Demystifying social enterprise and inclusive business

This year’s Skoll World Forum on Social Enterprise only confirmed the accelerating levels of interest in social business. The event brought together representatives from the private, public and non-profit sectors, all of whom agreed on one point: inclusive business is the future. However, there is one point which lacked any degree of accord: namely, what exactly inclusive business is.

Newcomers to the field might be forgiven for feeling a bit lost. Inclusive business, and the related disciplines of social entrepreneurship and social “intrapreneurship”, have evolved faster than practitioners’ ability to articulate exactly what it is they are doing.

This blog is the latest installment in my personal crusade to demystify the jargon surrounding the field of business and development. It does not try to attempt to provide definitive definitions; rather, it outlines the key elements of each term for which there is general agreement as well as those for which there remains some disparity.

Inclusive Business and Corporate Responsibility:

Inclusive business is perhaps best defined by what it is not: corporate philanthropy.

The term arose from the need for a differentiator from the more widely known “corporate social responsibility”, or CSR, which had too great an association with company giving which benefited society but had at best a tenuous connection to core business practice. Think of a pharmaceutical company sponsoring a theater production. Good cause? Yes. Inclusive business? No.

Rather, inclusive business refers to core business practice- design, sourcing, production, marketing or delivery- conducted in a way which benefits society. It can be thought of as overarching strategy to use business for social good, an umbrella term encompassing the narrowed tactics of social entrepreneurship and intrapreneurship.

While broad enough to include most activities, there is some debate around the term’s use, particularly in regards to whether inclusive business should include all activities which create social good (e.g. creating jobs) or just those proactive steps to go beyond minimum legal requirements (e.g. paying a living wage rather than the minimum wage.)

CSR remains in use, but increasingly less so, and mainly within corporate sourcing teams with the fairly narrow mandate of social auditing.

Social Entrepreneurship:

If inclusive business can be thought of as an overarching strategy, social entrepreneurship and intrapreneurship can be thought of as two specific tactics to achieve it.

The key element separating the two terms is this: whereas social entrepreneurship involves forming a new venture with joint commercial and social purpose, social intrapreneurship involves working within an existing company to enhance its social impact.

Let’s take social enterprise first. While sometimes used as a synonym for inclusive business, in fact there are relatively clear parameters on what constitutes a social enterprise; namely, a venture which:

– prioritizes social impact above profit;
– receives a high percentage of income from commercial, rather than charitable, sources; and
– in some definitions, reinvests profit earned into the enterprise or other activities of social value.

However, there remains a fair degree of ambivalence as to where exactly these parameters should be set. Should a social enterprise prioritize social impact to the extent it risks going out of business? What percentage of its income should come from commercial activities, and how soon? Does impact invest constitute venture capital or just another form of grant?

For a more in-depth exploration of the term, The Overseas Development Institute dedicated a working paper to the topic.

Social “Intrapreneurship”:

While social enterprise is increasingly well-defined, social “intrapreneurship” may just take the highly contested award for most jargony-sounding term in the entire field of business and development.

Like social entrepreneurship, intrapreneurship is one tactic to achieve inclusive business outcomes. Unlike entrepreneurship, social intrapreneurship involves working inside existing companies which may achieve and even seek to maximize social impact, but which still seek financial profit as their primary objective. Unlike corporate philanthropy, intrapreneurs also remain intrinsically linked to the company’s core business activities.

Conclusion:

In addition to the speed at which the field has evolved, there is another reason the definitions of inclusive business, social entrepreneurship and social intrapreneurship remain nebulous: the three increasingly intersect.

This convergence, to borrow Accenture’s phrase, can be taken as a promising sign of inclusive business moving from the purview of a few niche specialists into the mainstream. The increasing professionalization of the field requires ever more specific terminology. Inclusive business is the future. Let’s make sure we define it well.

Interested in social enterprise? Check out “Is big business appropriating social enterprise?” and “Three consequences of over-hyping social enterprise.”