary entrepreneurs to
not even have to think about what is good?
Social entrepreneurship: the danger to the
meaning of work
Distorting the meaning of work:
The field has struggled with definitions but there is some consensus
“Adopt a mission to create and sustain social value not just private value.”
“Recognize and relentlessly pursue new opportunities to serve that mission”
“Act boldly without being limited by resources currently in hand”
“Exhibit heightened accountability to the constituencies served and for the outcomes created.”
“Paying attention to market forces without losing sight of their underlying missions”
“A change agent to create and sustain social value without being limited to resources
currently in hand”
But which of these characteristics do we think should NOT apply to
all business institution, all entrepreneurs?
What does work mean if these characteristics are seen as being
distinctive only to “social enterprises?”
So how do we get out of this hole?
We need to stop digging for
more and better definitions
We need to recognize that the
problem is a symptom of the
“separation thesis” (Freeman)
that we need to stop trying to
talk about value creation and
meaning/ morality separately
We need to ask a different
question
A better approach
Stop asking “What is social entrepreneurship?” “What
is distinctive about social entrepreneurship?” “What
are some unique theories of this new discipline?”
We need to ask “what does it mean to be a Good
Entrepreneur?” “What is the difference between good
entrepreneurship and bad entrepreneurship.
Good entrepreneurship
Fortunately we have some answers for this already. We draw
from a framework of Catholic Social teaching, but these
values are widely share across culture, religions and nonreligions
There are at least three distinctive ways entrepreneurship
can contribute to the greater good
1.
2.
3.
Good goods: through the creation of good goods and services
that enrich our lives
Good work: from the development of good character from
the activity of working and development of community
through the positive relationships trade requires
Good wealth: through the creation of sustainable fairly
distributed wealth, augmented by altruism.
1. Good goods and services
A primary way entrepreneurs create good in the world
is through making excellent products for other people
It would be a bad world if everyone worked for the
United Way, or making pacemakers. Shoes, hinges, yes
even video games and mortgages can be morally good
Ask “is this product the best use of my talents?” “Is the
product a net contribute to the common good?” Is it
designed to be as good as it can be?” “Have I tried to
minimize as many negative potential consequences as
possible?”
2.
Good work:
a) the development of character through entrepreneurship
Much neglected aspect of human action. “The subjective
dimension of work.” Just as our work changes the world, so
working on the world changes use.
Our character evolves from our habits. Our habits emerge
from out decisions and our decision emerge from our
actions.
The critical question becomes “what sort of an entrepreneur
do I want to be?”
Leaders of character acting on good principle enhance the
greater good, those who act on greed and cynicism dilute it.
2. Good work:
b) the
development of community through trading relationships
Investing in the training and development of employees to be
more productive and meaningful
Finding creative ways to accommodate human needs and
effectiveness in the work place
How you treat supplier relationships in good times and bad can
strength or damage community
How you interact with the concerns of the communities that
surround your business can have an impact on both the success of
the business and the strength of the community
Once again little of this is dependent on your for-profit or nonprofit status. Non- profits can exploit and treat people inhumanly,
for profit can greatly strengthen community and thrive.
3.
Good wealth
Beyond pure altruism: too often the “good” of entrepreneurship is
restricted to cash donations after trading is done. (Cash donations cannot
undo the harm done by neglecting the first three goods.)
Good wealth requires a balance of reward for labor/ creativity with
the provision of a living wage to all.
Good wealth is often captured by individual action but has social
strings attached. Thus, wealth inequities require particular attention
The creation of good wealth implies a particular solidarity with the
poor. But even here, altruism is only one of a number of possible
strategies.(It serves no interests to donate cash in the startup phase and then go bankrupt)
But there are always problems and needs that slip through the cracks.
Some problems cannot wait for entrepreneurial action.
“Good entrepreneurship” NOT “Social
versus Conventional Entrepreneurship”
For sure it is hard to juggle the three goods
The growth phases and business realities will affect the ability to do each
of the goods at any particular time
But in the long run good entrepreneurship requires us to succeed in all
dimensions
Its just like developing a good diet….impossible to do most of the time,
but deadly if you neglect in the long run
The more the Good of entrepreneurship is integrated into our “daily
doings” , rather than an end of year check, the more likely we are to
succeed at doing good by doing well.
What does this change? How do we
teach?
