Do social entrepreneurs really benefit the poor?
Professor’s model helps predict which businesses help poor populations the most
In the past decade, the growth of social entrepreneurship has exploded. For-profit start-ups continually develop with a goal of improving the world.
But are they truly benefiting those who need it the most?
Father Nicholas Santos, S.J., assistant professor of marketing at Marquette University, has model to assess that important question on a case-by-case basis.
The approach is outlined in his article “Social Entrepreneurship That Truly Benefits the Poor: An Integrative Justice Approach.”
The article provides a framework for social entrepreneurial organizations to follow to be certain that they aren’t exploiting those they are supposed to help.
“One of the misconceptions is that just because social entrepreneurs are trying to do social good, there’s going to be no exploitation,” Santos said.
He points to a case in Andhra Pradesh, India, where more than 200 debt-ridden citizens committed suicide in 2010. An Associated Press report linked a number of the suicides to SKS Microfinance Ltd., a non-banking finance company.
The report claimed that SKS debt collectors were forcing people to pawn valuable items or suggesting that those in debt sell family members to prostitution. When the pressure was too great, many Indians turned to suicide.
Santos has created a framework to help ensure such tragedies don’t occur.
The article is built off the Integrative Justice Model (IJM), something Santos designed with colleague and mentor Gene Laczniak, Sanders Emeritus Professor of Marketing.
The IJM outlines ethical principles for companies who market to low-income populations. To create the model, the collaborators studied different frameworks, such as Catholic social teaching, moral philosophy theories, managerial perspectives and stakeholder theory.
From the compiled theories for best practice, Santos and Laczniak describe five key elements for just and fair marketing to low-income populations. These five elements of the IJM are the following:
- Engaging authentically with low-income consumers
- Investing in future consumption
- Co-creating value with customers
- Properly representing the interests of stakeholders
- Seeking long-term profit management over short-term profit maximization
Companies, consumers and researchers can all use these elements to evaluate the practices of companies, both for-profit and non-profit.
“There’s a lot of future potential in applying this lens,” Santos said.
Santos used the IJM to analyze social entrepreneurial organizations in his article.
Empowering the population served was a value Santos indicated as one necessary for sustainable and effective social entrepreneurial organizations. This is what differentiates social entrepreneurs from non-profit organizations. Santos stated that, too often, the mission of non-profits is to provide aid instead of empowering a population to thrive on its own.
It’s also a reason why Santos argues developmental aid does not work.
“The developmental aid model doesn’t work because it makes people dependent on the aid,” Santos explained.
In 2013, the United States gave nearly $23 billion in developmental aid. While large, this figure does not account for the billions of dollars funded through international organizations and other countries.
Continually giving aid is a strategy that hasn’t worked for a number of reasons, Santos argues. First, it makes populations dependent on consistent aid. Second, aid money often does not reach those it’s intended for because it must be filtered through the country’s government.
However, the entrepreneurial approach allows money and assistance to reach targeted populations directly. Entrepreneurs are generally not working through government agencies. Most importantly, as Santos points out, ethical approaches of entrepreneurship empower populations.
“The entrepreneur approach really affords the low-income population a better sense of dignity as persons.”
There are two indicators that people can look for in social entrepreneurial organizations to check ethical standards. The first is to see if the company focuses on creating independent and empowered populations.
The second is collaboration. If focusing on the common good is the main goal, Santos detailed, then companies should be open to collaborating to deliver the best product. A company’s disposition should be collaboration over competition.
These two indicators appear in companies that have long-term commitments and are sustainable. Santos points to Grameen Bank in Bangladesh as an organization that upholds the values he’s outline. As stated on its website, Grameen “provides credit to the poorest of the poor in rural Bangladesh, without any collateral.”
Santos is currently creating an audit tool that is based on the IJM. Multinational corporations could use the tool to evaluate their own practices and be sure they are creating sustainable environments to operate in.
Advocating for large companies to use the ethical framework is a bold undertaking, but Santos sees promise in the field.
“I’m seeing a lot of hope. I’m seeing a lot of positive change where businesses want to be better citizens or better to the environment.”
Research and reporting by Wyatt Massey, a junior studying writing-intensive English and advertising. Connect with him on Twitter or LinkedIn.
