Frontier Market Scouts: “Navigating the Gray Area of Social Enterprise”

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The following blog post was written by Steve Hoberg, a Frontier Market Scout.

We have all see the definitions of social enterprise, and they are all basically variants of “an enterprise that creates social benefit,” could either be for-profit or not-for-profit. Although, after that general definition the clarity stops. It can be argued that almost any business, run ethically, creates social benefit; and customers and investors alike are starting to look more closely at businesses and what measureable societal benefits they actually create.

The basic problem is that each business touts the good things it does, but that does not tell the whole story. We have seen the effects of “greenwashing” in the environmental arena. And now there are “green” oil companies – maybe that just means that they are greener than the others. But this has left the term “green” as virtually meaningless.

The key is that the social impact part of the business must be integrated into its business model in a way that can’t be changed. In embedding social impact into the DNA of an enterprise, creating impact is not an option, and instead, becomes a goal. We must not dilute the benefit that true social enterprises are accomplishing in the field by allowing things like greenwashing to be seen as having true societal and environmental impact. People must understand that just because a company is involved in philanthropy, that company should not necessarily be termed a social enterprise.

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