The Evolving Role of Business in Society
Debates over the role of business in society have existed since the era of America’s great industrialists. These titans of business acquired enormous wealth, were widely criticized for their business practices, but then spent much of their wealth advancing social causes. Were they robber barons, philanthropists, or both? It wasn’t until the 1950s that the debate shifted from the social responsibility of a business owner to the social responsibility of the business itself. Then in 1970 Nobel Prize winning economist Milton Friedman famously argued against the very notion of corporate social responsibility, calling it pure, unadulterated socialism. Edward Freeman countered that businesses operate within a network of investors, employees, customers, suppliers, and society at-large. Businesses, he argued, have a social responsibility to all their stakeholders.
Freeman certainly seems to have won the debate, but businesses still struggle to achieve these goals. Many stakeholders believe that socially focused business initiatives, such as corporate social responsibility (CSR), environmental, social, and governance investing (ESG), and sustainable development goals (SDG), fall short of their expectations. Still others argue that these programs have become primarily reporting mechanisms designed to foster legitimacy with various groups, are subject to ever-changing public and political winds, and have become bureaucratic in nature.
Is there another way?
Enter the Corporate Social Entrepreneur (CSE)
An effective but less frequently discussed approach to corporate social responsibility is corporate social entrepreneurship (CSE). CSE refers to empowering individuals in for-profit enterprises to create new products, services, and management practices that benefit both their companies and society.
Examples include an employee at eBay who launched the World of Good marketplace, a MetLife employee who pioneered a program addressing the specialized insurance needs of women with high-risk pregnancies, and teams at Nokia and ABB who pioneered ultra low-cost versions of their companies’ products to address the needs of communities at the bottom of the global economic pyramid. CSE can lead to profitable new products and services that achieve both a business’s and society’s goals.
What the current body of knowledge on CSE lacks, however, is a clear understanding of the corporate conditions needed to identify, enable, and support these individuals. The purpose of this article is to begin to close that gap.
Building Support for CSE
Through a review of academic research on CSE published over the past ten years, the following themes emerged.
Both Values and Structure Are Required
While values were crucial, it was the organization’s structure and commitment of resources that transformed its values into support for CSE. The businesses studied identified and allocated specific financial and organizational resources to CSE initiatives. This included elevating CSEs by forming special business units that insulated their efforts from traditional business operations. They also invested in relationships with outside groups that were close to the targeted social needs, including potential business partners, governmental, and non-governmental organizations.
Socially focused job elements and employee performance ratings were often imbedded into the organization's overall personnel programs. Organizational values may shape the business's approach, but CSE success was built upon structures, investments, and management systems.
CSEs Are Motivated, But Need Training
CSEs were identified based on both their personal motivations and their individual capabilities. CSEs were typically motivated by personal experiences, a recognition of opportunities for social impact, and dissatisfaction with current approaches within their organizations. A CSE’s background was another important factor. This could include having overcome personal hardships, a socially oriented mindset in their family or community, and their education. They may also have self-transcendent values rooted in spirituality. These types of characteristics were found to be important when choosing CSEs.
Developing the capabilities of CSEs was just as important. CSEs needed to become skilled entrepreneurs. They needed to know how to build something new and sustainable. Sometimes they gained these skills by working in the social sector or had moved back and forth between the social and commercial spheres. Businesses with successful CSEs helped them develop the ability to navigate complex internal organizational structures and deal with opposition and inertia. They needed to learn how to solve problems using the resources at their disposal – what is often referred to as bricolage. The skills that were developed in CSEs can be summed up as communications, enthusiasm, the ability to influence and convince others, innovativeness, leadership, and proactiveness.
Success Builds Success
The importance of success – both its achievement and its communications – was an essential link in the process of building a successful environment for CSE. CSE projects often created new markets for the company. The results, when shared, would highlight what had been achieved and be replicable by others. The firm’s transparency and its reward programs were found to be a powerful reinforcing mechanism that shaped its culture, values, policies, structure, and investments. Recognizing and reinforcing the impact of CSEs was crucial.
From Research to Recommendations
CSEs can impact both business and society. Doing this, however, requires an organizational approach that gives them the resources and tools they need. Here’s how to get started.
Step 1: Communicate Executive Values
The organization takes its cues from the expressed values of its senior managers. It is recommended that these executives consistently communicate, internally and externally, their commitment to CSE as an essential element of the organization’s overall investment in social responsibility. Senior executives have an enormous impact on organizational culture, values, policies, and strategies. The ideas and passions of senior leaders can directly inform and drive CSE actions. Just as importantly, these efforts can quickly be derailed when executives leave the company and their replacements do not express similar values.
Step 2: Demonstrate Executive Commitment
Executives demonstrate their values through the structural changes and investments they make in support of CSE. Because these initiatives often take longer to show a return on these investments, they need their own resources and separation from the organization’s traditional business activities, including in some cases its existing social responsibility programs. One strategy that can be successfully employed is to leverage both for-profit and non-profit entities. For example, having the company set up its own foundation, and then moving projects and key people between these entities at various stages of their development.
Step 3: Proactively Identify, Recruit, and Train CSEs
Potential social entrepreneurs can be found and developed from across the organization and from within the organization’s CSR or sustainability areas. Socially proactive personnel practices should be used to help identify high-potential candidates. Candidates can also be brought in from the outside, specifically for their background, experiences, and relationships with foundations, non-profits, and governmental groups.
Training is particularly important for CSEs. This can be formal external training, such as that offered by organizations such as the Aspen Institute (https://www.aspeninstitute.org/programs/first-movers-fellowship-program/first-mover-fellows/) and The League of Intrapreneurs (https://www.leagueofintrapreneurs.com/). Or it can be internally developed training programs based on these and other sources. Another recommended approach is to bring potential CSEs into teams working on current initiatives so they can learn through their involvement.
Step 4: Measure and Report
Clearly defined and measured goals, in recognizable business terms, are needed. Businesses should establish metrics for CSE, just as they would for any other investment, and measure and report the results to build legitimacy and momentum. This should include both internal and public communications, the use of social media, and recognition for the individuals involved. Failure to do this risks the ongoing development of CSE as a management tool.
Final Thoughts
These insights were developed through a review of available academic research. The practices recommended can help unleash the entrepreneurial spirit of socially minded employees. This can help businesses address the expectation that they serve not just the financial interests of their shareholders but the environmental and social expectations of all citizens. I found that: (a) values empower, but structure enables, (b) CSEs are motivated, but need skills, and (c) that success builds on success. It is recommended that executives communicate the organization’s values; make specific, targeted organizational investments; actively identify, recruit, and train CSEs; and establish, measure, and report CSE results.
Interested in Learning More?
Business Fights Poverty & The League of Intrapreneurs (2018, September). The Intrapreneurship ecosystem: Creating the conditions for social innovation to flourish in your company [Guide]. https://familyenterprisefoundation.org/resources/resources/research-and-newsroom/articles/2019/research/the-intrapreneurship-ecosystem/
Davis, G. F., White, C. J. (2015). Changing your company from the inside out: A guide for social intrapreneurs. Harvard Business Review Press.
Hemingway, C. A. (2013). Corporate social entrepreneurship: Integrity within. Cambridge University Press.
McGaw, N., Malinsky, E. (2020). Unlocking the potential of corporate social intrapreneurship: A call to scholars [Research paper]. Aspen Institute. https://www.aspeninstitute.org/wp-content/uploads/2020/04/Unlocking-the-Potential-of-Corporate-Social-Intrapreneurship.pdf