The past decade saw the emergence of a new entrepreneurial class, i.e. social entrepreneurs. This new development, relative to the conventional business practice motivated by rents, is evolving alongside the debates about the redefinition of capitalism as it were. The basis or rather a call for such a redefinition is spawned by the rising need of corporations and organisations alike to respond to societal needs and environment within which they operate. It has been a subject of economic, business and political debate for the past 40-50 years which culminated into what we know today as Corporate Social Responsibility (CSR). Economically, it has been a growing theoretical debates among academics, from business it has been the subject of lawsuits by environmental activists and NGOs to corporates and politically it has been a subject of political debate with its prominence in the Kyoto Protocol since 1997.
CSR, as a concept, has grown both theoretically and in practice from regulations to reporting. Some global companies have been practicing this nascent yet significant concept for the past two decades. The big question is: are companies embedded in the conventional business model in the capitalist market have a place to compete in the new third economy? Hart (1997) distinguished between three types of overlapping economies. The first economy is the market economy, a familiar world of commerce comprising both developed nations and emerging economies. The second economy is the survival economy, the traditional, villaged based way of life found in the rural parts of most developing countries. The third economy is a nature's economy, which consists of the natural systems and resources that support the market and the survival economies. Going back to the big question posed earlier, a follow up question could further be asked as to whether these companies will survive in the nature's economy? While many corporations are attempting to reinvent themselves against the call for a responsible capitalism, which is inevitable, new and innovative companies from the nature's economy are emerging to directly compete with encumbents in the market economy.
The conventional business models, given the sunk costs, are difficult, but not impossible, to adjust and flexibility in their operations is viewed too cumbersome to switfly take opportunities in the survival economy. Fundamentally, business strategies in the market economy define markets as "viable" segments pagging the survival economy on the margins outright. The market players in the nature's economy are the ones that stand to gain competitive advantage through social innovativeness. These type of entrepreneurs are not defining their markets as "viable", they define their markets as the positive social and environmental impact that sustain the livelihoods of societies in which they operate. Interestingly, this social entrepreneurs are largely not driven by profit motives but by the sustainability of their businesses, the environment and the societies in which they operate. While they may not be motivated by rents, to a large extent, empirical evidence has shown that these entrepreneurs do make good profits. There are a number of examples cited in the media and literature about the success of such entrepreneurs. Their source of business growth is nothing else but social innovation, which is embedded in their business strategies. Surprisingly, these businesses are Non-Government Organisations (NGOs). This attest to the narrowing gab between for-profit and not-for-profit entities.
As the market players in the market economy adjust and convergence between the private sector, environmental activits, NGOs and society at large looms, capitalism in its narrow sense dissipates and a broader view inevitably emerges. It is evident through this developments that the most innovative economic entities will emerge from the not-for-profit sector for a foreseable future due to focus on generating new ideas on how to consume products and services sustainably as nations. Emerging economies cannot afford to repeat the mistakes of Western developments. Achieving sustainability will require stabilising or reducing the environmental burden. Simply: Pollution = Innovation. An irony of the century, at least in my opinion, supporting Hart's view, is this: to some extent the greening of the developed world following Western industrialisation has been at the expense of the environments in the emerging markets. Because industrialisation has focused initially on commodities and heavy manufacturing, cities in many emerging economies suffer from oppresive levels of pollution. The pursuance of this simple but yet powerful sustainable function is the impetus of growth for emerging market economies. Entrepreneurship opportunities resurfaces across the entire businesses' value chains.
As the market players in the market economy adjust and convergence between the private sector, environmental activits, NGOs and society at large looms, capitalism in its narrow sense dissipates and a broader view inevitably emerges. It is evident through this developments that the most innovative economic entities will emerge from the not-for-profit sector for a foreseable future due to focus on generating new ideas on how to consume products and services sustainably as nations. Emerging economies cannot afford to repeat the mistakes of Western developments. Achieving sustainability will require stabilising or reducing the environmental burden. Simply: Pollution = Innovation. An irony of the century, at least in my opinion, supporting Hart's view, is this: to some extent the greening of the developed world following Western industrialisation has been at the expense of the environments in the emerging markets. Because industrialisation has focused initially on commodities and heavy manufacturing, cities in many emerging economies suffer from oppresive levels of pollution. The pursuance of this simple but yet powerful sustainable function is the impetus of growth for emerging market economies. Entrepreneurship opportunities resurfaces across the entire businesses' value chains.
