The Business of Doing Good

A recent BBC news article examined a growing movement in the business world to help solve some social ills. The article notes that charities responded to the perils of industrialization during the 19th century, but today social entrepreneurship is being hailed as their possible successor.

Social entrepreneurship means using business approaches to examine societal problems, and it is starting to garner media attention and consideration from business schools. The most prominent academic social entrepreneurship program is Oxford's Skoll Centre for Social Entrepreneurship, named for Jeff Skoll--former eBay president and founder/chairman of the Skoll Foundation. The director of the Skoll Centre notes that social entrepreneurship differs from charity, because it is a more active way of addressing social problems, seeking resolution, and moving on to the next problem.

The Skoll Foundation website identifies social entrepreneurs as those who “share a commitment to pioneering innovations that reshape society and benefit humanity.” The foundation invests in social entrepreneurs who tackle a wide range of issues including: world health, the environment, and human rights.

1. In most economic and financial theory, firms and individuals are motivated by profits. What motivates firms and individuals who are social entrepreneurs? Can non-profit organizations be efficient?

2. Adam Smith contended that society is best off if each individual acts in his own best interest, because resources will be allocated efficiently. How is Adam Smith’s contention consistent or in conflict with social entrepreneurship?

3. The Skoll Foundation bestows grants to non-profit organizations that it feels have the greatest potential to benefit society. What implications does this have toward competition? Is this a good model?

Topics: Social entrepreneurship, Competition, Invisible hand, Incentives