Saturday, November 29, 2008
As economic conditions worsen, the for-profit model continues to provide a way to tackle the world's social problems. With backing by people like Bill Gates (Microsoft) and Pierre Omidyar (Ebay), social entrepreneurs are trying new strategies. An article in Business Week describes the decision by Mercy Corps to buy a bank in Indonesia. Through the bank, Mercy Corps can provide credit to 2,000 local microcredit organizations and develop an ATM network. The article then describes social enterprise as being "like an industry just starting to take shape." A growing business school literature considers which business model is best. One microfinance company operating in India, SKS Microfinance, now has 9,500 employees and serves 3.3 million customers. That company uses McDonald's as a model of business-process excellence. Despite success stories like SKS Microfinance, the article also reports that strains between social goals and business imperatives (the bottom line) are growing. It is hard to justify most social enterprise on strictly financial grounds. Nonetheless, the use of business models seems to be leading to more effective ways to provide some types of services and assistance.