Launched undergraduate and graduate classes on social
entrepreneurship
Developed class on “Faith, career and Entrepreneurship”
Paper on the three goods of entrepreneurship is the
philosophical backbone
Experiential learning, case studies, few lectures,
Developing our own local cases
Students present their “entrepreneurial dreams”/ “This I
Believe” at mid point
The danger of the “pretense of knowledge”
“If man is not to do more harm than good in his efforts to improve the
social order, he will have to learn that … he cannot acquire the full
knowledge which would make mastery of the events possible. He will
therefore have to use what knowledge he can achieve, not to shape the
results as the craftsman shapes his handiwork, but rather to cultivate a
growth by providing the appropriate environment, in the manner in
which the gardener does this for his plants…The recognition of the
insuperable limits to his knowledge ought indeed to teach the student
of society a lesson of humility which should guard him against
becoming an accomplice in men's fatal striving to control society.”
(Hayek, my emphasis)
Social enterprise is an emerging field which needs to be carefully nurtured
with humility, experimentation and in a way that protects the belief that
ALL work should be GOOD work, ALL work should build character and
community, and ALL work should contribute to the GREATER GOOD.
John F. McVea and Michael J. Naughton
Introduction
The three goods of social entrepreneurship
•
• We are concerned by the side-effects of a concentration thesis that suggests that the moral responsibilities of entrepreneurship can
be concentrated in a subset of businesses called social enterprises, presumably leaving other enterprise to simply concentrate on
serving themselves.
• We are concerned by the impact such a concentration thesis could have on the conception of the meaning of work beyond the world
of social enterprise.
• We are concerned with how such an approach can focus attention solely on the altruistic contributions of entrepreneurial ventures as
the sole measure of their contribution to the Common Good
• Instead we propose that, rather than trying to determine the difference between entrepreneurship and social entrepreneurship, it
would be more productive to focus on the questions “What is Good Entrepreneurship? What action and activities define that
goodness?”
• We further propose that, by apply the perspective of Catholic Social Teaching, we can identify three specific strategies through which
entrepreneurial ventures may contribute to the Common Good thus suggesting that good entrepreneurship requires a focus on:
The term Social Entrepreneurship has experienced a huge growth in
influence over that last decade.
The literature proposes a number of advantages to social
entrepreneurship as a frame of reference:
•
Promoting innovation within non-profits
•
Leveraging and focusing scarce philanthropic resources
•
Faster response to strategic challenges
•
Infusion of business skills to non-business world
•
Involvement of non government assets in social problems
•
Creation of hybrid (blurred) organizations between for
profit and non profit worlds.
It is widely observed that practice has outpaced theoretical
development leading to little agreement on definitions or
frameworks for social entrepreneurship.
We believe that widespread and unchallenged acceptance of the term
Social Entrepreneurship masks some dangers and has contributed to
confusion in the field.
We believe that if we apply some insights from Catholic Social
Teaching to the issue of social entrepreneurship we can move
beyond the false dichotomy of Entrepreneurship/ Social
Entrepreneurship and identify three specific entrepreneurial
strategies which support a more robust discussion of the nature of
the work that is entrepreneurship.
We believe that the field would benefit from spending less time
discussing social entrepreneurship and more time discussion the
nature of the good entrepreneur.
•
•
•
•
•
The dangers of naïve acceptance of
Social Entrepreneurship
•
•
•
The rhetorical risk:
• Narrow definition: if S.E. is simply used to
rebrand non-profits then much of the value of
the new activities, hybrid design, stimulation of
new resources and innovation is lost.
• Implied dichotomy: if “good” ventures are
termed “social” it can imply that other forms of
entrepreneurship are “asocial” or “anti social”
• Boundarylessness: In contrast, if all business
activities are deemed “social”, to some degree
or other, then the term loses all meaning focus
on the distinctive phenomenon that is S.E.
Despite these risks we are more concerned with a risk
beyond rhetoric; the risk of undermining the meaning
of work, particularly from the perspective of Catholic
Social Teaching.
While this perspective is drawn from the Catholic
tradition, accepting the content of CST does not
require acceptance of Catholic faith (Guitan, 2009).
1. Good Goods. The primary way an entrepreneurial venture can contribute to the Common Good is by bringing into existence new
products and services which are inherently good and which enrich lives and minimize any unintended harms. This can include what we
call the “entrepreneurship of the mundane”, that is, the manufacture of the nuts and bolts and basic necessities of life as well as the
creation of life saving treatments. However, inclusion of good goods as a primary moral contribution of entrepreneurship must also
require of the entrepreneur analysis of what goods are not good, and what aspects of even good goods should be redesigned or rethought in order to minimize unintended consequences. We find, in our discussions, that this is a much under appreciated dimension of
the good of entrepreneurship.
