A business model that witnesses a wide embrace

The distinctive organisational forms adopted by social enterprises throughout the world depend on the existing legal frameworks, on the political economy of welfare provision and also on the cultural and historical traditions of non-profit development in each country. Consequently, the social enterprise sector globally encompasses both new typologies of organisations and traditional third sector organisations, re-imagined through the lens of sustainable income-generation.
In this context, we consider the landscape of the existing research on social enterprises, early forms of social enterprises in Bangladesh, evolution of the sector in the 1980s and 1990s, and intersections between businesses and social entrepreneurship, merit consideration. For that matter, key sectoral trends need to be identified, the policy environment has to be assessed in order to envision a roadmap for future development of the social enterprise space.
LANDSCAPE OF THE RESEARCH: In the field of social enterprise research, historically, it is the entrepreneurial actor rather than the social enterprise organisation itself, which has taken centre stage. In the global context, some of the pioneering social entrepreneurship research has focused on John Durand, who began the first "social firm" with disabled employees in 1964; Mimi Silbert who established the "Delancy Street" social enterprises in the 1970s; and Grameen Bank, which popularised microfinance for poor women in 1976. In this research literature, the social entrepreneur is venerated as a "change agent" in society, bringing market-based, Schumpeter-type innovations to solve previously resilient social problems.
More recently, the actions of philanthropist business founders as social entrepreneurs, e.g. Bill Gates, have captured public imagination and gained considerable media attention. Research on social enterprises in universities globally have also accelerated and gained traction with think tanks, policy institutes, development sector organisations and has featured in countless university dissertations. The term itself shows up frequently in the media, is referenced by public officials, and informs the strategy of several prominent social sector organisations, including Ashoka and the Schwab and Skoll Foundations.
Leading global business schools have also championed the concept of social entrepreneurship and actively integrated curricula related to social enterprises, particularly in the wake of the global financial crisis that had many pundits revisit capitalism's various adaptations. Prominent examples of initiatives undertaken by business schools in this field include the "Social Enterprise Initiative" at the Harvard Business School (HBS) and the Centre for Advancement of Social Entrepreneurship (CASE) at Duke University's Fuqua School of Business. As business school curriculum in leading western business schools tends to be informed predominantly by economic scholarship, it is unsurprising that the focus of the field has been on the entrepreneurial individual.
EVOLUTION OF THE SECTOR: Interestingly, the earliest form of social enterprises in Bangladesh predates counterparts in other countries when different non-governmental organisations (NGOs) promoted income-generating small and medium businesses as a means of creating livelihood for war-ravaged communities in post-liberation war Bangladesh. Even the Bengali poet and Nobel Laureate Rabindranath Tagore is credited with developing social enterprises when he started a soft credit programme for farmers. It began as a form of cooperative in 1905 and was institutionalised as Patisar Krishi Bank with funds from the Nobel Prize he received in 1913. It is said to have been discontinued in 1925 when a new law prohibited realisation of loans from subjects by zamindars.
Later on, in post-1945 Bengal, Christian charities started various initiatives including handicraft training, production and business with marginalised and disadvantaged communities. Soon, NGOs and individual entrepreneurs began to venture into this field and sell similar products. The largest NGOs and social enterprises were established in 1970s while the 1980s saw the emergence of different models of social enterprises which include the major model of micro-credit. Micro-credit giants such as BRAC, Proshika, ASA and numerous local NGOs jumped on to the bandwagon of the new business model, not to mention the hugely publicised Grameen Bank and its affiliated organisations.
In the 1980s and 1990s, the larger NGOs began initiatives to vigorously promote income-generating activities and from these emerged the BRAC brand of social enterprises, which began with handicraft and cottage textile products under the name of Aarong. Subsequently, BRAC began large-scale mainstream business ventures such as tea estate, dairy, poultry, a bank, a university, and so on. The objective was to invest the profits of those commercial enterprises for funding social development programmes of BRAC. As of 1999, BRAC generated 31 per cent of its income from its commercial ventures.  The proportion is now likely to be significantly higher fifteen years on, with Brac Bank having experienced exponential growth in its first several years. At any rate, BRAC's model is often referred to as a "hybrid model" of social enterprise.  