2. Good Work. The second way an entrepreneurial venture can contribute to the Common Good is through the nature of the work that
is carried out by the venture. This dimension has several aspects both internal and external to the entrepreneur:
• The development of good character in the entrepreneur. This aspect of the good is derived from the subjective dimension of
work, that is, just as how-we-work ends up changing the world, so working-on-the-world changes us. Most professionals spend
the majority of their waking hours at work. As habits, character and wisdom are developed through experience and activity, for
the entrepreneur, doing good work is an important opportunity to develop character. Society as a whole is better off for having
good, successful entrepreneurial leaders who, through that calling, can become leaders of character. This dimension of the
entrepreneurial good is widely unappreciated even by entrepreneurs themselves
• Good relations with employees, customers and other stakeholders. Value creation and trade creates opportunities for the building
of social relationships. The central question is “Are you in good relation with those with whom you create value?’ Do your
employees have opportunity to develop as people?
3. Good Wealth. The third way the good entrepreneur can contribute to the Common Good is through the creation of good wealth.
Good wealth requires a balance of reward for labor/ creativity with the provision of a living wage to all. Good wealth is often captured
by individual action but has social strings attached. From the CST perspective the creation of good wealth implies a particular solidarity
with the poor. One way to contribute to the common good is to donate altruistically to those in need. But even here, altruism is only one
of a number of possible strategies. Good entrepreneurs may also contribute by donating their time or their particular skills. Indeed, since
the donation of time and work often requires physical interaction with those in need, it often generates a solidarity of far greater integrity.
Finally, it must be emphasized that altruism, for the entrepreneur, is always dependent, indeed subsequent to the creation of good
wealth in the first place.
Literature cited
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Benedict XVI, Caritas et veritate,
Boschee, Jerr. 1998 “What does it take to be a social entrepreneur?” National Centre for Social Entrepreneurs (www.socialentrepreneurs.org/whatdoes/html), 5pp.
Cannon, Carl. 2000. “Charity for profit: how the new social entrepreneurs are creating good by sharing wealth” National Journal, June 16: 1898-1904.
Christie, Michael and Benson Honig. 2006. “Social entrepreneurship: New research findings.” Journal of World Business. 41: 1-5.
Dees, Gregory, J., 1998. “The Meaning of ‘Social Entrepreneurship,’” Original Draft: 10/3.
Drucker, P.F. 1985. Innovation and Entrepreneurship. New York: Harper & Row.
Fowler, Alan. “NGDOs as a moment in history: beyond aid to social entrepreneurship or civic innovation?” Third World Quarterly, 21(4): 637-654.
Gregg, S. and G. Preece: 1999, Christianity and Entrepreneurship (The Centre for Independent Studies Limited, St. Leonards, NSW, Australia).
Hibbert, Sally A., Gillian Hogg and Theresa Quinn. “Consumer response to social entrepreneurship: The case of the Big Issue in Scotland.” International Journal of Nonprofit and Voluntary Sector Marketing. 7(3): 288-301.
Johnson, Sherrill, 2000. “Literature Review on Social Entrepreneurship,” Canadian Center for social Entrepreneurship. (http://www.bus.ualberta.ca/ccse/Publications/).
John Paul II, Pope.: 1992 Laborem Exercens (On Human Work): 1981, in D. J. O’Brien and T. A. Shannon, (eds.), Catholic Social Thought (Orbis Books, Maryknoll, NY).
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Kennedy, R., G, Atkinson, and M. Naughton, (eds.): 1994, Dignity of Work: John Paul II Speaks To Managers and Workers (University Press of America, Lanham, Maryland).
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Conclusions
We have argued that, while there is great promise in
the contemporary social entrepreneurship movement,
there are also a number of important dangers. We
propose that, if we confront rather than acquiesce to
these dangers, we can use the perspective of
Catholic Social Teaching to broaden the scope of
entrepreneurial ventures that we study, to enrich the
moral dimension of entrepreneurial strategy and to
deepen the teaching of entrepreneurship as a whole.
We recommend the following to move toward these
contributions:
• Incorporate social entrepreneurship into
entrepreneurship in a way that enhances the three
goods of entrepreneurship. Specifically we
propose replacing the questions “What is social
entrepreneurship?” with the questions “What does
it mean to be a Good entrepreneur?” From this
perspective we can then apply what we have
called the three goods of entrepreneurship as a
means of supplying critical challenge and
inspiration to all forms of entrepreneurship such
that the true moral dimension of this critical force in
our lives comes into fruition.
• Encourage research within the entrepreneurship
discipline that addresses traditional social
entrepreneurial issues such as micro lending, fair
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Acknowledgments
I am indebted to Michael Naughton and Laura
Dunham for their reflections and thoughts on
this paper.