Rumee Ali explained in 2013 BRAC's rationale for expanding into domains such as banking or private university education. He further argued that since the overall objective was to sustain social impact through BRAC's development interventions, BRAC enterprises still adhered to the vision of a social enterprise and not commercial business.
Meanwhile, another model was promoted by the Grameen Bank's former Managing Director Dr. Yunus, who popularised the term "social business." As it transpired, social business models meant independent enterprises, mostly in the form of joint-ventures with multinational corporations, with the expressed purpose of catering to the poor. Examples include Grameen-Danone yogurt, Grameen UNIQLO clothing, and the hugely successful story of Grameenphone, which put the Grameen brand on the map. Grameen Danone Foods Ltd, in a communication material in 2010, described its business, its objectives, strategies, future plans and impact on the poor. It also presented findings as a result of their initiative, with regard to positive impact on child nutrition and women's employment.
Grameen's model bases itself on the premise that big business and owners thereof will invest (in addition to their mainstream markets) to businesses that have an objective to overcome poverty or problems associated with poverty - in ventures such as those with curtailed access to education, health, technology and the environment. These investments will not have profit maximisation as their motive and the investor will get back only the initial capital outlay and receive no dividends (all earnings will be retained for expansion of business). However, according to this model posited by Grameen, profit-making can occur if the business benefits the poor and particularly, if it is owned by the poor.
The key feature in Grameen's model is that the big businesses or their owners will invest, besides their usual business, in initiatives which will have an objective "to overcome poverty, or one or more problems (such as education, health, technology access, and environment) which threaten people and society - not profit maximisation" and the investor will get back the invested amount only, no dividend will be paid to them; dividends will be used for expansion of the business. It is, however, unclear if the entrepreneurs or mangers will benefit from the dividend or if so, to what extent. Dr Yunus also supports profit-making from such business, if it benefits the poor and owned by the poor.
More recently, certain prominent business houses have developed enterprises with specific social and environmental objectives such as Kazi and Kazi and Waste Concern. In the case of Waste Concern, there is also significant involvement of international development agencies and NGOs. A paper by Md. Shafiqul Islam in 2012 sheds light on the various economic, social and environmental impact of Kazi & Kazi Tea Estate and concludes that significant benefits along the said dimensions have been engendered by the Tea Estate in the area, especially for poor women. He also offers insights into ways such benefits could be extended to social security initiatives, e.g., pension and medical insurance for workers.
There is also the Jita model of NGO-multinational corporation (MNC) collaboration to expand the marketing and sales operations of MNCs with an aim to benefit the poor with employment and beneficial products. An important case study was that of the BATA and CARE collaboration for the "Rural Sales Project" which began to sell Bata Shoes in villages using poor women as salespersons, which eventually transformed into an independent social business. A paper by McKague and Tinsley in 2012 describes this collaborative initiative between CARE and BATA, and the establishment of the rural sales network. It goes on to explain how it created employment for poor women in rural Bangladesh and made available beneficial goods to villagers.
The venture also extended the market for MNCs, such as BATA, well beyond their existing distribution system and increased sales. The paper further highlights the lessons learned from this initiative and provides useful strategies for building such inclusive business models.
Lastly, in the previous 10 years, there is a trend of "self-identifying social enterprises" in Bangladesh. In addition to traditional sectors such as education, skill-development and agriculture, there is emerging interest in the technology for development space, led by social enterprises such as mPower, which has pioneered interventions in the e-health and m-health space.
There are also social enterprises gaining increasing prominence in leadership training and artisanal production such as BYLC and Hathay Bunano. The Jaago Foundation is a recent initiative that educates young children in slums across Dhaka, and relies on a team of volunteers for its operations.
The write-up, based on the findings of a study by Centre for Enterprise and Society (CES) of the University of Liberal Arts, Bangladesh (ULAB), is prepared by Sajid Amit, Director of CES, a university-based research organisation in the country which is meant for conducting studies and research on entrepreneurship and business with a view to promoting the goals of ethical, environmental and social sustainability.
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